Moore Capital’s Louis Bacon released a letter April 16th that is very critical of the both Greek bailout and the strength of the Euro. He’s also optimistic about the US economy short-term but predicts that growth will not be sustained through the year’s end.
MarketWatch got the letter.
On the Greek bailout:
- “When the European leaders have decided to reward the prodigal Greeks with a bailout, socializing their ills and taxing once again the prodigious Northern European workers.”
On the strength of the Euro:
- The bailout could have “disastrous consequences” for the European Union and Europe. (Soros says the same.)
- Sovereign-wealth funds have only bought trillions of euros to diversify away from U.S. dollars; to “flee their debauched currency.”
- Once the funds “finally realise what they own, they may stand aside… The euro will find a new level while these large funds instead seek currencies in the emerging markets where solvency is not such an issue.”
On future growth in the US economy:
- The U.S. economy could reach “escape velocity” this summer
- Markets could be worrying about “stall speed” by the end of the year
- “We should see a resumption of a bearish market amid the secular softening of U.S. economic might.”
- “Witness [European financial authorities’] demonization of hedge funds in the market revolt after the Greeks were found to be lying about their deficit data…Instead of listening to the market’s warnings… [they] would prefer to adopt a stance of ‘First Kill All the Canaries in the Mineshafts.'”
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