Famous short-seller Jim Chanos is at the Clinton Global Initiative this morning talking to Bloomberg’s Betty Liu about everything from his investments to our current macro-economic climate.
And you can’t talk about the economy these days without talking about the Presidential election.
Unlike a lot of his Wall Street peers, though, Chanos remains a staunch Obama supporter. This morning he explained why, while at the same time engaging in a serious take-down of widely-held Republican economic beliefs.
First up was the belief that the market will improve with a Romney presidency. Chanos said that this was, frankly, “unrealistic.” Why? Because Washington’s problem, he said, is not the executive branch, but Congress.
Any party in the majority will be cut off at every turn by the minority in our current climate, Chanos explained, and “the executive is being stymied by the legislative.”
That said, he told Bloomberg viewers to watch the story that isn’t being told. Watch House races that are leaning Democratic — those will be the races that have an impact in D.C.
In the meantime, it’s “more fun and games for us” as we approach the fiscal cliff.
Moving on, Chanos tackled an even bigger storyline on Wall Street — the belief that the economy is being hurt by too much regulation and uncertainty. This narrative just “doesn’t hold” when you look at the numbers, Chanos said. For example, The Fed Register of financial regulation has grown just as much under President Obama as it did under President Bush.
And as for investment: “They say people are holding back investment … and again, the numbers belie that,” said Chanos. “Domestic GDP investment in the U.S. is back up just about to pre-recession levels and bottomed out in 2009, 2010 …”
The problem, he said, is actually that “the investment we’re all looking for is actually saving labour … Look at what the internet is doing to retail,” he added.
According to Chanos, investing in technology that makes things more efficient doesn’t save jobs. So we’re looking at a capital-labour tradeoff that’s been going on for years. In the early years of the Bush administration this was masked by strong construction jobs but since the housing market collapsed, those are gone.
Anyone else have something to bring to Chanos while he’s in a fighting mood?
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