GUNDLACH: ‘The Real Killer Will Be The Next Recession, And There Will Be One’
Dec. 18, 2012
Bond god Jeff Gundlach was on Bloomberg Television’s “Market Makers” with Erik Schatzker and Stephanie Ruhle.
Among other things, Gundlach is concerned about the prospect of another recession, which he thinks will happen thanks to spending cuts and tax hikes.
We got out of the last recession thanks to the government racking up debt. The next time around, Gundlach thinks that type of fiscal policy won’t be tolerated.
The real killer is going to be the next recession. And there will be one. The policymakers are trying hard to have it both ways…Ultimately as you address the fiscal situation, you’re going to run the risk of a recession. When the next recession comes, it’s going to be a real killer because what exactly is going to be the policy response. It will be policies in terms of raising taxes and cutting spending that help to bring on the next recession I think, so I don’t think it’s very plausible that you’re going to just turn around and go back to the old method of pumping up the economy with debt…Next recession comes. So the next recession probably is going to be somewhat cleansing, which means that you’re going to see things repriced lower.