What will be the next big financial crisis? What's the biggest misconception about the current crisis? What does the future hold for Apple (Nasdaq: AAPL) and BP (NYSE: BP)? And what does the future hold for the Lebron James brand? I recently asked Roger Lowenstein, a contributing writer for The New York Times and the best-selling author of five books, including Buffett: The Making of an American Capitalist and When Genius Failed. His new book is the The End of Wall Street.

Mac Greer: Roger, let's talk about what you call "the next big crisis," the crisis with public pension funds. How bad is it right now and what does it mean for investors?

Roger Lowenstein: A lot of funds are going to be exhausted in the 10-15 year category. That means that states are already peering over the edge. By "public," obviously we mean funds operated for municipal employees, state employees, for public employees. In Illinois there are funds that are eight to 10 years shy of being exhausted. It probably doesn't mean much for the workers because the states have a legal obligation to fulfill their pension obligations. It means a whole lot for the taxpayers of those states because their taxes are going up and it probably means a lot for the people who get public services. Services are going down, and for investors, I think we have to think about a world of just greater government burdens than we have been accustomed to, higher taxes, what does that mean?

We talked in the beginning about the 70s. I think slower growth; ultimately I think higher interest rates because of all that government borrowing. You won't see that now with the economy so slow, but just when government has to take out more of the pie, there is less for private sector growth, and government has been promising a big piece of the pie over the last any number of decades, but hasn't been paying for it. So now, government has got to go to the private sector and say, "OK, we want our slice." There are just some periods that are not as rosy as others and the 70s were one and it would seem that we are at the beginning of another one like that now.

Greer: When people talk about the financial crisis today, what are they missing? What is the part of that story that you think still hasn't gotten enough coverage or attention?

Lowenstein: Well I think that there has been so much talk about various causes that maybe the basic cause has been obscured. Yes, there were government mistakes, but the basic cause was there was a tremendous bubble in home mortgage lending, meaning just tremendous, be foolish and indefensible lending policies by home mortgage companies, and that was multiplied, the effects of that were multiplied by leverage on Wall Street, by the Wall Street banks. You had speculation in assets and you had excess leverage.

Then on top of that, you had the banks that were leveraged were funding themselves via the short-term markets instead of long term, so they had long-term assets funded by short-term credit. These are all very old rules for what not to do or how to get in trouble on Wall Street. They were violated in 1998 in the LTCM fiasco. They were violated to some extent in the dot.com era and it wasn't a government-made crisis … it was Wall Street. I think the lesson, the overriding lesson of this crash is at the end of the Alan Greenspan era and the end of the era of laissez faire, we really do need regulation. Markets can't do it themselves, all by themselves.

BP, Apple, and Lebron James
: And Roger, let's wrap up with our buy, sell, or hold segment. I will start out with the buy, sell, or hold the future of BP as a stand-alone company?

Lowenstein: I would buy.

Greer: So you don't buy this idea that Exxon (NYSE: XOM) or someone else is going to swoop in and buy them?

Lowenstein: I think there is a certain amount of antipathy right now toward bigness in American business that comes in waves. We obviously saw that in the financial reform package. I think Exxon would have political trouble buying BP.

Greer: Apple is dealing with complaints over the iPhone 4 and the reception problems. According to the latest numbers as well, Google's (Nasdaq: GOOG) Android has gained ground in the U.S. smartphone market. So buy, sell, or hold the future of Apple's iPhone?

Lowenstein: Buy. I just can't believe they won't fix it. Has there been a better consumer company? People are comparing them to Toyota. Actually, I would buy Toyota as well. Neither of them is perfect, but they each have been around a long time. They do an awful lot right.

Greer: Buy, sell, or hold the future of the Lebron James brand?

Lowenstein: Well, I would say sell. I think for two reasons. I think there was a certain amount of distastefulness, maybe a lot of distastefulness in this ego-maniacal Decision, with a capital "D." Secondly, if he wins in Miami, if he wins one championship or two over the next five years -- which ain't easy -- he will have done it as one of a tremendous, I won't even say supporting cast, but co-cast. He almost will just be living up to expectations. Let's say he doesn't win. He didn't win at Cleveland. Suddenly he starts to look like one of these -- Wilt Chamberlain had this problem throughout his career. He finally did win a championship, but he was always overshadowed by Russell with all those rings. The heat is going to be on this guy to win the ring. There ain't a lot of excuses when you are part of this trio that he is part of, so I think the only way his reputation could go is down. I am a bear.

Greer: And so even on the heels of that ESPN debacle, you don't see Lebron as a value play?

Lowenstein: No, there are a few critics, but I still consider the bears to be contrarians. The guy has had a five-year bull run, the bears have been out there for two weeks. Give us a break.

Check out Roger Lowenstein's thoughts on financial reform, Wall Street props, and the big question for Goldman Sachs by clicking here.

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