Dienstag, 28. Oktober 2008

Interview: William A. Fleckenstein, Fleckenstein Capital

The current financial crisis becomes bigger and bigger. Some experts claim that hundreds of hedge funds will fail. What is your take on that?

I suspect enormous numbers of hedge funds will go out of business, perhaps as many as 50%, though that is a bit of wild guess.

As the stocks plunged Investors seem terrified. How long will the sell-off continue? What are your expectations regarding the duration and severity of the current recession?

Its not knowable how long this phase of the bear market will continue, but perhaps it will end soon and we can have a big rally…but after which we will make new lows….this is because the economy is going to be just terrible in 2009, and I think most folks don’t really understand how bad it will be.

The US financial sector has grown from 2,3% of GDP in 1950 to 7,7% of GDP in 2005. What does need to be done in matter of improving governance and regulations (more oversight?) to stabilize the system?

We don’t need too many new rules but we need to enforce the ones we have (though we must not let financial firms ever have too much leverage again). Also we need to improve financial statements so that they mean something once again. In addition, the Fed must stop targeting interest rates – that is critical.

Thank you very much.

William A. Fleckenstein is president of Fleckenstein Capital, an asset management company based in Seattle. He writes a daily Market Rap column for his Website, as well as the popular column Contrarian Chronicles for MSN Money. He is the author of the best-selling book Greenspan’s Bubble, dt. Übersetzung Mr. Bubble.

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