For more on the financial crisis, check out GlobeSt.com's Webinar , "Wall Street In a Freefall—The Winners and Losers."
DALLAS-Can Wall Street meet Main Street and reconcile their differences? New York City economist Dr. Jerry Webman says the first step is to make more funding available for credit-worthy histories so consumers can transport themselves and be strong and businesses can grow and pay employees.
Webman, senior investment officer and chief economist of OppenheimerFunds, was the keynote speaker at an investors' luncheon hosted by Dallas-based Brennan Financial Services at the Hotel InterContinental in North Dallas. "It's difficult, but not dire. It was much worse in the junk bond days of the early 1990s," he told the 200 attendees.
Webman, addressing the issue on everyone's mind, said the financial crisis isn't like the 1930s because this time government reacted. "They are trying to create liquidity and trying to create movement rather than letting it cure itself," he said.
Today's House of Representatives' vote on the $700-billion rescue package, still viewed as a bailout in some circles, could point the country in the right direction if it's approved, but it's going to be costly and not an overnight panacea. "I think the country is in for a very tough time for the rest of this year and into next year," Webman said. The upshot is the rescue plan is going to be negative for the dollar, force the government to borrow and leave a debt-ridden legacy for future generations.
"The reason I'm not so pessimistic about the dollar is the rest of the world is slowing too," Webman said. "They will have to push down interest rates faster than the US."
Webman told GlobeSt.com that commercial real estate's saving grace in the midst of the debacle is that the industry didn't overbuild this time as it did in other down cycles. The problem, as the industry's aware, is the ability to finance either rolling debt or start new projects. "In the short term, it could be very difficult, but in the long term it will work out," he said. "You might see a dampening of the cycle because of the lack of access to borrowing."
Webman advised investments in healthcare and technology, which he predicted will lead the US out of the financial crisis. The caveat is to invest in "innovation-driven earnings" and not borrowed-driven earnings, he added.
In the world of dollars and cents, sense needs to prevail. "Let's not be greedy about yield," he said. "Being greedy about yield is part of what got us into the problem we're in right now."
Want to continue reading?
Become a Free ALM Digital Reader.
Once you are an ALM Digital Member, you’ll receive:
- Breaking commercial real estate news and analysis, on-site and via our newsletters and custom alerts
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical coverage of the property casualty insurance and financial advisory markets on our other ALM sites, PropertyCasualty360 and ThinkAdvisor
Already have an account? Sign In Now
*May exclude premium content© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
