(To see Howard Simons' piece on why China's buying of Euro debt makes sense, click here.)
Increasingly everywhere I look, from the president's new jobs proposal/tax plan, to the various austerity programs in Europe, to Citigroup's (C) credit card marketing strategies (in the Wall Street Journal earlier this week) to college admissions (covered in this morning's New York Times), I see organizations not only looking to the wealthy for opportunity but outright survival. To all, the rich will provide. From experience, I have learned that the more we think something is true – and the more of us who think it – the less true that something is likely to be. And I am already beginning to see cracks in the “rich will provide” business model. In higher education, for example, I am seeing “able” families less “willing” to pay the price for either private or out-of-state public colleges and opt for far cheaper in-state public alternatives. As one parent put it to me recently, "There is no first class cabin at college."(To read Sterling Wong's article about AT&T's bid for T-Mobile and whether it is Anti-Competitive, click here
With governments around the globe increasingly “voluntelling” the wealthy to contribute more in order to close fiscal gaps, I expect that we will see more examples, like higher education, where the wealthy will cease their now increasingly obvious voluntary subsidies and choose cheaper alternatives. An Acura, after all, is still a Honda (HMC).
But I would not underestimate the devastating financial consequences. For many bar-belled businesses, the top 10- 20% likely make up 80-90% or more of the profits, particularly in today's economic environment in which the low end is under intense price pressure already.
(To see Michael Thomsett's article on agribusiness leveraged ETFs being the best commodity play, click here.) To read the rest, head over to Minyanville.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Comments
Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.