Fleckenstein - Stock Market to Tank, Buffett’s Ego & Gold

kingworldnews.com

With continued uncertainty surrounding global markets, today King World News interviewed Bill Fleckenstein, President of Fleckenstein Capital, to get his take on the situation. Fleckenstein told KWN that despite the volatility, “stocks are going down.” He also predicted continued collapse in Europe and railed on Warren Buffett and Charlie Munger. Here is what Fleckenstein had to say: “I mean, look, they’ve figured out how to skin the paper money machine pretty well. They’ve benefitted greatly by government bailouts. Buffett’s gotten himself upside down and sideways in various different financial entities, and they’ve worked out okay in the end.”

Bill Fleckenstein continues:

“They’ve got a lot of these levered financial entities, and that’s helped them. So, I guess they figure they know how to beat the money printing, that they obviously must see. Buffett knows the dollar is doomed by our policies.

 Why they (Buffett and Munger) act like you have to be a moron to own gold, I don’t know. He could just say, ‘It’s not my cup of tea, I prefer businesses that spit out cash,’ instead of talking about it as though as it was something only a fool would have....

“Is Munger trying to imply that only Jewish people in Vienna, before World War II, it was only suitable for them?  Does that mean if he was Jewish, he wouldn’t have seen the problems coming and he wouldn’t have owned any?  

It’s just idiotic.  But then so is Buffett’s stance on tax policy.  Maybe guys get to the point where they have so much money, their ego gets the best of them and they just like to hear themselves talk.  I don’t know.”

When asked about the stock market, Fleckenstein responded,  “Oh I think stocks are going down.  They are going to go down until we get QE3.  The same thing happened last year and the same thing happened the year before.  Easy money boosts stocks higher, then the easy money stops.

The data gets worse.  In this case the data got people’s expectations way too optimistic because of the seasonal adjustments making all of the data seem stronger than they were.

So the data will get worse and Europe will get worse.  Then the stock market will get worse.  And then Ben (Bernanke) will come with QE3 or ‘Operation Twist 2.0’ or whatever he’s going to do.  Then we’ll be on to the next round and we can start looking forward to our own election.”

Fleckenstein also added: “I still think there will be angst over financial collapses in Europe, especially as the Spanish bank problem gets worse.  I wouldn’t say there is not headline shock for the deflationist’s knee-jerk reaction, but I don’t see how it’s a viable outcome.

It’s clear that people aren’t going to stand for austerity anymore and the politicians, all they want to do is get reelected, so they are going to go where the votes are.  This probably ought to be the final hurrah for the deflationists argument.  I say ‘argument’ because it hasn’t been an outcome, it’s just been a theory.”