Michael Burry bet against the United States of America before the financial crisis. And he doesn’t like it, but he won.
Recently, he talked about that experience while giving the Commencement speech for UCLA’s economics program (h/t marketfolly). He dove into it by first sharing what happened to him after he wrote his famous New York Times Op-Ed, ‘I Saw The Crisis Coming, Why Didn’t The Fed?’ 2 years ago.
It’s a good question. What he got in return was not an invitation to go chat in Washington. Instead he found himself (and his 6 defunct funds) under investigation. The FBI went to his house, and he was forced to spent $1 million in legal and accounting fees.
All of this, he says, because those in charge of our economic policies are wilfully ignorant of how to get out of a crisis that is making a mockery of financial principles we’ve held dear since the 1960s. “As it turns out, information is not perfect, volatility does not define risk, markets are not efficient, the individual is adaptable.”
From his speech:
Our nation’s economic policies are born of a synthesis of theories on how to deal with the Great Depression of the 1930s yet seems unable to honestly examine the most recent one. Sadly, in the highest levels of economic thought in government, questions are not tolerated. It is as if we’re dealing with the binary thinking of a fundamentalist religion.
If that’s not a swipe at Bernanke, we’re not sure what is. Worst yet, he doesn’t think it will change. History, he says, has taught us that sovereign nations will delude themselves into doing nothing in the face of crisis. Burry warns the students sitting before him that as their lives progress, they will see a decline in their standard of living as government tries to manage its way out of ruin.
“Of course this is a false prophecy,” he said. “It’s already happening.”
Watch the full video below:
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