Juggling Dynamite

Whatever else one may think about Carl Icahn, he makes many excellent points in this refreshingly candid 15 minute video. The observations about Wall Street [and Bay Street] and ETF mammoths (Larry Fink et al) who get rich selling risk to others (every day in every way) is too little said and very little understood by the masses who look to them for financial advice like lambs to the slaughter.

Billionaire investor activist Carl Icahn ramped up criticism of the U.S. Federal Reserve, warning about the unintended consequences of ultra low interest rates on the economy and financial markets.

“They don’t understand the treacherous path they are going down,” Icahn said in an interview with Reuters, in which he also declared his support for Donald Trump as a candidate to be the next U.S. president.

…Icahn said he felt compelled to raise red flags about the state of the financial markets because he believes if more big investors had warned about subprime mortgage market in 2007, the United States might have avoided the crisis that strangled the economy the following year.

In a video entitled “Danger Ahead” and released on Tuesday, Icahn said the Fed’s rate policy had enabled U.S. chief executives – many of whom he describes as “nice but mediocre guys” – to pursue “financial engineering” that he said has exacerbated an already wide gap between rich and poor in America. See: Ichan urges Fed to get off zero .

Here is a direct link to the video.

The emissions fraud scandal is spreading (as we suspected it would), with revelations of overstated fuel efficiency results across a host of manufacturers.  See:  Mercedes tops list of car companies overstating fuel economy.

Others are complaining that this is making a mountain out of a molehill, arguing that emissions are low and fuel economy is relatively high and present scrutiny is just regulators justifying their own existence.  See:  VW “scandal”.

I think all of this misses the point entirely. The point is that we don’t need to have any emissions. We don’t need to argue over which car is giving the best gas mileage, or who is misleading whom. We don’t need to fund even more emission regulators or drill environmentally critical areas for more oil or keep bailing out antiquated car companies that are too short-sighted and pigheaded to evolve their products out of the ICE (Internal combustion engines) ages to smarter products.  We just need to move to electric cars and continental smart grids fueled by the vast array of renewable energies all around us.  Then all of these wasteful distractions and expenditures go away and importantly, cash-strapped consumers and businesses will be able to spend less and save more, rebuilding financial strength for the future.

On a related note, lower oil prices are finally managing to drive drillers out of exploration projects in the Arctic. See: Why Shell has gone cold on the arctic.  Maybe oil companies are starting to understand that they cannot keep borrowing endlessly to go after the least cost-efficient energy on the planet (and to pay shareholder dividends) at great expense to everything else including their balance sheet, water, clean air, the biosphere and human health.  This is progress.

Gary Shilling, president at A. Gary Shilling, discusses the impact of low inflation on the U.S. Treasury market, the Federal Reserve’s focus on China and the global economy and the ability of commodities to clear their markets. Here is a direct video link.

A. Gary Shilling & Co. President Gary Shilling discusses the price of commodities and deflation. Here is a direct video link.