What kinds of reforms are needed?
Kerschner: Corporate scandals are one of the biggest indicators for negative growth in the near term. We’re moving from CEOs who are risk takers to CEOs who are risk controllers. It’s a mindset change. Who is going to do anything original, creative or new in the current environment? CEOs are now paid to conform, not to brave new paths. The movement from a risk-taker to a risk-controller mentality is going to be one of the key drags on growth, at least in the near term. A bubble in bonds? Many pundits say bonds are the next bubble to burst. Is anybody worried that investors still piling into Treasuries will lose money? Dreman: I am. I’m afraid we’re almost in a bond bubble now. The yield on 10-year Treasuries is 4%, a 41-year low. Inflation is low. But the question is, are we in a permanent period of inflation being down and industrial stagnation? If we’re not, this is probably the best time to short (make a bet on falling prices) long-term bonds than there’s been in 50 years. Diving in
