Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
Chinese Tech Stocks CCP Paranoia and Best AI Tech Stocks ETF - 26th Oct 21
Food Prices & Farm Inputs Getting Hard to Stomach - 26th Oct 21
Has Zillow’s Collapse Signaled A Warning For The Capital Markets? - 26th Oct 21
Dave Antrobus Welcomes Caribou to Award-Winning Group Inc & Co - 26th Oct 21
Stock Market New Intermediate uptrend - 26th Oct 21
Investing in Crypto Currencies With Both Eyes WIDE OPEN! - 25th Oct 21
Is Bitcoin a Better Inflation Hedge Than Gold? - 25th Oct 21
S&P 500 Stirs the Gold Pot - 25th Oct 21
Stock Market Against Bond Market Odds - 25th Oct 21
Inflation Consequences for the Stock Market, FED Balance Sheet - 24th Oct 21
To Be or Not to Be: How the Evergrande Crisis Can Affect Gold Price - 24th Oct 21
During a Market Mania, "no prudent professional is perceived to add value" - 24th Oct 21
Stock Market S&P500 Rallies Above $4400 – May Attempt To Advance To $4750~$4800 - 24th Oct 21
Inflation and the Crazy Crypto Markets - 23rd Oct 21
Easy PC Upgrades with Motherboard Combos - Overclockers UK Unboxing - MB, Memory and Ryzen 5600x CPU - 23rd Oct 21
Gold Mining Stocks Q3 2021 - 23rd Oct 21
Gold calmly continues cobbling its Handle, Miners lay in wait - 23rd Oct 21
US Economy Has Been in an Economic Depression Since 2008 - 22nd Oct 21
Extreme Ratios Point to Gold and Silver Price Readjustments - 22nd Oct 21
Bitcoin $100K or Ethereum $10K—which happens first? - 22nd Oct 21
This Isn’t Sci-Fi: How AI Is About To Disrupt This $11 Trillion Industry - 22nd Oct 21
Ravencoin RVN About to EXPLODE to NEW HIGHS! Last Chance to Buy Before it goes to the MOON! - 21st Oct 21
Stock Market Animal Spirits Returning - 21st Oct 21
Inflation Advances, and So Does Gold — Except That It Doesn’t - 21st Oct 21
Why A.I. Is About To Trigger The Next Great Medical Breakthrough - 21st Oct 21
Gold Price Slowly Going Nowhere - 20th Oct 21
Shocking Numbers Show Government Crowding Out Real Economy - 20th Oct 21
Crude Oil Is in the Fast Lane, But Where Is It Going? - 20th Oct 21
3 Tech Stocks That Could Change The World - 20th Oct 21
Best AI Tech Stocks ETF and Investment Trusts - 19th Oct 21
Gold Mining Stocks: Will Investors Dump the Laggards? - 19th Oct 21
The Most Exciting Medical Breakthrough Of The Decade? - 19th Oct 21
Prices Rising as New Dangers Point to Hard Assets - 19th Oct 21
It’s not just Copper; GYX indicated cyclical the whole time - 19th Oct 21
Chinese Tech Stocks CCP Paranoia, VIES - Variable Interest Entities - 19th Oct 21
Inflation Peaked Again, Right? - 19th Oct 21
Gold Stocks Bouncing Hard - 19th Oct 21
Stock Market New Intermediate Bottom Forming? - 19th Oct 21
Beware, Gold Bulls — That’s the Beginning of the End - 18th Oct 21
Gold Price Flag Suggests A Big Rally May Start Soon - 18th Oct 21
Inflation Or Deflation – End Result Is Still Depression - 18th Oct 21
A.I. Breakthrough Could Disrupt the $11 Trillion Medical Sector - 18th Oct 21
US Economy and Stock Market Addicted to Deficit Spending - 17th Oct 21
The Gold Price And Inflation - 17th Oct 21
Went Long the Crude Oil? Beware of the Headwinds Ahead… - 17th Oct 21
Watch These Next-gen Cloud Computing Stocks - 17th Oct 21
Overclockers UK Custom Built PC 1 YEAR Use Review Verdict - Does it Still Work? - 16th Oct 21
Altonville Mine Tours Maze at Alton Towers Scarefest 2021 - 16th Oct 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Financial Storm Worse Than 2008 Coming as Seniors Steal From Youth

Stock-Markets / Financial Crash Mar 01, 2013 - 04:31 PM GMT

By: Bloomberg

Stock-Markets

Hedge fund icon Stanley Druckenmiller sat down for a rare one-on-one interview with Bloomberg Television's Stephanie Ruhle, saying that he's decided to speak out now because he sees "a storm coming, maybe bigger than the storm we had in 2008, 2010."

Druckenmiller said that the mushrooming costs of Social Security, Medicare and Medicaid, with unfunded liabilities as high as $211 trillion, will bankrupt the nation's youth an pose a much greater danger than the debt currently being debated in Congress. He said, "While everybody is focusing on the here and now, there's a much, much bigger storm that's about to hit...I am not against seniors. What I am against is current seniors stealing from future seniors."


Druckenmiller on why he's speaking out now:

"I see a storm coming, maybe bigger than the storm we had in 2008, 2010. And really, the reason could happen without people looking as for a lot of similar reasons that we could get into. But the basic the basic story is, the demographic bubble I was looking at way back in '94 that started in 2011, we are right at the first ramp-up of this thing that is about to hit."

On U.S. demographics:

"Something remarkable has occurred since 1994 until now, which is entitlement spending, or let me say transfer payments to be a little more correct. Transfer payments which were 28% and 60, and were 50% when we were in the budget mess in '94. Lo and behold, they've gone up to 67% of government outlays. But they haven't gone up because of demographics. They've gone up because the seniors have a very, very powerful lobby. They keep getting more and more transfer payments from the youth. But the demographic storm is just starting now. It reminds me of '05 when people just extrapolated housing prices going up for 50 years...Everyone sorta lives with their rulers in the past and doesn't look at coming changes. So what's going to happen is we now have a working population, this is the way entitlements work, where the current workforce is paying for the benefits of the seniors. And since 2000, we've had about 4.5 to 4.8 workers for every retiree. By 2050, that number will drop to 2.4 workers per retiree. Another catchy way to say it is by 2030, the average population of the United States is gonna be older than the average Floridian right now."

On who is going to stop seniors from stealing from the next generation:

"You asked me why I'm here. And I think people like me and others need to speak out. It's about the future, not about the present where the problem is. And let me just say one thing. I am not against seniors, okay. I love seniors. Unfortunately I'm going to be one in the not-too-distant futures. What I am against is current seniors to me stealing from future seniors."

On who should be blamed for hurting the economy:

"It's hard to tell who's going to be blamed-- if we don't act and this occurs...There's plenty of blame to go around. If I had to analyze how do we get into the financial crisis, I would say it started way back in the '90s when then-Chairman Greenspan refused to address the dot-com bubble, came up with some new theory of productivity and therefore we're not going to have a problem, so all these NASDAQ companies who were never going to earn money went to hundreds-of-times earnings and then of course, we had a major bust. And instead of taking a recession and having the cleanup...they needed an offset. So they created the housing bubble. So now by hindsight, everybody says, 'Well, you had these horrible Wall Street actors,' and I'm sure there were quite a few horrible Wall Street actors. And I don't doubt that they were part of the problem. In fact, I know they were part of the problem. But I also know it was negative real interest rates for 12 outta 20 years that enabled these actors to do the things they were doing and incented, yes, incented them to go out and gamble the way they were gambling."

On gridlock in Washington:

"I'm pretty frustrated. This sequester thing-- if you just look at how it came about, first of all, every five minutes all the suffering and all this horrible stuff is going to happen in various sectors if this goes through. But there's three things that are not on the table in the sequester. I know you're gonna be shocked by this. Medicare, social security and Medicaid, okay."

On why Medicare, Medicaid and Social Security are not on the table:

"I'm sure it's because of short-term politics. The problem with politicians is, they really only do have a four-year life cycle. The rest of us should have the responsibility to look a little further than that ahead. But yeah, I don't know whether 'mad' is the word. I'm extremely frustrated by their refusal to deal with this problem. And the sequester thing, I think the president made a deal. It was a deal so they would extend the debt ceiling, which they did, all right. I am very much for tax reform. But I don't think it should be part of this particular thing and we should be parading out the crowd we'd been parading about to say how horrible this is going to affect the economy. Let me tell ya, I don't know what the economy's going to do. But it's just a little ridiculous to say a $600 billion tax increase over ten years and $150 billion increase in the payroll tax is going to have no affect on the economy. But an $85 billion cut in discretionary spending is going to tank the economy? If the economy were to soften, I can tell you it won't be because it will not be because of this $85 billion."

On why he doesn't become a policymaker:

"Because my wife loves New York and I love my wife."

On equities vs. bonds:

"One of the things that is kinda one of my pet peeves is hearing all these people on TV say, 'Well, you gotta go into equities 'cause they're so cheap relative to bonds and there's no other game in town.' They are cheap relative to bonds. But everything is cheap relative to bonds...So just because equities are cheap relative to bonds doesn't mean their price isn't subsidized. I'm not making a forecast here because the subsidization could go on for a long time. But real estate, gold, equities, they're all priced off of ZIRP, zero interest rates, and they're all subsidized."

On whether the hedge fund industry could be in hot water 12-24 months from now and become even further consolidated:

"Oh, I don't know. I think the hedge fund's short-term thinking is just a manifestation of our entire society. Whether it's the fed or whether it's-- the administration or whether it's Congress, no one bothers to think about the long term anymore. And the hedge funds are just one more manifestation of that."

On where investors should put their money right now:

"That's hard for me to answer. Because I have the luxury of a lot of experience in sitting in front of a screen. And I can go into currency markets where it's at a relative price. So it's the one area where prices aren't subsidized. And I'm arrogant enough to think I can time these things. But I don't really know how to answer that question for public invest-- but let me just say that this idea that you've got go plowing into risk because rates are zero, that they will rue the day one day. The music will stop. And I would probably be invested right now thinking I'm smart enough to know that we're quite away from the music stopping. I don't think Bernanke is about to end these policies for a while. But let's just know what we're dealing with here."

On whether there needs to be more consolidation in the banking industry:

"I'd like to see them be more like utilities. I could care less whether they make money, unless I happen to own equities in it. But if we're talking about as a United States citizen--I have no problem with banks being utilities and going back to what banks used to do..."

On whether banks should just be making loans:

"Yeah."

On whether the most sophisticated bankers should work at hedge funds, not on sell-side trading desks:

"You said it, Stephanie, not me."

On what his future looks like:

"I'm probably going to disappear again at some point. But in the meantime, I'm gonna do what I can to try and bring the awareness of this issue out because with respected economists, again, focusing on a little problem over here when you've got this big problem over here, I think the message needs to be out there."

On whether he'll start tweeting:

"No tweeting for me."

bloomberg.com

Copyright © 2013 Bloomberg - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

Bloomberg Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in