Billionaire hedge fund manager Carl Icahn voices his economic concerns and tells why he is against BlackRock and why Trump should be the next President.
Carl Icahn thinks investors are headed over a cliff in a “party bus” driven by BlackRock.
Icahn accused the giant money management firm of pumping air into a bubble in high-yield debt by pushing seemingly safe investments on individual investors that were actually filled with what he claims are risky bonds. Icahn compared what BlackRock is doing today to what the banks did in 2007 when they sold billions of dollars of faulty subprime mortgage bonds.
Hedge fund managers don’t pay enough in taxes: Icahn said he agrees with Trump that Congress should close a tax loophole that allows hedge fund managers and other professional investors to benefit from lower tax rates on earnings. Under the current system, hedge fund managers get paid a portion of profits they earn for clients, which are taxed as capital gains, or around 23.8%. If they were taxed at ordinary income, they would have to pay up to 39.6%.
Interest rates are too low: Icahn said he agrees with critics who have tied the mortgage meltdown of 2008 to the low interest rates that proceeded it. Lending standards have since been tightened, but Icahn said he still fears that historically low interest rates, which now hover close to zero, are creating asset bubbles in other areas, including high-yield bonds.
M&A bubble: Icahn said the rise of junk bonds is contributing to an artificial merger boom. Companies are using the cash they have raised from junk bonds to buy companies they could not otherwise afford, he said. He said the merger boom is contributing to false growth by companies. “It’s like steroids,” he said of the rise in acquisitions.
Corporate taxes are too high: Icahn says he wants Congress figure out a way to incentive companies to bring back the $2.2 trillion in cash they have overseas. It’s an issue some policymakers have argued could be dealt with through a tax holiday. Such a holiday would forgive either all or a portion of $770 billion in taxes that would otherwise be owed and benefit a slew of tech companies, including Apple — one of Icahn’s largest investments. Other economists have called for corporate taxes to be lowered more permanently.
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