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Shatzker:<\/em><\/strong>\u00a0 Why is it that the stock market is where it is?\u00a0 That with valuations so high that I noticed in the letter that — or at least in a statement that you made with your son, Bret, earlier this month, that you don’t feel confident making any large investments?<\/p>\n <\/p>\n
ICAHN:\u00a0 <\/strong><\/em>Aabsolutely, Erik.\u00a0 I have hedges on, I’m more hedged than I ever was. <\/strong>I will tell you there’s certainly good companies. [The market] is way overvalued at 20 times the S&P and I’ll tell you why: a lot of it is a result of zero interest rates.\u00a0 It’s just what I said. You have zero interest and a lot of buybacks. Money is not going into capital. <\/strong><\/p>\n <\/p>\n
So think of it as a rich family that just decides “we’re just going to have a lot of fun, we’re going to sit around in the pool, and we’ll keep printing up IOUs to the town, we’ve got a good name.” You keep\u00a0 doing it until you go broke.\u00a0 And this is what’s happening in our economy.\u00a0 Zero interest rates are building huge bubbles.\u00a0 You have retirees that saved a million bucks, half a million bucks.\u00a0 <\/strong><\/p>\n <\/p>\n
I think the market is at literally very high levels because of zero interest rates, <\/strong>and if you really look at it, the dollar is pretty strong right now, which is going to hurt international earnings.\u00a0 The S&P, they live on international earnings.\u00a0 That’s going to be hurt<\/strong>.\u00a0 There’s going to be a day of reckoning here.\u00a0 I’ve seen it many times in my life.\u00a0 When things look good, they look great.\u00a0 You go into the sky.\u00a0 But that’s when you have to really pull down and really stop buying.\u00a0 <\/strong>That being said, I’m not going to tell you it’s going to happen tomorrow, next week, even next month, even next year possibly.\u00a0 But it’s going to happen, and you have to change the direction of our economy.\u00a0 I can’t say it plainer than that.<\/p>\n <\/p>\n
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[T]housands of CEOs understand the problem.\u00a0 They say one day, a regulatory agency, EPA, waves its wand and we’re bankrupt, or almost bankrupt.\u00a0 We’re losing a fortune.\u00a0 Why the hell should I invest in more capital?\u00a0 Why should I invest in more machinery?\u00a0 Therefore, we can’t compete, and therefore the middle class does not have manufacturing jobs and we now say, well, we’re not a manufacturer, we’re a service company<\/p><\/blockquote>\n
What could cause a crash:<\/p>\n
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Shatzker:<\/strong><\/em>\u00a0 You say, Carl, that a day of reckoning will come for the stock market.\u00a0 You can’t say whether it’s going to be this week, this month, even this year or next year.\u00a0 Let’s talk about the factors that you believe would precipitate such a correction.\u00a0 What could cause stocks to fall?<\/p>\n <\/p>\n
ICAHN<\/strong><\/em>:\u00a0 Erik, I think I’ve been talking about it to you this whole interview.\u00a0 One of the things that’s causing it to fall is happening right under your nose, that we have no capital spending.\u00a0 Capital spending is going way down.\u00a0 In a society like us, manufacturing is important.\u00a0 I don’t care, sooner or later, you can’t just keep tweeting to each other.\u00a0 You can’t text each other.\u00a0 <\/strong><\/p>\n <\/p>\n
We say we’re a service economy, that’s great, we’re a service economy.\u00a0 What does that mean?\u00a0 That we text more to each other.\u00a0 <\/strong>Sooner or later, everybody is going to send a text to each other and say isn’t that wonderful, so why should anybody work?\u00a0 Just sit there and text to each other or watch TV.\u00a0 So I am saying to you, this is what is happening as we speak.\u00a0 Capital spending is down, obviously. The last two years, I mean, it’s just down four percent in the last quarter which is unheard of when you don’t have a recession.\u00a0 OK.\u00a0 Productivity has not grown.\u00a0 In fact, it’s the lowest growing it’s ever been as far as growth goes.\u00a0 These are very important things in a capitalistic system.\u00a0 Unless you have a dictatorship, you’re going to go the way of Cuba.\u00a0 Well, Cuba was a dictatorship but it still went that way.\u00a0 But then you’re going to go the way of Venezuela, Argentina.\u00a0 You’re going to be in a major problem.<\/p><\/blockquote>\nHe then turns to the economy and social tubulence, where he repeats “shocking” allegations made by Trump, namely that “unemployment numbers are not accurate”<\/em>:<\/p>\n\n<\/div>\n
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You see GDP is not going up, I could give you a lot of reasons.\u00a0 But the most important is that the middle class worker is really, does not have good jobs.\u00a0 This unemployment numbers are not accurate in one way, that a lot of these guys have left the work force, and two, these jobs aren’t paying that well.<\/strong><\/p>\n <\/p>\n
So I am saying that the middle class – that is why you saw this uprising for Bernie Sanders and you see it for Trump and you see Brexit and you see what’s going on in Italy.\u00a0 <\/strong>I think there’s an undercurrent of great unrest in our global economies.\u00a0 This “one percent”, people resent it, and they resent government for allowing it to happen.<\/p><\/blockquote>\nLast, and certainly not least, is perhaps the key issue at the bottom of everything: the US Dollar as a reserve currency<\/strong>, which has permitted all of the above to happen:<\/p>\n\n<\/div>\n
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Now, the thing that goes for the country as you pointed out is, we’re a reserve currency.\u00a0 But I don’t know how long you can depend on that<\/strong>.\u00a0 So I am just saying that sooner or later, there’s going to be a massive problem, I think.<\/strong><\/p><\/blockquote>\nThe full 40 minutes interview is below.<\/em><\/p>\n
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