Thoughts for Entrepreneurs from Economist Roger Arnold

Tonight’s EO event featured the economist and writer Roger Arnold pontificating on the macro economy. It was great. Here are a few of his thoughts, many of which are contrary to mainstream media opinions:

  • ABCs of the world economies:
    As the the U.S. housing market goes, so goes the U.S. economy
    As the U.S. economy goes, so goes the world economy
    What’s good for the U.S. is good for the world
  • Interest rates are going to go down to 2.5-3% for 30 year fixed mortgages in the next 2-3 years
  • Interest rates in 10 years are going to be 10-20% to inflate away some of the U.S. debt
  • China is over heating and will crash this decade
  • China will require half the world’s oil in 10 years at their current 8% compounded annually growth
  • The cost of shipping is put under overhead for many companies resulting is misunderstanding of costs
  • Oil prices in 10 years will be so high that manufacturing jobs will return to the U.S. because it’ll be too expensive to ship things
  • Quantitative easing part two is a good thing as the fed is lowering the yield on T-bills making it less desirable for banks to hold them and thus look for other ways to make money (e.g. loan the money to small businesses)
  • Housing prices still need to come down as 30% of homes are under the value of the mortgage and people will keep walking away from them
  • The current generation of kids watching their parents lose their homes will be more reluctant to purchase homes in 20 years resulting in a larger percentage of the population renting instead of buying
  • A home should not be viewed as an asset but rather a lifestyle choice and liability
  • Current income tax cuts should expire and revert to previous rates but then new tax cuts should be put in place for small business creation and growth that are even more favorable than what we have now
  • Small businesses create the majority of new jobs in the U.S.
  • All the uncertainty and change going on right now creates opportunity for entrepreneurs

As you can see, he covered quite a bit of ground in the hour and I enjoyed hearing him speak.

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