Paul Singer's $21.1 billion Elliott Management Corporation warned in its yearend letter to investors of nothing less than the downfall of societies should global governments continue printing money.
|| Paul Singer (Photo: Bloomberg)|
"It is critically important for investors to try to understand what global QE is actually doing, where it may lead, and what will happen when it slows, stops or shifts into reverse," the Elliott letter said. "What we urge most strongly is that the current atmosphere of calm and stability, and the lack of virulent inflation, must not be relied upon to continue forever...Our takeaway is that when investors lose confidence in ZIRP-soaked, QE-ridden, faith-based paper money, the consequences could be abrupt and catastrophic to societal stability."
The firm added a political plea: "We do not know exactly what to do about it, except to urge policymakers to STOP substituting QE for sound tax, regulatory, labor, environmental, and fiscal policies."
If they don't listen, Elliott noted, "History is replete with examples of societies whose downfalls were related to or caused by the destruction of money. The end of this phase of global financial history will likely erupt suddenly. It will take almost everyone by surprise, and then it may grind a great deal of capital and societal cohesion into dust and pain."
A Mitt Romney supporter, Singer and his firm expressed its distrust of the White House. "The re-elected Obama Administration has not put forth any plan to enhance economic growth, and there are no signs that it will," the letter said. "Rather, it apparently intends to ride the horse of redistribution to the horizon proudly carrying a banner with the inscription, 'millionaires and billionaires not paying their fair share.'"
"As to the impact of the Administration's mix of tax, regulatory, labor, environmental and fiscal policies, the answer is straightforward: significantly slower growth than could be achieved by better policies," the letter adds later.
The firm's flagship fund, Elliott Associates, gained 13.4% in 2012. It has produced a net annualized return of about 14% since its inception in 1977. For the fourth quarter, Elliott won on investments in Lehman Brothers claims, Greek bonds, mortgage backed securities and more. A spokesman for Elliott declined to comment.
See also: Singer to Washington: Stop over taxing the rich--we earned it! | Paul Singer gives gold an "A," Bernanke a "D" | Elliott wins on Lehman, Greece, MBS, loses on National Express, gold