Good News For The Grandchildren?

"Good News for the Grandchildren" was the title of David Einhorn's talk on Wednesday at the Ira Sohn Seminar at New York. I had attended the meeting.

"Do you think you're nervous that we are passing our debt on upcoming generations?" Einhorn began...

"Fine you need not be concerned. Our generation - not our grandchildren's - should handle the consequences."

Einhorn's investment success have made his hedge-fund people rich. He's profited them over 20% for every year compounded, after fees.

Einhorn famously revealed that Allied Capital was defrauding the government. He wrote a fantastic book regarding his 6-year battle with Allied, called Fooling Some of the People All of the Time. Every value investors must look at it. (He first publicly stated Allied was defrauding the government in the 2002 Ira Sohn Seminar.)

Einhorn also "very nearly made it to the final table" in the World Series of Poker main occasion in 2006. He donated his $659,730 in winnings from that event for the Michael J. Fox foundation for Parkinson's Research.

And then in spring of 2008, Einhorn publicly predicted the downfall of the Lehman Brothers.

Hence he's wise, a successful investor, also a very good gentleman. He's worth listening to.

Einhorn thinks that the United States could experience a Greece-type debt circumstances much earlier than anyone thinks (in our generation, not our grandchildren's). He stated civil servant pay for instance for the U.S. crisis in making much like Greece...

Einhorn explained how in 2008, the common U.S. federal civilian wage along with reimbursement was $119,982, in comparison with $59,909 for the non-government worker. Furthermore in case you have government employment, you could remain utilized for 20 years afterward that you can retire, receiving retirement remuneration the remainder of your life (the following forty years). Einhorn questioned the sustainability of these entitlements.

Einhorn was not the only real spokesman at the seminar... His hedge-fund-manager peers exchanged their valuable ideas also. A large amount speakers at the seminar held the same view to David's.

The optimistic take was essentially, "People are adaptive... We'll figure out easy methods to adapt to these time, and become profitable out of them. There's never been a catastrophe that you can't see coming. If you're able to see it coming, then you definitely can adapt."

To invest in this difficult time, David thought to own gold as well as gold stocks... and worry regarding your grandkids afterward.

Like he believed, "When push comes to shove, there is a good chance the Fed will print currency to the point where significant inflation shows up.