January 11, 2010
The older I get the more I think of the line "History doesn't repeat itself, but it does rhyme." Variously attributed to both Mark Twain and Will Rogers, today's news brings a degree of affirmation.
If we step back twenty years, pundits "knew" the US was finished as an economic powerhouse. The Japanese were buying us up in great swaths and soon would own our whole country, or so said the wags. Proof positive? The purchase of Pebble Beach golf course and Rockefeller Center by Japanese real estate interests in late 1989 and early 1990. Funny thing about that proof. By 1992 Pebble Beach was in default and Rockefeller Center followed after two years.
Now twenty years on we are again seeing the humbling of some foreign investors who were thought to be on verge of "owning" our economy. The Saudi prince who lost a bundle on Citigroup is just one. The most recent is today's announcement by Singapore's sovereign wealth fund that they have written down their investment in the defaulted Stuyvesant Town, which was in 2006 the largest real estate deal ever. The Stuyvesant default is getting plenty of ink, and the titans of finance will wrestle over the wrecked deal for a few years.
The takeaways? 1. Even the titans of finance will buy high and sell low. 2. The American Economy is large enough and dynamic enough to survive, prosper and grow. To paraphrase Mark Twain, the rumors of our economic demise have been greatly exaggerated.
(This article contains the current opinions of the author but not necessarily those of Brighton Securities Corp. The author's opinions are subject to change without notice. This blog post is for informational purposes only. Forecasts, estimates, and certain information contained herein should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. References to specific securities and their issuers are for illustrative purposes only and are not intended and should not be interpreted as recommendations to purchase or sell such securities).