Thursday, November 01, 2007

Competitive Realignment

(An exchange on last night's Kudlow & Company)

KUDLOW: Okay, financials have gotten whacked—the loan stuff, the credit-freeze. It’s not over, I agree with that. There’s still a credit deflation going on. But…in the next ten, fifteen, twenty years, American financials are going to do great. Why wouldn’t I be looking to buy into that story right now if I had a longer-term viewpoint?

DON LUSKIN (Trend Macro CIO): You should be buying into it. These companies have just been trashed for no reason. What we’ve seen is a kind of acid-bath, where they all got dipped in the bath. And some of them came out corroded and ruined, and some of them came out shining and new. Goldman Sachs is a big winner; Merrill Lynch is a big loser. We call that a competitive realignment—creative destruction. In this country, we let that happen. And that is what makes American business great.