Einhorn: The Fed's Jelly Donut Policy

[Sportgamma]

http://www.huffingtonpost.com/david-einhorn/fed-interest-rates_b_1472509.html

[dcollon]

Thanks for posting.

[Eric50]

that's the speech he made at the Grant's conference a couple of weeks ago.

[mhdousa]

It's unclear to me what makes hedge fund managers think they are in any position to comment on macroeconomic policy.

As an analogy (I recognize analogies are just that), even if I consider myself the world's greatest surgeon, it doesn't mean I know s**t about effective health care reform.

 

[ERICOPOLY]

I read what Einhorn had to say...

 

He says ZIRP won't work because it won't reflate the stock market.

 

He doesn't acknowledge that refinancing at low rates has played the biggest role in getting the consumer debt service ratio down to nearly the lowest point in 30 years.

 

Of course, that would be a positive thing and he only speaks of it's failures.

[A_Hamilton]

I read what Einhorn had to say...

 

He says ZIRP won't work because it won't reflate the stock market.

 

He doesn't acknowledge that refinancing at low rates has played the biggest role in getting the consumer debt service ratio down to nearly the lowest point in 30 years.

 

Of course, that would be a positive thing and he only speaks of it's failures.

 

I agree. He also mentions that the consolidated national consumer balance sheet largely has a negative duration gap with a large amount of checkable deposits against a relatively smaller position in long term mortgage borrowing. He says that raising rates will drive more consumption. However, I think his aggregate view misses the fact that there are huge differences in the way consumer balance sheets look at different income and wealth levels. Overall ZIRP certainly causes incrementally more consumer demand than having higher interest rates.

[Guest Hester]

It's unclear to me what makes hedge fund managers think they are in any position to comment on macroeconomic policy.

As an analogy (I recognize analogies are just that), even if I consider myself the world's greatest surgeon, it doesn't mean I know s**t about effective health care reform.

 

I agree.

 

The irony is, macroeconomic policy is a favorite topic of this board.

[jacobwolinsky]

Bc economists are any better at forecasting? I would take Einhorn over anyone forecasting GDP in Q4 2014 any day.

[PlanMaestro]

Bc economists are any better at forecasting? I would take Einhorn over anyone forecasting GDP in Q4 2014 any day.

 

`cos everybody hates a tourist

Especially one who thinks it's all such a laugh

Yeah and the chip stain and grease will come out in the bath

Common People - Pulp

 

Hedge fund managers are very bad in macro in general, even the ones that disclose their strategy as "Macro". Most of these funds are about the asymmetric structure of the event payoff, looking for extreme events, and not about the probability of the payoff.

 

They just need a few to pay but they talk as if all will pay. And if one of these bets pay off they go full broadcast, while bloggers go along exaggerating their macro wins and track record. Fooled by randomness indeed.

 

Soros has been the only one that had any macro sense (and maybe Dalio ... but there are not enough concrete details on his trades). Since he did not have CDSs he had to be much more careful with the probabilities and not just count on the multiple of the payoff. Now all these newcomers that were lucky in one of their several CDS bets think they know macro when they are just macro tourists.

 

And Einhorn, what has he done that makes him a macro expert? And don't get me started on how many of these tourists are just pandering to the ideological biases of their investor base or inventing issues to try to create ST movements for their CDSs.

 

I took her to a supermarket

I don't know why, but I had to start it somewhere

So it started .... there

I said "Pretend you've got no money."

But she just laughed and said "Oh you're so funny."

I said "Yeah?

Well I can't see anyone else smiling in here."

 

 

"We have two classes of forecasters: Those who don’t know—and those who don’t know they don’t know." - Galbraith

 

"The worst are those that know that they do not know and still end up making forecasts based on ideology or self-interest" - PlanMaestro

 

 

[bmichaud]

Plan, go read Dalio's Daily Observations here: http://www.bwater.com/home/research--press.aspx

 

Absolutely brilliant.

[fenris]

Dalio is excellent. I wonder if anybody has access to BW's daily newsletter?

[bmichaud]

Looks like the Fin Times reached out to "blogger" Cullen Roche of pragcap.com to write a piece on modern monetary theory. Very well done IMO...

 

http://www.ft.com/intl/cms/s/0/c53082f8-9543-11e1-ad38-00144feab49a.html#axzz1u6l7ZbBJ