Jeff Gundlach on the “Instant Recession”

Ray Dalio (Bridgewater) is a proponent of the ongoing “Beautiful Deleveraging” as the process by which the US slooooooowly works itself out of the economic morass we’ve been digging ourselves into for the last few decades. His knowledge of deleveragings is extensive and he’s talked a lot about the commonalities between them – they all end with printing and they all require patience.

Jeff Gundlach of DoubleLine does not typically advocate policy (two years ago he told a room full of money managers I was in that his job is invest based on what policy is, not whine about what it ought to be) but he does have some thoughts about the potential for a drastic slowdown should the pols try using the same deficit-reduction chainsaw that’s been employed in peripheral Europe:

From Advisor Perspectives:

“We’re in this predicament owing to a simple fact…The United States has been spending more than 50% more than it’s been taking in in taxes….”

“Clearly, people don’t want to see the economy contract very substantially next year,” Gundlach said.  “But, as I’ve said for several years now, addressing the budget deficit equals economic weakness and headwinds, and perhaps if it’s addressed aggressively, that’s just instant recession.”

Gundlach was very skeptical that progress would be made to avert the fiscal cliff, much less toward addressing the larger deficit issues.   The fiscal cliff negotiations have been unable to bridge gaps as small as $70 to $80 billion annually in tax increases, he said, which does not bode well for addressing the $1.3 trillion deficit.

“Ultimately, you must balance the budget,” he said.  “To do that, you have so much more work to do than this tiny little issue about 2% of the population.”

I would say that there’s probably little danger of the rug being ripped out from beneath our feet so quickly thanks to the November elections.  The deficit hawks and born-again Austerians (the same gang that vociferously backed Bush’s massive spending binges not even ten years ago) were largely chased out of town after all.

More on Gundlach’s views including his Japan bet below.


Gundlach’s High Conviction Investment Idea (Advisor Perspectives)

Read Also:

Ray Dalio On How The Economic Machine Works (Zero Hedge)

What's been said:

Discussions found on the web
  1. bitcoin evolution review commented on Sep 28

    … [Trackback]

    […] Find More on to that Topic: […]

  2. updated tor search engine commented on Oct 11

    … [Trackback]

    […] Read More here to that Topic: […]

  3. Sex chemical commented on Oct 29

    … [Trackback]

    […] Read More Info here on that Topic: […]

  4. Quality Formula commented on Nov 24

    … [Trackback]

    […] Information on that Topic: […]

  5. DevSecOps as a service commented on Dec 02

    … [Trackback]

    […] Read More to that Topic: […]

  6. anime love doll fie reviews commented on Dec 08

    … [Trackback]

    […] Read More here to that Topic: […]

  7. best bongo drums commented on Dec 09

    … [Trackback]

    […] Here you will find 968 additional Information on that Topic: […]

  8. 메이저놀이터 commented on Dec 24

    … [Trackback]

    […] Here you can find 51525 additional Info to that Topic: […]

  9. long black wigs commented on Dec 29

    … [Trackback]

    […] There you can find 48112 additional Info to that Topic: […]

  10. commented on Jan 14

    … [Trackback]

    […] Here you will find 38263 more Info to that Topic: […]

  11. DevOps company commented on Feb 04

    … [Trackback]

    […] Info to that Topic: […]