Thursday, March 24, 2011

Rare interview with John Burbank (Passport Capital)

End of QE2
Too early to tell if there will be QE3
Regardless, we need to fund $2T deficits next year -- will need to raise $800B from Banks or the Fed.
Resource Scarcity and Saudi Arabia
Concerned about resource scarcity
Started investing the middle east in 2006-07
One of the largest investors in Saudi Arabia
The country is not in any index and does not attract institutional money
Aramco may have over $1T in revenue in the near future
Financial Firms
No stake in financial firms
Regulatory issue vs. a bottom up analysis issue
Banks should be not allowed to pay dividends
We are pretending things are stable and back to normal
We are "not recovering"
Housing prices are still falling
Mortgage Duration issue (low coupon) - will not be able to refi if rates rise so people will be stuck in houses for a long time
Fed is stuck with owning a lot of mortgages - the problem will get worse over time

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