Stockman - Interview on King World News: Don’t Buy The Dips

by David Stockman
March 13, 2014

The greatest danger is the central banks. All the central banks are out of control. They have expanded their balance sheets in a way historians someday will properly and soberly describe as lunatic. So I think it’s extremely dangerous. No one has the foggiest idea of what land mines or explosive eruptions are out there. But it’s all out there and it’s just looking for a catalyst, looking for a match.

There is an accumulating recognition that the environment is a lot more dangerous than people thought. Its not benign, it’s not that ‘the crisis of 2008 is over,’ and that ‘We’ve crawled along and finally we are nearing escape velocity,’ and all this nonsense you hear from Keynesians like Larry Summers and the economists at the IMF and the World Bank and so forth.

I think what the marketplace of the world is beginning to realize is that the opposite is true — that we’re not getting stronger, better, and returning to normal, but instead the accumulation of all these anomalies and bubble finance effects is building huge tensions and instabilities . And as that happens, you get to an environment where some catalyst can set off a real selling panic.

Stay alert, stay out of harm’s way, and don’t believe the constant refrain that ‘this dip is a buying opportunity.’ They have been for several years because the Fed and the central banks have made it so. But unless you believe that the central banks can just keep printing money forever and expanding their balance sheets at these crazy double- and triple-digit rates, then the answer is that it’s dangerous out there and the best thing to do is draw back, keep liquid, and keep out of the risk asset markets.

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David A. Stockman: Former Dir. of the US Office of Management and Budget (USOMB), Economic Policy Maker, Politician, Financier & Acclaimed Author - After leaving the White House, Stockman had a 20-year career on Wall Street where he joined Salomon Bros. He later became one of the original partners at New York-based private equity firm, The Blackstone Group and in 1999 started his own private equity fund based in Greenwich, Connecticut. Defying right- and left-wing boxes, his latest book a New York Times best-seller, The Great Deformation: The Corruption of Capitalism in America (2013), Stockman lays out how the U.S. has devolved from a free market economy into one fatally deformed by Washington’s endless fiscal largesse, K-street lobbies and Fed sponsored bailouts and printing press money.