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Billionaire Howard Marks: US Standard of Living to Plunge

Monday, 25 Jul 2011 09:17 AM

Billionaire and hedge fund manager Howard Marks says the U.S. debt problem will lower the standard of living for everyone in America, The Business Insider reports.

"In addition to balancing the budget and growing the economy, I think we have to accept that the coming decades are likely to see U.S. standards of living decline relative to the rest of the world," Marks writes in a letter to investors.

"Unless our goods offer a better cost/benefit bargain, there’s no reason why American workers should continue to enjoy the same lifestyle advantage over workers in other countries.”
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“I just don’t expect to hear many politicians own up to this reality on the stump."

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(Getty Images photo)
Washington’s spending has recently been higher as a percentage of the nation’s economic output than at any time since World War II, notes Marks, but Washington’s revenues are the lowest in more than 60 years.

"We have no choice but to raise the debt ceiling and keep borrowing in the short-term," says Marks, adding that current talks are unlikely to bring much fundamental progress because politicians are too concerned about getting re-elected to compromise.

Though the years in which the government hasn’t run a deficit have been by far the exception of late, not the rule, Marks says that taking action to reduce the deficit and related borrowing – be it through reduced spending or increased revenues – would further depress the economy.

Bloomberg reports that Republicans have challenged a presidential veto threat by preparing for a short-term extension of the U.S. debt limit, hardening partisan differences in the face of warnings that a stalemate risks roiling financial markets.

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Billionaire and hedge fund manager Howard Marks says the U.S. debt problem will lower the standard of living for everyone in America, The Business Insider reports. In addition to balancing the budget and growing the economy, I think we have to accept that the coming...
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