May 13 (Bloomberg) -- Ken Griffin, founder of hedge fund Citadel LLC, said the U.S. must act “fast” to balance its budget before the country reaches a “point of no return.”
Asset managers are “gravely concerned” that the U.S. may enter a decade of fiscal instability, Griffin said today at the SALT, or SkyBridge Alternatives, conference in Las Vegas.
Griffin, 42, whose Chicago-based firm manages $11 billion, said that the asset-management industry was “frustrated” with the expansion of government under President George W. Bush. By embracing the Democrats in 2008, the industry was betting on a return to the fiscal conservatism and restraint under President Bill Clinton, Griffin said.
“The frustration with the Obama administration is that we have taken the spending levels of the Bush era and multiplied them,” Griffin said.
Spending was needed to revive the economy, said David Axelrod, a former senior adviser to President Barack Obama who was also on the panel.
“We were greeted with the deepest economic and financial crisis since the Great Depression,” Axelrod said. “The last thing that any of us had planned on or would under normal circumstances would have been a $787 billion stimulus program, or a TARP program, or an auto intervention. That was the farthest thing from our minds, but it had to be done in order to stabilize our economy.”
Axelrod said the moves “weren’t politically popular, but the president did them because the country required it, and as a result, things are much different today than they would have been.”
The U.S. needs to rewrite its social contracts, bring budgets into balance, provide a safety net for the elderly and provide children with education, Griffin said.
“We need to do this quickly,” he said. “We’d love to see the President initiate change.”
The hedge-fund industry recognizes that the increase in spending came after the worst financial crisis since the Great Depression, Griffin said. Still, the rhetoric from the government “says you aren’t listening” to concerns that spending is getting out of control, Griffin added, addressing his remarks to Axelrod.
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