Ten years ago, if the stock market had done what it
has just done now, I could practically guarantee you
that growth was going to accelerate. Now, it's a
possibility, but I would rather say that the market is
rigged and people are chasing these assets, without
growth necessarily backing confidence. It's not
predicting anything the way it used to and that really
makes me reconsider my ability to generate superior
returns. If the most important price in the most
important economy in the world is being rigged, and
everything else is priced off it, what am I supposed to
read into other price movements?
The US needs to resolve its debt problem
politically, otherwise it is headed towards default. I
believe the estimates suggest that the US needs to
raise all taxes by about 64% in order to be able to
support its older population. That's raising payroll,
capital, dividends and income taxes by 64%. The other
option is to cut all government spending by 40%.
What happens when machines really take over
investing? Do the markets get really efficient? Or will
there be competing systems trying to outdo each other?
All of this is depressing because there won't much left
to do for humans once machines start doing more and
more. If machines do everything well, including
allocating capital and resources efficiently, can that
be deflationary, can that eliminate poverty? I don't
know. It's hard to be very optimistic.
When I go over [to China], it looks like they have a
lot of infrastructure. It seems ahead of the
population, not behind. I see expensive apartments in
empty cities that 300 mn rural Chinese are expected to
migrate to. That looks very unbalanced to me. Nobody's
ever had investment to GDP at 47%. Japan and Korea
peaked at 36%-38%, so as a result I think capacity is
way ahead of demand in some areas in China.