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.