Forbes says in these tough times there are great bargains

KUALA LUMPUR: Forbes editor-in-chief Steve Forbes says there are enormous equity opportunities in terrible times like these.

“It is when the clouds are there that no one can see what lies ahead. There are great bargains now,” Forbes told StarBiz at Forbes Global CEO Conference in Kuala Lumpur.

He added that the weakness in the economy now was caused by the convulsions of a weak US dollar. Over the next five years, he said, the dollar would be re-tied to gold.

“Things will change when the United States gets a new president in 2013. The current president's policies have been destructive.

“The United States should have been chugging along by now, instead we are like an automobile going at 10km per hour,” said Forbes.

He said President Barack Obama had compounded the problems in the United States.

“Where do we begin? The binge spending, the healthcare bills, the unchanged tax code and his regulations on energy. For some reason, he is anti-coal and anti everything except for windmills, which is a medieval technology.

“He blocks drilling, for example, the blocking of a pipeline from Canada ... For some reason, he has something against Canada; I don't know what it is,” said Forbes.

When asked what he thought about Obama's recent job stimulus plan, Forbes said that Japan had had 15 stimulus packages in the last 20 years and nothing had happened.

“Governments cannot be spending money they don't have. Jobs are not created by governments but by entrepreneurs,” he said.

As for the debt crisis in Europe, Forbes said it wasn't just austerity measures that the European Union (EU) should be focusing on. It also had to look at growth.

He said some of the things the EU should be doing included having its own Troubled Asset Relief Programme (TARP) like what the United States did in 2008, pumping capital into banks and focusing on shoring up their capital levels.

“It is not that Greece is very important. However, many European countries are holding on to Greece's bonds. Europe needs to restructure Greece's debts instead of pretending that Greece can actually pay them,” he added.

Forbes said Greece should also focus on reforming the taxes, noting that increasing the taxes at a time like this was “the dumbest thing to do”.

“In dealing with this problem, some banks will fold but it has to be done in a way that the good banks don't go down with the bad. Then you avoid panic,” he said.

As for Asia, Forbes does not believe that intra-regional trade will be enough to buffer the problems in the United States and Europe.

“Asian exports will be hurt,” he said.

By TEE LIN SAY and JOHN LOH, biz.thestar.com.my