Jeremy Grantham on Charlie Rose (54:19)

[Milton Kuo]

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.

[doom&gloom]

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

thanks, really enjoyed it!

[Bundi]

Re: 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.

Thanks for posting. Interesting interview. Poor Charlie looks bummed out.

"There is an enormous pressure in the investment business to deliver good news. Trust me, good news sells better. Stock brokers thrive on it, investment houses thrive on it. To go out there in a bubble and talk about badly priced markets and downsize risks is an invitation to get fired. They simply don’t want to hear it."

Jeremy Grantham 3-12-2013