Here’s a great little letter from Katana Capital (via PragCap) presenting the strongest argument for why this current rally can’t or won’t be anything like the great rally we saw in the 80s.
The bottom line then is that the macro drags were horrible — interest rates were sky high, for example — but the world was full of tailwinds. Now interest rates are 0%, but there are all kinds of numbers, from government spending to household spending to demographics that are getting worse.
It’s a point that’s been made before, but you don’t hear the bulls — and we’d particularly like to hear from James Grant, as it’s obvious that a lot of his current thinking is informed by the 1980s — address these differences.
Definitely worth a quick read.
094Q letter 1982 vs 2010 section-1 –
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See Also:
- Phew, We’re Doing WAY Better Than Japan
- Jim Grant: The Economy Will Surge Back, We Just Don’t Know How
- Jim Grant: Here Comes A ‘Zippy’ Recovery That Will Blow Away Expectations