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Howard Marks Megathread


doughishere
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His latest. Have a good weekend.

 

https://www.oaktreecapital.com/docs/default-source/memos/economic-reality.pdf

 

 

For example, lending people money can enable them to buy things today that they otherwise mightn’t have bought until later (if at all). If a consumer buys a boat today with money made available through a low-interest loan, that’s a boat he won’t buy next year. Lending people money doesn’t alter their lifetime incomes, meaning consumers may buy fewer boats later, when the loans have to be repaid, causing disposable income to contract.

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"For example, lending people money can enable them to buy things today that they otherwise mightn’t have bought until later (if at all). If a consumer buys a boat today with money made available through a low-interest loan, that’s a boat he won’t buy next year. Lending people money doesn’t alter their lifetime incomes, meaning consumers may buy fewer boats later, when the loans have to be repaid, causing disposable income to contract."

 

Sometimes the opposite is true.  When a bank loans me money cheaply to buy an apartment building it directly increases my future income.  I get the point about pulling demand forward, and I haven't read the memo yet, but it goes both ways.

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