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Thread: Jeremy Grantham on Charlie Rose (54:19)

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    Milton Kuo is online now iTulip Ambassador, iTulip Select Premium Member
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    Default Jeremy Grantham on Charlie Rose (54:19)

    Jeremy Grantham was on Charlie Rose's program sometime last week. Embedding doesn't seem to work for the video; the link is:

    http://www.bloomberg.com/video/inves...suWLXpSRA.html

    Some of the things I thought interesting that Grantham had to say:

    • He sees the biggest problem as that of natural resource scarcity and environmental destruction to mine ever more difficult and expensive to extract reserves.
    • He disagrees with the idea that price solves the problem of scarcity. 50% of the world who cannot afford the high prices die which solves the problem for the wealth 50%. He says that China has "made the cut." [China can heave a sigh of relief.]


    With regards to central bankers' understanding of the economy and how they run the central banks:

    • Greenspan believed the nonsense 90% of the time. [I take this to mean that Grantham believes that Greenspan knowingly managed the economy poorly at times.]
    • Bernanke has a more academic view than Greenspan. [Bernanke has got ivory tower syndrome and believes the junk economics out there.]


    On current stock valuations:

    • Things aren't too bad for the well-run, franchise companies (GMO's "quality" thesis) such as Coca Cola. They are slightly expensive but one will make money in them over the longer term. [I assume 7 years, which is GMO's long-term cycle.]
    • Returns in general equities will be better overseas although returns are not good enough to justify the risk.
    • There are almost reasonable returns in emerging markets.
    • GMO is underweight global equitie, heavily underweight U.S. equities except for the global franchise companies such as KO.


    On debt:

    • Rose suggested that Grantham agrees with Paul Krugman on increasing debt to get the U.S. out of the housing bubble bust we're in. Without explicitly disagreeing, I get the impression that Grantham does not agree with Krugman's seeming "if it moves, stimulate it" bent.
    • U.S. debt up until 1982 was 1.25x GDP
    • From 1982 until today, debt increased to 3.5x GDP. [The FIRE economy.]
    • Growth materially slowed during this period. Grantham states that based on the data he's looking at, increasing debt does not increase growth.
    Last edited by Milton Kuo; 03-19-13 at 12:02 AM. Reason: Removed non-working embedding of video.

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