Legendary Julian Robertson Says U.S. To Suffer Poor Economy for 10 to 15 Years

[AK100]

Box

Yep, you're right, the arms and legs can be knocked up in your garage. It's the all important brain (AI) where the secret lies.

US military are well into this game and a lot of things come from the military.

But so are the Japanese, in fact I think they're ahead of the Americans. Their stockmarket possibly looks like a world beater over the next 20 years, built on the back of robot technology.

Think about this hard everyone. Take China as an example. What do they do right now, what's been the secret of their success over the last 10 years or so?

Yes, manufactoring. But I would estimate that 90%+ of what they produce ain't that complex, kitchen sinks, clothes, match sticks, baths etc etc.

And what might happen if robots replace them. That's a lot of unemployment etc. Same with America, how many jobs in detroit could the robots do, how many cleaners in LA could they replace, how many plane pilots the world over could they replace?

Some people are suggesting that every robot should come with a 10,000% tax otherwise we all get destroyed.

Sounds alarmist? not if you think it about it.........

 

[den999]

Quote from theboxer:

Once we have intelligent robots, all these extra people on the planet are no longer needed; they can be killed off by massive religious wars, disease, or both. [/B]

I guess we all better stock up on canned food, plastic shower curtains, duct tape, and ammo.

 

[Bernard111]

Quote from Landis82:


This time, Robertson feels that the economic contraction will be CONSUMER lead and this will result in a Japan style deflation, or disinflation that lasts for years - - -

But he talked about inflation, not deflation as a reason for a steepener...

 

[1flyfisher]

10-15 years recession.
I don't see it and I am pretty bearish on the economy.
3-4 years I can see that and it is going to be a deep one. In this consumer driven economy, the consumer is going to be doing a lot of belt tightening.

 

[ByLoSellHi]

Some interesting thoughts in this thread...

 

[Fractals 'R Us]

A few decades back computers were going to put people out of work but the upside was that we would have lots of spare time. There was a college major in Leisure Time Activities, not kidding here, I knew a guy that had that major. What happened with the computers is not that they reduced work much, they improved the quality and they opened up new areas of work and research and improved productivity. Probably it will be similar with the robots.

 

[stock_trad3r]

Quote from ByLoSellHi:

http://www.cnbc.com/id/27165599

US To Face Poor Economy for 10-15 Years: Robertson
Posted By: JeeYeon Park


Multi-millionaire investor Julian Robertson told CNBC that the United States is "just getting into the recession," and that the poor economy will last as long as 10 to 15 years.

Last year, Robertson had said that the U.S. economy was in for "a doozy of a recession." He said the reason was the credit situation was worse than anyone had thought.

"Doozy’s a tough one and long one, I think that’s what we’re headed for," said the chairman of Tiger Management.

(Watch the accompanying video for the full interview with Julian Robertson...)

"I don’t mean to imply that this is going to last quite as long as what’s been happening in Japan, but when they went into their decline in 1990, almost 20 years ago, their people were loaded with savings—but [Americans are] all broke," he said. "...If we leave out the home in the calculations, I’d say that 80-85 percent of Americans are broke. So they have to cut back on their spending."

Robertson said that his current favorite trade is the "curve steepener" trade.

"It’s a derivative which pays the movements in the difference between the two-year interest rate on government bonds and the 10-year and 30-year…I think the curve steepener is the best hedge against inflation and I think we’re going to have some inflation."

Robertson was optimistic about "some excellent buys" that investors should consider.

He likes Apple [AAPL 110.26 13.46 (+13.9%) ], Microsoft [MSFT 25.50 4.00 (+18.6%) ], Baidu [BIDU 266.05 52.30 (+24.47%) ], MasterCard [MA 173.60 21.89 (+14.43%) ] and Visa [V 58.87 6.87 (+13.21%) ].

"I have a pretty good bet on copper. I think that copper, which is selling so far below its cost of production, is a terrific short," he added.

The only part of the the article I agree with are the stock picks.

 

[gnome]

Quote from Bernard111:

But he talked about inflation, not deflation as a reason for a steepener...

Hard to know which will prevail...

Declining housing prices are deflationary as are all the CDS assets disappearing to money heaven.

But all of this bailout and stimulus money is inflationary.

What wins out?

Could be we see the worst of both.. declining house prices but the cost of goods and services continues to inflate.. ??

 

[jem]

it should be noted he used to be "billionaire" investor. His crystal ball is not what it used to be if he has to be called millionaire investor.

 

[achilles28]

Quote from Jayford:

I tend to agree with Achilles on most of his points. We in the US are consumer dependent. Good luck!

What is going to drive us forward quicker than a snail after all the Gov intervention stuff stops, which it must eventually?

We can't use artificial interest rates and debt next time. We will need either:

a) a large war (won't happen)

b) major tech breakthrough in energy, nano tech, etc.

Short of something extreme like the above, I see really slow growth for a long time. We have to work off the ridiculous debt first.

Jayford,

Good to hear from you.

I agree - supply-side or war is the only thing left to juice the economy.

I spent a lot of time last night contemplating Japans deflation with 0% rates.

My best guess was posted last night.

Consumers bought in at or near bubble top.

The hyper-inflated valuations were locked-in, the market crashed, and wages never rose commensurate with home prices or home equity debt they had taken.

Which means the entire economy was saddled with years and years of Bubble debt that had to get paid off with pre-bubble wages!

That equaled a massive drop in consumption, GDP and price deflation ensued.

The same thing is happening now, in America.

Home values didn't go as high as Japan. But the scope is just as wide. Plus, our savings is non-existent.

Another interesting facet- why didn't more credit help?

I think i got that one, too:

At or near 0-3%, interest, Bubble Debt on mortgages or home equity cannot be re-financed any lower.

If mortgages were locked in at say 7%, then interest rates dropped and people re-financed at 4%, the overall Bubble Debt Load would decrease from the reduction in interest payments over the lifetime of the mortgage. More consumption and a buoyed economy would result.

But with mortgages bought at 3-4% already (can't refinance much lower), additional interest rate cuts can't generate any savings on re-financing, so the consumption (And debt) remain at Bubble Levels, as interest rate cuts have little-to-no impact on overall debt.

In other words, if debt is taken out at high interest, the total debt burden can be reduced by reducing interest rates on that debt.

But if debt is taken out at very low levels of interest, the total debt burden can only be minimally reduced - or not at all - with further reductions in interest.

Thats a Big Problem.