원문 보기
super bubbles can really wipe you out like 1929 did and that's where we are now we we ended a few months ago into three sigma territory Super Bubble territory and the other great risk is last year we also entered bubbles in real estate so this is a very dangerous year that we've just had some bubbles are very specialized to U.S growth stocks like 2000 and they and they hurt there is a wealth effect people lose money they pull back on their spending but they don't hurt anywhere near as much as when you combine that with a housing bottle so in 2008 where we had the only housing bubble in American history burst and the stock market came down 50 in sympathy then you're talking serious damage to the economy through the income effect because this time we have as a multiple of family income U.S housing suddenly is more overpriced than it was ever in the housing bubble of 2006 to 2008.
and and it got there this last year since we last spoke the biggest increase 20 that the U.S housing market index has ever had has taken it to a new high and they are in the U.S still much cheaper than Canada Australia New Zealand London Paris Etc so that is a global event that could cause enormous pain so we have a housing problem we have a stock market bubble like 2000 we have overpriced Commodities oil is 88 and and we have of course the lowest real rates in the history of that now you have a much higher ratio of debt to GDP you have much more debt on the balance sheet of the Federal Reserve and you have much lower rates they will try they will have some fact there's some element of the put left it is just heavily compromised as you suggests how worried are you about inflation I haven't written about inflation for 20 years I when I did quarterly letters I never featured inflation uh it I didn't think it was on the radar screen it is now on the radar screen once again it's not that inflation will go roaring back to 1972 or 1982 it's that it will always be part of the discussion from now on in my opinion instead of forgetting about it it will be spiking and irritating and falling back and then spiking again it will be part of the scenery in the way it used to be in the second half of the 20th century there's a lot about this economy I think that will be dragged back into the late 20th century we've had a very very abnormal honeymoon Goldilocks period for 20 years which I think is ending let me put it this way we're in the early stages of running out of raw materials of course we live on a finite Planet there's only a certain amount of cheap oil cheap nickel cheap copper and we're beginning to hit some of those boundaries and we're going to have bottlenecks Here There and Everywhere the food price index of the UN is about as high as it gets a growing food is not getting easier climate change is coming with heavy floods serious droughts and higher temperatures none of these make farming easier so we're going to live in a world of bottlenecks and shortages and price spikes and we have to get used to it and learn to manage our way around them Commodities have a long history of doing quite well when inflation picks up for obvious reasons and inflation is quite likely to pick up looking out into the future it is pretty clear that we are running out of Labor fertility rates have dropped like a stone China is reeling from the shock of finding that it has 10.8 million babies last year it's only the other the other year seven or eight years ago it had 20.
and this means absolute certainty that the cohorts of 20 year olds coming into the workforce will will be smaller going forward everywhere everywhere in the developed World we're below replacement infertility I think the FED absolutely does not get the pain that's involved with the bubble breaking you can see that in the history of the last 50 years Greenspan encouraged the tech bubble he bragged about the productivity gains from the internet that would last forever actually productivity has declined slowly but surely since then when it broke it caused a lot of pain but nanky learned nothing he encouraged the housing bubble he denied its existence even though it was a three sigma one in a hundred year event that had never occurred in American history before and what have we learned we just went straight back into the game over stimulating pushing the raids down down and down they have gone for 50 years so they started at 16 on the long Bond and now the real return you would get is -2 they act as if a low rate is a Panacea and comes with no downside that is clearly nonsense it's created I think the biggest evil in in our society and that is inequality if you drive up the price of assets systematically and it's bound to happen if you drive the rates down to negative Target who do you make money for you make money for the people with assets who owns the assets the top one percent has 35 percent of all the assets the top 10 have practically all the assets what are the what's the asset ownership of the bottom half a rounding error a practically none so you mark up the assets and that that's your contribution contribution to society what you're doing is pushing down on labor pushing down on the bottom half with no offset from increasing their assets since they have none and you're making the top one percent ineffically rich and the data bears that out right down to the last two years when the top 0.1 percent has doubled its wealth during covet and the bottom 50 I can assure you has not doubled as well the dominance of a handful of firms has increased steadily in most subsets and so profit margins have gone up and the power of Corporations has gone up and they've been able to use more of their power in influencing government and they have there is a lot of regulatory capture where people from business tend to run the agencies that regulate the industry so it's been a wonderful time to make money at the corporate system and the share of GDP that goes to corporate profits has steadily risen the share going to labor has steadily Fallen this makes it a dreadful cousin with with the asset class inflation that we've had they both have two things in common they they make the rich better off and they make the working class worser and that that I think is the great poison at the moment in the American system if we do not address Rising inequality we will be in real trouble we are the least equal Society measurably in the developed world we have the least fluid economic Mobility For Heaven's Sake you know when I arrived in America in the 60s it was a joke how rigid the UK was the the UK is now less rigid than the US the number of people moving from the bottom quarter to the top quarter in a lifetime is half of what it is say in the swedens of the world in the U.S we are the least mobile I mean this is so Un-American it is so far from what people believe to be the case but check it with the least mobile we're the least equal society and it it's a poisonous influence and we have facilitated it we have moved the taxes on capital capital gains tax dividend tax interest tax we've moved them down and by definition the amount that has to come from income has gone up and and of course there's a bubble element to all that and some of it will be priced much more highly uh in the last few months than it will be sometime in the next couple of years as the bubble fully breaks but in the end look back at the Amazons look back at the internet bubble there was a lot of money wasted but my god did push it did push along the Technologies of the internet and it was the US who emerged with the Amazons and the ETC the aols of that of that era Jeremy it's one thing to predict a collapse in stock prices it's another altogether to tell investors they should sell should they as I said a year ago I think I think they'll do pretty well by selling I'm sympathetic to how difficult it it is to get out in tally out of equities and I would point out as I did last year that there are less overpriced parts of the equity market around the world in fact everywhere is less overpriced than the US the U.S is the peak of this bubble as it was in 2000 and what it meant then is what it will mean today and that is the U.S will decline a whole lot more than the rest it's also true that the value end of the spectrum as opposed to the growth ad is about as cheap as it gets so if you can combine this by buying value stocks outside the US I would say particularly Emerging Markets but there's quite a few countries Japan the UK where the markets are if they're overpriced they're only moderately overpriced the US is not moderately overpriced it is shockingly overpriced let me remind you that in 1929 you didn't get back in real terms until about 1954.
that's a long wait in 2000 you didn't get back for 13 years by modern standards that's a pretty long wait I and in Japan which is really the granddaddy of both bubbles land and stocks they are not back to their 1989 Peak today that is a very very long wait so if you think you can stand it for 10 or 20 or even 30 Years be my guest but history says a lot of you will not stand it a lot of you will become more conservative deep into this kind of Correction
Comments 0