Jeremy Grantham on Charlie Rose

Jeremy Grantham was on Charlie Rose last week in a rare interview. ┬áNot surprisingly, Grantham is not terribly optimistic. ┬áHere’s a brief summary though his full thoughts are always worth a listen:

  • The global economy is in a long-term slow-down.
  • US annual economic growth will never go back to what it once was (3%+).
  • Population poses a huge hurdle in the US.
  • China is a good growth economy in the short-term, but is a major resource consumer.
  • The biggest problem is natural resource scarcity where prices are rising faster than global growth.
  • He doesn’t think very highly of Alan Greenspan….
  • Bernanke is even more academic and arguably worse then Greenspan was.
  • Foreign equities should perform reasonably well compared to the USA.
  • GMO is underweight global stocks, significantly underweight US stocks.
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Cullen Roche

Mr. Roche is the Founder of Orcam Financial Group, LLC. Orcam is a financial services firm offering research, private advisory, institutional consulting and educational services.

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Comments

  1. Where does Orcam stand when GMO, PIMCO and the like make their 1.5% predictions. Also, Jeremy made no reference to a current bubble. Well, has anyone seen what farmland in IA and NE is going for these days. 5 yrs ago, you could buy ground for 4 to $5000/acre. Ground just sold last week where I grew up, for $20,000/acre. Other ground has recently gone for as high as $28000/acre. These once simple land farmers now are among the richest in the country. Maybe what Jeremy is saying about the scarcity of resources is indicative here.

  2. “The biggest problem is natural resource scarcity where prices are rising faster than global growth.”

    His Malthusian musings really do get tiresome after a while. He should stick to what he knows well.

  3. Bit of a strawman, don’t you think? Our economy is pretty far away from infinity, and we’re pretty far from reaching the limits of human ingenuity or the resources available to us.

    Not to mention, population is predicted to peak sometime in the middle of this century, as more women get access to contraception and education. So Malthus *definitely* doesn’t apply.

    Plus, how much of the high commodity prices are due to China’s expansive monetary policies? I recall Grantham showing that China has been using ~50% of concrete and iron ore. That’s not sustainable.

  4. I live in Iowa and I know lots of farmers. The vast majority aren’t rich, they just have a lot of debt. Everything is fine as long as they can continue to service that debt. The somewhat recent increase in land prices in Iowa is partly due to corn being used in the production of ethanol, and related to the increase in corn price.

    I’ve cut back my equity exposure signifanctly over the last year, and what exposure I currently have is geared towards Europe and Asia. My gut tells me the US markets are a little “over-juiced” relative to some of the foreign markets. Of course I could be wrong. I’ve been wrong before.

  5. I also live in Iowa. Around here most of the farmland being bought is being paid for in cash. From what I can tell, farmers are carrying nowhere near the debt load they had in the 80’s. Still, the prices seem crazy.