Not everyone on Wall Street thinks the stimulus package Congress and President-elect Obama are constructing will solve the economy’s ills.
While many think a combination of tax cuts and spending will spur the economy at a time when consumers and businesses are keeping a tight grip on their cash, others are preparing for another plunge in markets.
“I think there’s still a big split here,” said Brian Gardner, a former aide on Capitol Hill who now offers analysis at Keefe, Bruyette & Woods. Some investors think “the stimulus package is not getting at the fundamental problems of the economy,” Gardner said, particularly the housing problem at the center of the crisis.
Axle Merk, the portfolio manager of Merk Investments, sees Federal Reserve actions to keep interest rates low as “propping up a broken system” and questions the wisdom of providing incentives for consumers to spend on mortgages and cars when they should be saving.
“I think as this thing progresses, they’re going to get frustrated,” he said of Washington policymakers. “Nothing will work out as planned.”
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