Carl Icahn on Bloomberg Television

Would you stop manufacturing in the country? All this other stuff is nonsense. You know, you have a service economy. So we're going to just tweet to each other? What are we going to text each other? That's all it is, great service economy. Eventually our cars will go to hell and we're going to lose our Germany. I think it's a market, and I've said it before. Hey look, I have hedges on. I'm as voyeur as I ever was. I will tell you, there's certainly good companies, but it's way overvalued at 20 times the S&P. And I'll tell you why: a lot of it is a result of zero interest rates. It's just what I said. You have zero interest and a lot of buybacks. Money is not going into capital. So think of it as a rich family that just has a lot of cash, decides we're just going to have a lot of fun. We're going to sit around the pool and we'll keep printing up money. You're used to the town, we got a good name. You keep doing it until you go broke. And this is what's happening in our economy. Zero interest rates are building huge bubbles. You have retirees that save a million bucks, or four million bucks. It caught me, these friends of mine, and what do I do with my money? I have to buy stocks. I said, what? Why are you buying stocks? I can't live on zero percent. I said, what's better? Zero percent or losing 30 percent? One day you can lose it. But they're doing it. You've got these bubbles built in real estate in New York alone. The real estate market's through the roof. It's coming down now. It's absurd. And therefore I think the market is at very high levels because of zero interest rates. And if you really look at it, you know what? The dollar is pretty strong right now, which is going to hurt international earnings. The S&P, you know, they live on international earnings. That's going to be hurt. It's going to be a day of reckoning here. I've seen it many times in my life. When things look good, they look great, you go into the sky. But that's when you have to really pull down and really stop buying. That says I'm not going to say it's going to happen tomorrow, next week, even next month, even next year possibly. But it's going to happen. And you have to change the direction of our economy. A lot of these companies that are overlevered today and really not making what I consider to be sure earnings, all the money is buying back stock. This is making a false market, or worse than that, it's causing them to have worn-out tools for their workers. It's costing them the ability to go into new things. And therefore they should not be buying back stock. It causes stocks to fall.

Eric, I think I've been talking about this whole interview, but one of the things that's causing it is happening right under your nose. We have no capital spending. What I see is capital spending going way down. In a society like ours, manufacturing is important. I don't care. Sooner or later, you can't just keep tweeting to each other. You can't text each other. That's what we said: we're a service economy. Okay, that's great. Oh, we're a service economy. What does that mean? That we tech support each other? Sooner or later, everybody is going to sit next to each other. There's that wonderful. So why should anybody work? Just sit there and text each other or watch TV. So I am saying to you, this is what is happening as we speak. There's no capital spending. It's down. Obviously capital spending in the last two years, I mean it's just four percent the last quarter, which is unheard of. We get on up a recession. Okay, productivity. Productivity is backgrown. In fact, it's the lowest point it's ever been as far as growth goes. These are very important things in a capitalistic system. And unless you have a dictatorship, but you're going to go the way of Venezuela, Argentina. You're going to be in a major problem. We are a capitalistic system, and you'll have to have companies that invest and have faith in their governments. And over the last eight years, we've become more and more at war with our governments, our companies. And you don't see this really spending now. You can say technology companies are spending, but when is that going to come to fruition? Maybe it's years away. Actually, ironically, it's happened a little sooner than you think because you've got more and more people walking around using iPhones and whatever. But I, and of course you've got globalization to help you somewhat. But I think, I mean, we could go into hours and hours. I think that one of the problems you have is that you were importing cheap goods from China all these years, and that's going to stop. So there's going to be all kinds of problems. We could go into it, and I spend hours and hours thinking about it. You know, I'm a bit of a workaholic and I read about it a lot. But you know, and by the way, I am not the only one who I consider to be real smart guys saying just what I'm saying. I mean, you know, if you read some of these guys, they're pretty damn negative. And so what? I've heard it myself, and I keep saying this. Rulings like this, what it's understood a battle. And a lot of companies, thousands of CEOs, understand the problem. They say one day a regulatory agency, EPA, waves its wand and we're bankrupt or almost bankrupt. They'll lose their fortune. Why the hell should I invest in capital? Why should we buy machinery? Therefore we can't compete. And therefore the middle class does not have manufacturing jobs. And we now say, well, we're not a manufacturer, we're a service company. Now the thing that goes for this country, as you pointed out, is you know we're a reserve currency. But I don't know how long you can depend on that. So I am just saying that sooner or later there's going to be a massive problem.