• Steve H. Hanke
    05/04/2016 - 08:00
    Authored by Steve H. Hanke of The Johns Hopkins University. Follow him on Twitter @Steve_Hanke. A few weeks ago, the Monetary Authority of Singapore (MAS) sprang a surprise. It announced that a...

Carl Icahn Reiterates "We Are In A Major Asset Bubble"

Tyler Durden's picture




 

A month ago, Carl Icahn told told CNBC that he was "very nervous" about US equity markets. Reflecting on Yellen's apparent cluelessness of the consequences of her actions, and fearful of the build of derivative positions, Icahn says he's "worried" because if Yellen does not understand the end-game then "there's no argument - you have to worry about the excesssive printing of money!" Today he follows up that warning with an op-ed that states "we are in a major asset bubble that continues to grow," supporting Stiglitz comments that "these very strong stock market prices are in a sense a symptom of the weak economy, not a symptom that we are about to have a strong recovery to our real economy."

Excerpted from The Bottom Line by Carl Icahn,

Currently, I believe that the facts “reduce” to one indisputable truth which is that we must change our system of selecting CEOs in order to stay competitive and get us out of an extremely dangerous financial situation.

 

...

 

We can no longer simply depend on the Federal Reserve to keep filling the punch bowl.

 

Federal Reserve Chair Janet Yellen recently commented on our Monetary Policy at the International Monetary Fund saying, “Monetary policy faces significant limitations as a tool to promote financial stability.” She continued that, “Its effects on financial vulnerabilities, such as excessive leverage and maturity transformation, are not well understood and are less direct than a regulatory or supervisory approach.” Yellen’s comments suggest, and I agree, that we are in an asset bubble.

 

Adding to this, Standard & Poor’s issued a report just a few days ago titled, “How Increasing Income Inequality is Dampening U.S. Economic Growth and Possible Ways to Change the Tide.” In it they say: “Our review of the data, as well as a wealth of research on this matter, leads us to conclude that the current level of income inequality in the U.S. is dampening GDP growth, at a time when the world’s biggest economy is struggling to recover from the Great Recession and the government is in need of funds to support an aging population.”

 

There is also a dire situation regarding pension funds which supports the view that Main Street Americans are the ones falling victims to entrenched CEOs and Boards doing poor jobs at running companies. A study by Ray Dalio, founder of Bridgewater Associates, calculates 85% of public pension funds going bankrupt in three decades and only able to achieve 4% returns on their assets. These inexcusable numbers are mainly due to pension and mutual fund managers “voting with their feet” or simply voting for current management of companies in their funds, regardless of their effectiveness on shareholder value.

 

Our current system of corporate governance protects mediocre CEOs and boards that are mismanaging companies and this must be changed. With this system we will not meet the needs of Main Street America, nor will we be ready for when the asset bubble we have today bursts – whether it is the next one, five, ten, or 20 years. Nobel Laureate and professor of economics at Columbia University, Joseph Stiglitz recently told CNBC, “These very strong stock market prices are in a sense a symptom of the weak economy, not a symptom that we are about to have a strong recovery to our real economy.” He also said, “In the United States, from 2009 to 2012, 95 percent of the gains went to the upper 1 percent. Ordinary Americans are using up their savings.”

 

...

 

I believe that America needs [shareholder activism] to correct the economic course we are on and push back against the approaching storm clouds resulting from the many problems we face today, including a major asset bubble that continues to grow.

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Tue, 08/12/2014 - 12:35 | 5082280 theonewhowaskazu
theonewhowaskazu's picture

Why can't we rely on the federal reserve to prop up the market?

Tue, 08/12/2014 - 12:52 | 5082368 Cattender
Cattender's picture

As soon as they Quit Printing $ the game ENDS.

Tue, 08/12/2014 - 12:59 | 5082389 Chris Jusset
Chris Jusset's picture

The US is amidst its THIRD giant bubble in less than 15 years.

How many more iterations of this bubble cycle will it take before the Fed realizes that the US is now a complete BUBBLE ECONOMY?  Stated otherwise, without bubbles, the US economy would cease and collapse.

Tue, 08/12/2014 - 13:12 | 5082473 i_call_you_my_base
i_call_you_my_base's picture

All true. But they don't care because they don't care about economics, this is about politics.

Tue, 08/12/2014 - 13:19 | 5082520 max2205
max2205's picture

It will tank if the Fed gets out of the way.....

Not gonna happen ICarl ICant

Tue, 08/12/2014 - 13:37 | 5082620 ATM
ATM's picture

It will eventually tank bigger if they don't, and they won't because they can't.

The money printing will end when the dollar ends. History tells us as much.

Wed, 08/13/2014 - 08:25 | 5086434 Pumpkin
Pumpkin's picture

It is of no benefit to mistake evil genius for incompetence.  Bubbles are what they want.

Tue, 08/12/2014 - 13:03 | 5082424 Groundhog Day
Groundhog Day's picture

I CON can go fuck himself

Tue, 08/12/2014 - 13:40 | 5082637 JR
JR's picture

Ah, Carl Icahn. I like to see them falling in line behind the collapse.

Tue, 08/12/2014 - 13:14 | 5082498 theonewhowaskazu
theonewhowaskazu's picture

That's the key, I don't think they intend to quit. 

Tue, 08/12/2014 - 14:07 | 5082780 mrvco
mrvco's picture

Exactly.  They're going to keep riding this pony right on into the ocean.

Wed, 08/13/2014 - 02:50 | 5086008 PiratePiggy
PiratePiggy's picture

Because Carl is short right now.

Tue, 08/12/2014 - 12:35 | 5082282 Osmium
Osmium's picture

Major asset bubble?  Kinda Like HLF?

Tue, 08/12/2014 - 17:14 | 5083951 EggSlayer
EggSlayer's picture

HLF is probably less of a bubble, more of ignorance. In the market, investors probably understand that the Fed has propped it up. But they're riding the wave. Whats the point of investing again? Oh yeah.. to make money.

Tue, 08/12/2014 - 12:35 | 5082285 LawsofPhysics
LawsofPhysics's picture

Somebody wants you to sell.

More useless paper-pushers talking their books...

same as it ever was.

Tue, 08/12/2014 - 12:36 | 5082289 The Phallic Crusader
The Phallic Crusader's picture

How is this new/s?

Tue, 08/12/2014 - 12:43 | 5082323 Winston Churchill
Winston Churchill's picture

Because all these CYA statements going public tell you we are close to a major

correction/collapse..

That, or its all in Zimbabwe style, which didn't work out too well long term for stawk

values.

Tue, 08/12/2014 - 12:53 | 5082370 Eyeroller
Eyeroller's picture

When MSNBC's Andrea Mitchell calls Obama's claim of bad intelligence a 'farce' it's a signal that they can see this thing is about to implode and are finally giving thought to their own career integrity.

When the clowns at CNBC start to interview people other than Faber who claim things are going pear-shaped and without mocking them a la Santelli, that will also be a signal that the big 'pop' is near.

Tue, 08/12/2014 - 13:05 | 5082441 NotApplicable
NotApplicable's picture

"Don't need to be a weatherman to see which way the wind blows."

Tue, 08/12/2014 - 12:40 | 5082305 pan
pan's picture

Relevant to paperbugs.

Tue, 08/12/2014 - 12:41 | 5082308 GrinandBearit
GrinandBearit's picture

He has billions, yet he still wants more. 

He can't die soon enough for me... same goes for Buffet. 

Tue, 08/12/2014 - 12:43 | 5082319 yogibear
yogibear's picture

Maybe Ebola Edith will cook for him.

Tue, 08/12/2014 - 12:45 | 5082337 Inthemix96
Inthemix96's picture

Speaking like a good radical egalitarian... Wishing death upon someone because they want to be as rich as possible.

Tue, 08/12/2014 - 13:00 | 5082401 Squid Viscous
Squid Viscous's picture

and how many people has he fucked over in his quest?

Tue, 08/12/2014 - 13:03 | 5082427 NOTaREALmerican
NOTaREALmerican's picture

Survival of the fittest, BITCHEZZZ!!!! 

Tue, 08/12/2014 - 13:16 | 5082465 Squid Viscous
Squid Viscous's picture

looks like he's not "surviving" all that well, i would say dead within 1-2 years? and then...hell or maybe reincarnated as a "goliath grouper"?

Tue, 08/12/2014 - 13:29 | 5082570 NOTaREALmerican
NOTaREALmerican's picture

His DNA bling will survive VERY well.    It's all about sex, power, and DNA bling.

Tue, 08/12/2014 - 13:39 | 5082632 espirit
espirit's picture

HeHe.  "goliath grouper."

dat's not rayciss.

Tue, 08/12/2014 - 13:52 | 5082653 GrinandBearit
GrinandBearit's picture

Crony capitalist insider trading criminals like I-con do NOT make the world a better place. 

He's a selfish, narcissistic psychopath.  Same goes for Gates, Munger and Buffet.

Buffet's the worst IMO.  His ice cream eating, coke swilling, ukulele playing, grandpa persona is 100% manufactured.   

 

Tue, 08/12/2014 - 12:42 | 5082316 yogibear
yogibear's picture

Tell us something we don't know. There isn't any reason why the asset bubble could expand much further.

With Federal Reserve intervention and printing this bubble can get much bigger. It's what the Fed does best. Blow bubbles to historic levels.

Tue, 08/12/2014 - 19:18 | 5084545 daveO
daveO's picture

If Icahn actually believes his own bullshit, then it's like a junkie reacting to his dealer going out of town for the weekend. 'Oh my god, I'm gonna die!'

Tue, 08/12/2014 - 12:44 | 5082328 gdiamond22
gdiamond22's picture

We don't need shareholder activism, we need to end the fucking FED, the chamber of commerce, institute term-limits for Congress and let all companies from here on out know that if you go bankrupt, you will not be bailed out, no matter whose dick you suck.

Tue, 08/12/2014 - 13:40 | 5082636 ATM
ATM's picture

You wouldn't need termi limits for congress if the Federal government were strictly limited to the powers that was granted to it.

You would have trouble getting people to actually want to serve their country by doing that basic, mundane, low dollar work and not having people spend millions for a lifetime job that makes them wealthy beyond belief.

Tue, 08/12/2014 - 12:45 | 5082329 Toolshed
Toolshed's picture

All this crap from the king of crap means is........the ass wipe is shorting the market and wants to ensure his payoff.

Tue, 08/12/2014 - 12:47 | 5082331 Dr. Engali
Dr. Engali's picture

Fuck him. He made billions on the system and now that it's on the death that he helped to create bed he starts pointing out all that is wrong with it. Fucking parasitic asshole.

Tue, 08/12/2014 - 12:56 | 5082385 blown income
blown income's picture

It would have been nice if the system would have just taken its own course

Would we be better off today

Tue, 08/12/2014 - 13:04 | 5082436 NOTaREALmerican
NOTaREALmerican's picture

"We" might be, but the country is run by and for the benefit of the top 10%.    They are better off with the current system.    As long as they trickle down enough, the "we" will be ok.

Tue, 08/12/2014 - 13:42 | 5082645 espirit
espirit's picture

They're on the "short list".

Weak and old oligarchs go first.

Tue, 08/12/2014 - 13:50 | 5082677 NOTaREALmerican
NOTaREALmerican's picture

What is it about 10% that you don't understand?   10% is 30 MILLION people.   

Tue, 08/12/2014 - 14:04 | 5082756 Slave
Slave's picture

Don't you have anything better to do than troll ZH comments?

Tue, 08/12/2014 - 14:52 | 5083000 NOTaREALmerican
NOTaREALmerican's picture

No, I work for a TBTF Zombie bank in IT.   What are you doing?

Tue, 08/12/2014 - 13:32 | 5082591 game theory
game theory's picture

Regardless of what kind of parasite Icahn is...he's definitely correct that many corporations have crappy execs and totally bullshit boards of directors. It's the total corruption of the boards of directors which has done the most to destroy capitalism in the last 50 years...but whatever...chances of that changing...zilch.  

And the asset bubble Icahn complains about? Maybe true...but also propaganda for his PE biz.  Kind of reminds me of an Asimov story...where you analyze the article and end up with zero information.

Tue, 08/12/2014 - 12:44 | 5082332 buzzsaw99
buzzsaw99's picture

he should know, he helped blow it

Tue, 08/12/2014 - 12:46 | 5082340 q99x2
q99x2's picture

Arrest him and redistribute his stolen wealth.

Tue, 08/12/2014 - 12:45 | 5082343 Porous Horace
Porous Horace's picture

"We can no longer simply depend on the Federal Reserve to keep filling the punch bowl."

That's the problem; it is (or should be [or used to be]) the Fed's job to "take away the punch bowl just as the party gets going." Where is William Martin when you need him?

Tue, 08/12/2014 - 12:45 | 5082344 carbonmutant
carbonmutant's picture

Hope is the air inside a bubble...

Tue, 08/12/2014 - 17:55 | 5084193 Rouge Trader
Rouge Trader's picture

Helps us all breathe when we get trapped

Tue, 08/12/2014 - 12:54 | 5082373 NOTaREALmerican
NOTaREALmerican's picture

Carl makes it sound like printing more money won't eliminate "the end game".   Why would anybody want the game to end?

Tue, 08/12/2014 - 12:58 | 5082395 Squid Viscous
Squid Viscous's picture

just fucking die already, you old lizard

Tue, 08/12/2014 - 13:01 | 5082408 ronron
ronron's picture

i'm long gold here with a short cock. if this trade goes south, i will never get layed again.

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