During his recent interview with the Asia Society, Howard Marks explained why a soft landing is extremely unlikely. Here’s an excerpt from the interview:
Marks: It was a great investment sage called Peter Bernstein, and he wrote me once, that the market is not an accommodating machine, it will not give you appreciation because you want it.
Similarly the economy will not give… necessarily give investors what they want.
History… what is a soft landing?
A soft landing is you have an economy which is too strong and consequently is producing inflation. You want to cool off the economy, to cool off the inflation without producing a recession.
In other words if you want to put that in plain English, you want to get it exactly right.
Your actions should not be so limited that it doesn’t fix the inflation, but it should not be so strong that it produces a recession.
Just right!
Hard to do.
Given the imprecision involved in dealing with an economy it’s hard to guess that they’re going to get it exactly right.
And history suggests that soft landings are very hard to produce. Now there’s always a first time, and by the way it wouldn’t be the first time, but it could happen. But I would say the odds are against it.
You can listen to the entire discussion here:
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