Jeremy Grantham: belief

Transcript context

…If we look at the UK only, how would you describe the current bubble in the UK? What’s the overvaluation? The UK is not spectacularly overpriced. The odd thing about this event is that the overpricing, rather like 2000, is concentrated in the US in the stock market. Plenty of places around the world are merely in a bull market — ho-hum, ordinary stuff. The real estate world is completely different. We’re way up at the top of the range. As a multiple of family income, we’ve just beaten the so-called housing bubble of ’06, but we’re pikers compared to Canada, Australia, and Europe and China. They all went to multiples of family income that were, by historical standards, preposterous. And housing, of course, is a more dangerous thing to mess with in economics. I believe the housing markets around the world will spend the next big chunk of time unraveling and causing all manner of, perhaps, unexpected problems. Of course, the interest rate bond market overvaluation was universal too. So, we had, of the three bubbles, bonds was everywhere, and real estate almost everywhere, and the stock market curiously confined principally to the US. Why does there seem to be such a major current productivity crisis in the UK? Maybe stretching back 20 years. There’s a lot of science in south England, a lot of talent in the country, a democratic government. What’s the fundamental thing going wrong there?…

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