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Crispin Odey: "The West Will Become Flooded With Inflation"
Some interesting observations from the transcript of Crispin Odey's Q1 2011 conference call. In a nutshell: inflationary re-exports from the developing world back into the developed is about to make life for chairprinters a living hell.
In our scenario, we do not see interest rates going from 0.5% to 3%. We see interest rates staying very low but when they do actually start to move up through to 6%/7% and even when they get to 7%, basically finding that that is hardly where they are going to stop, they are actually probably on their way higher still. Our question there is obviously if interest rates go from 0% to 7% there are lots of assets which suddenly become speculations and that means that we have to be worried for your portfolio during that period and the whole question is, how can you insulate yourself against that?
...
So what have we been having over the last couple of years and where are we now? Well the answer is on page 13, of course these numbers are in part exaggerated; wage growth in the UK does appear to be picking up a little bit more than I am showing here but the essence of everything is really what is important. What you can see is that whilst we have an uncompetitive first world, the good news is that because the emerging markets are pegged to the US dollar currency, they have not been able to push up interest rates to offset the wage inflation that they have been experiencing and essentially wage inflation of 20% has been pretty well the norm across most emerging markets and average interest rates have been around about 5% in these countries so we are nowhere close to slowing things down.
...
Then the question only is when you get to a position where the West is competitive, we are not going to continue to see wage growth of 1.8% or 1%, because the fact is we are building up this sense in which we are way behind the line in terms of keeping up the cost of living so we anticipate, whether it is 2012 or whether it is 2013, that we will not see a 1% rise, we will see a 8% rise and if we see a 8% rise, 75% of that will come through straight back into inflation. So our forecast is that inflation, far from being 5% at the end of that, it will be at 11%. Which means at that moment interest rates have to rise because that is the moment that the central banks have got that mandate. If interest rates rise from 0% to 7%, you can be sure that at round about 35% to 40% of that rise will make its way again through to inflation.
...
So our cry is that you move into a very different kind of cost cut inflation coming through in which essentially the central bank remains behind the curve even if they are raising interestrates which themselves are much higher, the rises are much steeper and faster than people anticipate but I think that is the shock bit and that is why I hope with all of you, I spend my life worrying about that bit, not really about where we are now but about that and making sure that we have got the right franchises.
...
What you have got to keep on remembering is that actually there is a convergence going on here but there is a benefit to the West from the fact that inflation is taking place, the fact is we do end up with much more competitive western economies, albeit at the same time they will become flooded with inflation.
The chairman disagrees with the premise of this argument.
Full transcript:
Crispin Odey's Transcript Q1-11
h/t Bob
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Great stuff Tyler. Thanks for sharing.
P.S. Suck it up, Charlie.
Yields at 7% will destroy the US financial system and government.
My thoughts exactly. For any 'reversal' in the inflation trend (not even direction) Fed needs to raise 500 BPs . . . like . . . now! When they don't, they create zombie consumers, companies, and governments to such an extent that any change in their free money dosage could have very significant negative effects.
Face it, OUR hyperinflationary society changing threshhold could be as low as 10%. Said another way, interest rates at 7% will cause riots. We are no longer robust (we survived I rates in the high teens 30 years ago for christ's sake!) We are fragile. Very fragile.
This guy isn't saying anything different than any other CNBS network personality. Namely, "Now is a great time to be double leveraged long the stock market. It will go down in the future but I will be smart enough to be out of the market just before it craters, blah, blah, blah..."
Treasuries are the new Toxic Waste...
But at least 2020 will be SUPER!
On a long enough timeline
the inflation rate for
everywhere is transitory.
lol, how about this one:
On a long enough timeline
the inflation rate for all fiat currencies
approaches infinite.
STOLEN! :)
Might even call it the "average inflation rate". When you throw in an infinite, and average will be infinite as well.
On a not very long timeline, all fiat currencies go to a close approximation of zero.
Bond Vigilanties to the rescue ?
Never gonna happen.
USD is 'the' carry trade now, ZIRP will end when the USD = Null
Have been waiting a while now.
I wonder if we are going to have the usual summer pull back in gold.....
In a word? "No"
If anything (IMHO) it will be Q2 earnings reports that could have some price action to the downside in the PMs if we don't hyperinflate before that.
After that, May delivery on the COMEX might make silver/gold both pop right back up to where they are if not much, much higher.
I think you may be forgetting to factor in Japan in the Q2 earnings. Q2 will be the first Q in which all companies that were affected most likely will produce lower earnings. once that info is out, and enough report significant losses that might just be the pin the pops the stock bubble, as we know the stress is getting to be too much on the outer layers of said bubble.
I think the one thing we've learnt from Japan is that when powerful interests have their position threatened, they lie and deny. Frankly, I doubt we will be shown the true impact from the events in Japan.
Look at Japan today - we have the must worse than expected manufacturing data for March and yet the Nikkei was up 1.8% and the futures are up another 0.9%.
The manipulation is so blatant it's almost like they are trying to make gold and silver go up...
Hyperinflation will not take place until AFTER the banks have dumped all of their toxic waste on the people via the government buying it ALL off them for full value.
Then the game truly begins...and ends.
Plan accordingly.
That is what I thought last year and the year before and there always seems to be a pullback. I am waiting.
We're going to have a summer Pull Out in PMs, and give a nice bukakke shower to all topcalling trolls.
"I wonder if we are going to have the usual summer pull back in gold...."
Not unless we have a summer pullback in deficit spending and unpayable debt. I think the Chairsatan will keep us on a path of dollar destruction, which can only put upward pressure on gold, this summer, fall, winter, etc.
chairprinters? That is too kind. He is the Great Chairsatan...
All of you idiots- STOP BLAMING THE CHAIRSATAN for this.
WTF did you all think was going to be the eventual outcome of the trade deficits we've run for FORTY YEARS??
Our currency HAS TO DROP. Trade flows MUST NORMALIZE. There is no way around this; the center CANNOT hold any longer.
We consume but do not produce; the FX consequence of this is a decline in currency's relative value.
If we do what is recommended around here, default, wtf do you think the FRN is going to be worth? Same bagle.
Well.. there are two ways to normalize Trav. You're right, but you're forgetting the 'other' way.
Which is telling senior bond holders that they made bad investments and they're getting nothing. Telling public entitlement recipients that the government is bankrupt (which is true) and they can sue, but they're getting pennies on the dollar. And jacking up rates to 15% like we did the last time inflation got out of hand.
There are two ways out of profligate spending. One, as you said: print money and decrease the value of the currency. Two, roll back obligations and tell senior bond holders (ie: national and international mega-banks) that they made a bad call and they're going to take the fall.
What's your problem, bub? Too much paper in the portfolio? We'll blame the guy who said he would not monetize the debt.
Bond vigilanties don't exist because the economic teachers around the world have been teaching for 50 years the insanity that America is the ``safe heaven`` and always will be.
Bond vigilantes will only exist when those students think for themselves... which won't happen till hell freezes over.
Nothing lasts forever...
The (D) & (R) Free Shit Empire™ is far too overleveraged, far too corrupt, far too rapacious and/or far too brainwashed to ever form another AMERICAN unified culture.
Tribalism is taking the place of Christian morals & ethics (e.g. DC insider tribe alignment with NYC Bankster tribe), and short of a military coups d'etat to retore The Rights of the Individual, the USofA is just waiting for the event horizon to shatter national government and plunge head first into regional civil war.
Followed by...?
The mistake the Founding Fathers made was not envisioning a godless, immoral time when Emergency Powers would be used to suspend Natural Law *permanently* and reduce *We the Sheeple* to wards of the Nanny State.
Once the huddled masses became indoctrinated to the necessity of living with legal fictions (e.g. Emergency Powers, Licenses, Income Taxes, Social Security, etc.) the clock began ticking on the Grand Experiment of Life, Liberty and Justice for all...
This has the ring of truth, sad to say.
Quixotic_Not
a big + 1, most excellent
Whenever the legislators endeavor to take away and destroy the property of the people, or to reduce them to slavery under arbitrary power, they put themselves into a state of war with the people, who are thereupon absolved from any further obedience. ~ John Locke 1690
GREAT quote! Thank you.
Stealing quote for spacebook status. That's a keeper, thanks.
[The] American business community was also very impressed with the propaganda effort. They had a problem at that time. The country was becoming formally more democratic. A lot more people were able to vote and that sort of thing. The country was becoming wealthier and more people could participate and a lot of new immigrants were coming in, and so on.
—Noam ChomskySo what do you do? It's going to be harder to run things as a private club. Therefore, obviously, you have to control what people think. There had been public relation specialists but there was never a public relations industry. There was a guy hired to make Rockefeller's image look prettier and that sort of thing. But this huge public relations industry, which is a U.S. invention and a monstrous industry, came out of the first World War. The leading figures were people in the Creel Commission. In fact, the main one, Edward Bernays, comes right out of the Creel Commission. He has a book that came out right afterwards called Propaganda. The term "propaganda," incidentally, did not have negative connotations in those days. It was during the second World War that the term became taboo because it was connected with Germany, and all those bad things. But in this period, the term propaganda just meant information or something like that. So he wrote a book called Propaganda around 1925, and it starts off by saying he is applying the lessons of the first World War. The propaganda system of the first World War and this commission that he was part of showed, he says, it is possible to "regiment the public mind every bit as much as an army regiments their bodies." These new techniques of regimentation of minds, he said, had to be used by the intelligent minorities in order to make sure that the slobs stay on the right course. We can do it now because we have these new techniques.
This is the main manual of the public relations industry. Bernays is kind of the guru. He was an authentic Roosevelt/Kennedy liberal. He also engineered the public relations effort behind the U.S.-backed coup which overthrew the democratic government of Guatemala.
His major coup, the one that really propelled him into fame in the late 1920s, was getting women to smoke. Women didn't smoke in those days and he ran huge campaigns for Chesterfield. You know all the techniques—models and movie stars with cigarettes coming out of their mouths and that kind of thing. He got enormous praise for that. So he became a leading figure of the industry, and his book was the real manual.
(From Chomsky's "What Makes Mainstream Media
Mainstream": a talk at Z Media Institute, June 1997)
Chomsky is a CIA/Rothschild stooge.
+1 on the John Locke quotes. Is Ron Paul the John Locke candidate?
Even if the Founding Fathers were able to envision such a future, there is nothing they could have done to prevent it. Seriously.
Laws can be changed, Constitutions ignored, Supreme Courts stuffed with dummies, and so on.
"The mistake the Founding Fathers made was not envisioning a godless, immoral time when Emergency Powers would be used to suspend Natural Law *permanently* and reduce *We the Sheeple* to wards of the Nanny State."
They didn't have to imagine it, they were living in it.
Bond vigilanates don't exist because no one is buying U.S. debt. This is called QE to infinity.
www.youtube.com/watch?v=uc88LkfuH7c&feature=channel_video_title @5:14 to end.
it is time grasshopper
Indeed, Master DJ... indeed it is.
Econ teachers around the world are definitely not singing that tune today.
Anyone have any good ideas for a zerohedge meetup? Like a weekend... get together and get wasted/talk about shit/network/build physical community? or is that non-ZH territory?
</idea>
I bet we could get a suite in Langley
Epic.
Dont worry, FEMA is building a venue for us as we speak.
HA! but it is scary :/
No worries our culture has been stolen and stored away so it can be replaced by photoshopped and data altered reality.
http://www.youtube.com/watch?v=2aou6c2MOmg
That would be one fucked up weekend. Beer-econo-palooza-day-of-chair-creature-rage? The black helicopters would certainly be circling.
On second thought, count me in. Who's in the NYC area?
I like the idea, but what would BIG BROTHER think of that? aha, a TERRORIST get-together! The Zerohedgeputsch!
They could be independent/simulcasted. It doesn't have to be 1 location for everyone to go to, in fact, that's probably a really bad idea considering people who don't want to raise the debt ceiling are "a part of al qaeda" now. Anonymity is probably our best friend as a community.
I'm in Texas and think a kind of same-time, different location meetup would be neat...
donde en Tejas, mi 78654
You're about 40 minutes from me, 78745
estoy aqui 75091 (or close enough anyway)
I thought you Austinites kept it weird, what are y'all doing on ZH ?
78738
75001
Austin, USA
78602 :O
so many so close !
78731
For the major metro branch, there is a pub called Pound & Pence in lower manhattan, just across the street from the Federal Reserve... the perfect location for this gathering IMO.
That is a sweet idea. I might even cash in some frequent flyers miles to come.
If only CNBC had a live studio audience.
It would be a great spot. We could toast the William Dudley and the Ben Bernank. On the opposite corner is the JP Morgue and down the street is the Goldman Sachs.
Who wants to get drunk and pee on some investment banks (while excessively using articles and poor sentence structure)!!!
edit: In the interest of full disclosure, the JPM bankers are actually up on Park Avenue. The downtown office could be used as an effigy urinal.
Good idea!
Damn good idea. We could replicate a bankster weekend in the Hamptons after bonuses are handed out.
Beer, smokes, hookers, guns, firetrucks the WORKS!! ;-)
It would be rather interesting to get to see all of the ZH'ers face to face. Though if that were to happen it could only be done via visual chat room, if thats even the correct term.
They have a system somewhat like that at GLP. Dont hate me... I know, take off the foil hat...
how bout a ZH cruise? LOL
.
.
Great idea. Make sure everybody wears a Tyler Durden mask to avoid being noticed.
We can play "Spot the Fed" like they used to at Def Con. :)
Brad Pitt would have a PR nightmare on his hands! DO IT! HAHAHA. Let me know if you guys open up a franchise in the DC area, northern VA.
....and we could wear robes and dance around a bonfire in front of a really big owl statue and....oh wait...that's been done already.
Never mind.
Here's a four-letter word in the Bernanke Dictionary: GOLD
Here's the the real McCoy of expletives in chairsatan's dictionary: SILVER
yO, bERNAnK: Open up and say AHHH ...
That isn't the core of his hatred or the source of his failure.
It's "Dead Ghawar".
Don't take your eyes off the ball, lads.
Reactor 4 radiation level jumped today from 4250 to 6550 Sieverts. (No, not microSieverts or milliSieverts, SIEVERTS.
http://atmc.jp/plant/rad/?n=4
Someone with image posting capabilities please screenshot that and post it for historical purposes.
Greenpeace says Japan restricting its radiation tests
http://www.straitstimes.com/BreakingNews/Asia/Story/STIStory_662323.html
Japan is a death trap and there is propaganda running that if you leave Japan now you're not a real nihonjin (Japanese). The government prefers everyone to suffer, wither and die in situ, than to have the people leave. Of course, if people leave, no one will pay taxes, end of gov, end of days. Money!
ooOOooo, game show network is on.
Who cares, We have a royal wedding this friday!
sarc/
misplaced post
so i minor update bothers you?....especially japan, and now that you mention it, it has slipped my mind
i welcome the additional info, and i can choose to persue now or later, your way ...no choice....the thread was not hijacked....
That has got to be either a false reading or something undeniable is about to break into the news cycle.
What gets me is the fact that reactor 4 was supposedly emptied of all fuel while the reactor shroud was being replaced...but they're saying radiation is at f*you up melt your freaking eyeballs in seconds levels in the suppression pool???
Que fa??? What the heck is generating that kind of reading?
Aftershock activity has dropped off somewhat the past week...but it's about time for another 6+ even so...haven't had one for a few days. They're pumping their butts off ...have just about filled currently available storage for that highly radioactive water and new tanks/storage options are still days to weeks away. And the water level in the tunnels is RISING.
Not long now .... we'll be hearing more I'm certain.
thats just the thing, all the fuel was in the storage pool...not all of it spent
Yes...doubtless...but my confusion comes from wondering how that might have gotten into the suppression pool? If the water pooling in the basement around the torus is so "hot" the sensors in the pool are picking up those kinds of readings....sheeeesh....
Probably some other explanation...I'm guessing of course....but damn that's HOT stuff in there somewhere if those readings are anywhere close to correct.
@uncleFurker;
Just watched a UK Nuclear physicist explain that the "swimming pool" for preventing meltdown of the old fuel rods in reactor 4 was destroyed in the earthquake and there were pics from above showing the broken fuel rods lying on the floor or what's left of it. He pointed out that these fuel rods were Plutonium + Uranium and that both elements had been found as far away as Hawaii / Midway / Guam.
He was at pains to point out that the Russians put a half million workers cleaning up Chernobyl which was ultimately responsible for 1.5 million extra cancer deaths over the next twenty years.
He also pointed out that this fuck-up is much much worse than Chernobyl because the Japanese are trying to hide everything instead of pedal-to-the-metal fix it fast at all costs. Not only that but there are hundreds of tons of spent(???) fuel rods there, all Plutonium (half life = quarter million years) + Uranium and they are melting down towards the water table which will end up producing a massive radioactive steam explosion. As a parting comment he pointed out that the burning / reacting fuel cannot be "encased in concrete" until it has cooled, which will take years.
Japan has, of course, a far higher population density than the area around Chernobyl. Expect millions of additional deaths over many years.
And a nation running a huge trade deficit is going to export it allllllll awayyyyy
What is this guy talking about?
The entire WORLD is flooded with inflation. Capitalism keeps its power from delivering delusions of economic growth while all it is is a population ponzi scam and 99% of people trading in intangibles for money.
We are more "richer" in terms of money and materials, but we have sacrifised non-material wealth such as time, ethics, culture, etc.
Many of the middle class are just now discovering that they are not rich at all.
*BINGO*
The grand plan of the bankster tribe has been to export USofA inflation to developing countries to continue the extraction of wealth - Money for nothin', chicks for free.
Of course, with external sovereign purchases of treasuries not equalling (D) & (R) Free Shit Empire™ spending, the Fed Mafia switched over to holding treasuries until developing countries can be convinced once again to pick up the slack...
No matter what, the bankster tribe gets their vig, even if the money created from thin air implodes due to lack of real buyers.
the advantages of a reserve currency...
EVERY nation has dollar in it's books. And even if the exposure isn't "that big", all the goods they buy is with dollars anyway.
The dollar is so rooted into every system that cutting it out is almost impossible. The cost to do so will be monstrous.
That's what Bill Gates argued when he was taken to court over MS Internet Explorer.
I love how you guys blame "capitalism," having no clue what it is.
Oh, sorry... your Marxist teacher told you what is was... and you believed him.
Ray Charles
I know of a pretty large FEMA camp, over in Taylor I'm sure they wouldn't mind us having a little pow-wow ....
I know a few good bars in Nacogdoches...
What Inflation?
http://dont-tread-on.me/and-now-for-my-next-magic-trick-no-inflation/
I've been saying this for a long time. When the rush for the exit from the dollar begins, each and every dollar we have printed over the last 40+ years will flood back onto our shores to buy up EVERYTHING that isn't nailed down. Left behind will be a nation of beggars without a wheelbarrow to move all their cash around with.
The only way we can avoid that fate is to produce real goods again, on a massive scale. This will allow us to back our dollars with goods, as China has done. That is the only way we can avoid that fate, but it is probably too late.
The move to the new red currency will occur over a weekend.
The effect would be the same long run--the US turns into the third world, but that would make bagholders of the foreigners to a greater extent than US residents.
As has happened with most other "new and improved" currencies, inflation would take off quickly there as well. No-one will have faith in the new one, since so many were shafted by the last one. Velocity will increase rapidly, if the currency is accepted at all due to this effect.
History and practicality are against you.
As in, outside of the US, meaning we won't be able to buy goods.
Make a chart of currencies that have been reissued, show the length of the first regime, the second, the third, etc. You will see a pattern.
Make a chart? See the pattern? Me ain't stoopid.
The current US currency holds the record for longevity over the several prior US currencies.
So 100 thousand years of gold as money do not count in your book?
Back to back fiat currencies, fool.
"I've been saying this for a long time. When the rush for the exit from the dollar begins, each and every dollar we have printed over the last 40+ years will flood back onto our shores to buy up EVERYTHING that isn't nailed down. Left behind will be a nation of beggars without a wheelbarrow to move all their cash around with.
The only way we can avoid that fate is to produce real goods again, on a massive scale. This will allow us to back our dollars with goods, as China has done. That is the only way we can avoid that fate, but it is probably too late."
In other words totally screwed.
I can see inflation in all the things I need everytime I go out and also even if I don't with inflation in heating, electricity, water and other essentials to life.. but the ChairSatan... nope, he is a blind idiot who couldn't see sub-prime and yet they still allow him to preside and feed yet another disaster
Hmmm... seems like a lot of scary #'s being pulled out of thin air...
"If interest rates rise 0% to 7%"... Any speculation as to when that process will start?
Bernank does not care about inflation, as long as the stock markets are up...And before they serve coffe and donuts, better buy some silver.
Currency debasement has no economic benefit whatsoever anyone that says otherwise is:
1. short sided
2. lying
3. don't know shit about economics
or all of the above.
anyway you cut it..the west is in for massive inflation or massive deflation or both..PM's for the inflation..what we use for the deflation depends on the continuation of the FED, they sure look like a target for the pols to fry but if they do the big banks must also go down for they own the fed in fact.
Just bought some toilet paper. Same brand as I bought before. Same price. The roll is 1/2" narrower and the tube in the center is 3/8" larger diameter. Diameter is the same. Soon, a whole roll of it will be too small to wipe Bernake's big fat ass.
Reminds me of a comment by an American reporter, newly returned from the devastated countries of Europe right after WW2.
"It's the kind of place where the money falls apart in your hands and you can't tear the toilet paper".
Once upon a time i spent an afternoon talking with Mr. Odey. He impressed me as a very intelligent, forward-looking fellow.
Could not help but notice someone mentioned a ZH cruise.
The White Star Line would LOVE to host such an event.
Our owner, Mr. J.P. Morgan, though unable to attend, would like to book you all for our transatlantic cruise this spring on the luxury liner RMS Titanic.
I prefer the Lady Anne
http://www.youtube.com/watch?v=1MCZrGsohYc&feature=related
YOU FIRST WORLD!
Why would CBs raise the interest rate when core inflation is "stuck at 1.2%"? At least until all the TBTF find a new AIG to offload their interest rate derivative positions, there won't be any interest rate hike, these scums have learnt from Lehman, so unlimited money printing, Ben is easily replaced, Obama is easily replaced but the TBTF will not fall because of a silly and easily avoided interest rate hike. Impose price controls and screw Walmarts (squids are shorting them by now for sure), crash the oil market by spreading lies of "probable" news of a massive new oil find in Afghanistan, have JPM fund $2b in a new "alternative energy" stat-up in silicon belly valued at 1 gezillion and claiming breakthru using magma to generate energy, pass a new law to drill to the earth's core. Every trick can be used but no hike, they are called TBTF for a reason. There are no more laws in this country, the interest of TBTF prevails; what is good for TBTF is good for AMERIKA! It has become a country of cheating scums ruling over flocks of sheep.