"I don't think the stockmarket is delirious," distressed debt investor and author Howard Marks tells Dan Weil of The Wall Street Journal. "Valuations aren't terribly high." And even though the US is now well into its "longest recovery on record", it's also been "the slowest since World War II. That suggests not so many excesses have built up".
But when it comes to debt, and government spending in particular,Marks is less sanguine."It's worrisome that the government is applying stimulus in the 11th yearof economic recovery, running a massive deficit and adding so much tothe national debt, yetno one seems to be worried." That's not to say that something bad will definitely happen, but overspending can have consequences, notes Marks.
Running a budget deficit in order "to build a port or bridge" with a high "internal rate of return" seemslogical. But that's not where government spending tends to go. "If you look at societies running hyperinflation, you don't want to live in them. Large budget deficits can lead to that... I've always been told that you can'tprint an infinite amount of money without something going wrong."
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
That said, for all the low interest rates and quantitative easing we've experienced so far, inflation has yet to jump. This, notes Marks, is "very mysterious... it makes me wonder whether the orthodoxy is wrong. As the saying goes, It isn't what you don't know that gets you into trouble. It's what you know for sure that just isn't so'."
How much could your cash ISA save you in tax?
Official data reveals ISAs will collectively save us an estimated £6.7 billion in tax this year. We’ve crunched the numbers to find out how much a cash ISA could save you
By Vaishali Varu Published
The 8% pension rule: what is it and is it enough to retire on?
You are probably saving this amount into a pension each month without even realising with the 8% pensions rule. But is what is this and is it enough to give you a comfortable retirement?
By Ruth Emery Published