Tags: Carl Icahn | fed | Minefield | economy

Carl Icahn Warns of a Fed 'Minefield'

Carl Icahn Warns of a Fed 'Minefield'
Carl Icahn (Getty Images)

By    |   Thursday, 05 November 2015 07:11 AM

Activist investor Carl Icahn once again has warned that the nation's central bank is only steering the country into a world of financial pain and suffering.

Icahn repeated his prediction that Federal Reserve policies are going to cause woes for the market.

"There are going to be real problems. We're walking into a minefield of what's going on with the Fed," Icahn said Tuesday at the annual DealBook conference. "I could go on and on here, but I think we have problems."

Icahn released a highly publicized video in late September in which he predicted a sharp market decline ahead fueled in part by speculation and the dangers of junk bonds. He also said corporate earnings are being inflated, CNBC reported.

Icahn said he felt compelled to raise red flags about the state of the financial markets because he believes if more big investors had warned about subprime mortgage market in 2007, the United States might have avoided the crisis that strangled the economy the following year.

In a video entitled "Danger Ahead" on his website, Icahn said the Fed's rate policy had enabled U.S. chief executives — many of whom he describes as "nice but mediocre guys" — to pursue "financial engineering" that he said has exacerbated an already wide gap between rich and poor in America.

He isn’t the only high-profile voice to warn about the Fed's antics.

Hedge fund manager Stanley Druckenmiller said the Fed has inflated an economic bubble that is poised to burst.

The chief executive of Duquesne Capital said "the central bank has created a bubble of short-term investing through its near-zero interest rates and quantitative easing," CNBC reported.

"All you do when you're doing this is you're pulling demand forward to today," Druckenmiller said at the same conference.

"This is not some permanent boost you get. You're borrowing from the future. I think there's been such a misallocation of resources that this has gone on so long and unnecessarily (and) the chickens will come home to roost."

Druckenmiller didn't specify exactly how he thinks it all will end, but believes the Fed policies have not only encouraged risky behavior but also have added to income inequality problems by shifting wealth to asset owners, CNBC reported.

"Over six years when you have zero rates and quantitative easing you move investors out the risk curve," Druckenmiller said. "You cause corporations to start acting in bizarre ways."

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Activist investor Carl Icahn once again has warned that the nation's central bank is only steering the country into a world of financial pain and suffering.
Carl Icahn, fed, Minefield, economy
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2015-11-05
Thursday, 05 November 2015 07:11 AM
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