Wednesday, September 1, 2010

Misallocation of Capital

In this recent Barron's interview, Michael Lewitt makes the following points:

For Chastened Investors, Capital Ideas

- There has been a misallocation of capital for years. Speculative activities have been favored over productive activities.

- He also added that 95% of credit default swaps are not used for hedging but instead speculation on price action. As a result, much intellectual and financial capital is wasted instead of being used to enhance growth.

There's no question that speculation needs to be reigned in. Check out the full  interview.

Adam

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