In this interview with Yicai Global, Howard Marks explains why this recession won’t last long. Here’s an excerpt from the interview:
Marks: Within the bounds of my limitations on forecasts Ivan I would say probably yes.
As I just finished saying the Fed is trying to weaken the economy to reduce inflation to a tolerable level without making it so weak that it falls into recession. And historically speaking this has been very difficult.
It hasn’t worked most times but again I want to caution you and your audience. The important thing is not yes/no in answer to your question, yes recession, no recession, the important question is if there’s a recession, how bad, how long, and my naïve view tells me that it will not be too strong a recession and will not last too long because… especially because the dynamics of labor demand are so strong.
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One Comment on “Howard Marks: This ‘Recession’ Won’t Last Long”
Very sensible observations. However, as has been reported, monetary policy, interest rates, is less effective if it is opposed by fiscal policy or other government policies. The fiscal measures taken as a result of Covid likely could not have been avoided but with Covid largely under control, they should be reigned in, and that is not the case. Climate alarmism has also contributed to inflation throughout much of the world. OPEC does not control electricity supply or prices in North America, but government policies that reduce the supply of coal and natural gas do drive up the cost, as does shutting down nuclear power generation. Here in Canada, the latest target of the Prime Minister is agriculture. He is proposing regulations to reduce the use of fertilizer that impact food production and prices. He is on record as stating he would like to see the tar sands oil production shut down and when the German Chancellor visited Canada asking for LNG, his requests were rejected despite the massive natural gas reserves in Canada. Germany’s current crisis, like Texas last year, is also self-inflicted.