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Faber's Bold Prediction: Both The US And Europe Will Default On Their Debt

Tyler Durden's picture




 

Picking up where he left off in his prior Bloomberg interview earlier this week, the author of the "Gloom, Boom and Doom Report" continues his bashing of the governments of all developed and overleveraged nations, which he claims will sooner or later default on their obligations. This could be the most scathing critique of the fiat-money system to date, which is the primary cause for the facility with which governments have accumulated untenable debt loads.

"In the developed world we have huge debt to GDP, in terms of
government debt to GDP and unfunded liabilities that will come due, and these unfunded
liabilities are so huge that eventually these governments will all have
to print money before they default."

Sure enough, CNBC, and especially Dennis Kneale, was not too happy with his assessment.

 

 

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Wed, 02/10/2010 - 18:57 | 225739 DoChenRollingBearing
DoChenRollingBearing's picture

Faber might very well be right.  It would track with history -- when a country's debt / GDP gets too high, one of several things always happens.  One of those things is often a default on the country's internal debt.

Reinhart & Rogoff's book This Time is Different will tell you everything you need to know.

Wed, 02/10/2010 - 20:34 | 225881 MarketTruth
MarketTruth's picture

" It would track with history -- when a country's debt / GDP gets too high, one of several things always happens." "

The other thing they do is that said country goes to war. Hmm... i hear the beating drums of USA vs Iran....

--------------------------

Near the last few seconds of the video he seems to feel that precious metals will do quite well. Ahhh... where is Chumbawumba when you need him?

Wed, 02/10/2010 - 20:43 | 225941 hound dog vigilante
hound dog vigilante's picture

"USA vs Iran..."

 

like Iraq (twice), it's not even a contest. To call this 'war' is giving the "enemy" to much credit. 

This is a modern day religious Crusade, delivered as mercenary/protection services for multinational energy corporations, financed like Enron, and packaged as a 'war on terror'.

Wed, 02/10/2010 - 22:23 | 226085 MarketTruth
MarketTruth's picture

If you are referring to the Petro-Dollar link, you may want to read my post at www.zerohedge.com/article/guest-post-iran-unfazed-congressional-threats-new-energy-sanctions

It appears the USA may do ANYTHING to keep the oil flowing only in dollars.

Mon, 03/01/2010 - 01:31 | 249225 Anonymous
Anonymous's picture

That is only part of the answer. You have the first part right, but we already have half the oil that the Saudis' claim they own, and that is a lie. All the OPEC members are lying about what they have, so they can sell more according to OPEC rules, and it is actually a lot less that they have. We don't use our own oil thanks to our domestic terrorists in power, in D.C. Call or write your congressman right now on the internet, demanding we 'Drill HERE, Drill NOW!'

Thu, 02/11/2010 - 01:58 | 226324 jeff montanye
jeff montanye's picture

if the energy corporations were so hot for iraq/iran why were so many of the early proponents effectively likudniks with little connection to international oil?

Thu, 02/11/2010 - 11:08 | 226605 Anonymous
Anonymous's picture

What in the effin craphole are you talking about?

Thu, 02/11/2010 - 19:05 | 227526 Anonymous
Anonymous's picture

shut up , what religious crusade ? you cant tell who is the offender here. have you heard of the real religious crusade called jihad? wake up you obnoxious moron

Wed, 02/10/2010 - 23:01 | 226120 Anonymous
Anonymous's picture

Faber Bitches!

I am not Chumabwumba.

Thu, 02/11/2010 - 14:02 | 226961 AnonymousMonetarist
AnonymousMonetarist's picture

If memory serves, Faber, in his most recent newsletter, shows a chart adding up all of America's liabilities and pegs the debt at about 600% of GDP.

 

Thu, 02/11/2010 - 14:02 | 226962 AnonymousMonetarist
AnonymousMonetarist's picture

If memory serves, Faber, in his most recent newsletter, shows a chart adding up all of America's liabilities and pegs the debt at about 600% of GDP.

 

Fri, 02/12/2010 - 16:00 | 228961 Anonymous
Anonymous's picture

All this crisis originated from the fixed Chinese currency. By keeping the Yuan at fixed rate, imported inflation on Chinese goods stay out, and instead of raising interest rate, the Fed wait for an inflation that never materialized. It stay cristalized in the Yuan. So the Fed keep rate low, and bring to life the cheap mortgage bubble. Faber is right on paper. But what he didn't think is that capital will raise its relative value to debt. So the market will adjust by reducing the price they want to pay for debt. Debt will depreciate relatively to earning producing investment. And then the lastic will go back in their face: who own the most of the worldwide new debt? China!

The Machine

Mon, 02/15/2010 - 05:38 | 231235 Anonymous
Anonymous's picture

You hit the nail on the head. Do you also realize that's why we're deliberately trying to debase the dollar? Yeah, I know what the FED is saying. Does anyone really think they are telling us what we need to know? Or is it just trying to keep the game running? Reality is that noone apparently wants to really stop China and this way is hurting them really bad. Problem is that they are tough about it, since they are and have been a totalitarian govt.

MARC

Wed, 02/10/2010 - 19:01 | 225742 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

"All governments"...hahaha!  Blow to the state!  He will be right, he always is...just watch.

Love the way he renders Dennis "on his knees" Kneale's comments utterly worthless.  Faber makes money and looks good doing it too, biotch!

Buy Silver tonight if you know whats good for you.

Wed, 02/10/2010 - 19:10 | 225760 Let them all fail
Let them all fail's picture

God that dude is such a tool - Him and that older guy in the mornings should just have a three-way with Bernanke and get it over with

Wed, 02/10/2010 - 19:41 | 225805 cougar_w
cougar_w's picture

No! You Visigoth! Now I will NEVER get that mental image out of my head!

Hope you are satisfied.

cougar

Wed, 02/10/2010 - 23:17 | 226139 knukles
knukles's picture

"All" is a mighty strong statement, pilgrims.  Somewhere, somebodies will be buying something of a medium of exchange, a store of value.  And not all shall likely be physical, hard assets.  Like the last one to which folks flock, a la Switzerland in the post war era.  A "Somewhere" will survive.  If the broad "all" comes to fruition, these comments are immaterial evidence of eggregious false pride, self-will and egomaniacial delusion run riot.  Mere amusement whilst Rome burns.

Thu, 02/11/2010 - 03:25 | 226363 TheGoodDoctor
TheGoodDoctor's picture

I thought Sue used to be hot? I thought it funny when Faber said, "All governments" they all freaked out. They mildly freaked out when he was talking about bonds and then precious metals too.

It's almost like it was, "Who the fuck booked Faber?"

Fri, 02/12/2010 - 23:33 | 229472 Anonymous
Anonymous's picture

do you remember a painting titled..."Pride before the Fall". Recall the meaning of that and then read the posts...the world has a very different view of the States as it blows it's own horn in the dust of Iraq, Afganistan and now maybe Iraq? How much does this self puffery cost in real dollars and reputation. C'mon guys (and gals) the US used to be the shining light in a darker world...get it back there!

Wed, 02/10/2010 - 19:01 | 225743 Shiznit Diggity
Shiznit Diggity's picture

Why explicitly default when you can just inflate your debt burden down to size? 

Wed, 02/10/2010 - 19:42 | 225807 cougar_w
cougar_w's picture

Currency manipulations can lead to hurt feelings.

Wed, 02/10/2010 - 20:37 | 225928 35Pete
35Pete's picture

And latent emotional resentfulness that could later manifest itself in insurrection, civil war, and political revolution.

Wed, 02/10/2010 - 20:56 | 225966 cougar_w
cougar_w's picture

It all ends in tears, I just know it.

Wed, 02/10/2010 - 21:19 | 226002 faustian bargain
faustian bargain's picture

Thursday afternoon, a very special episode of Hallmark Theater: "Not Without My Currency!"

Brought to you by iPad.

Thu, 02/11/2010 - 03:28 | 226368 TheGoodDoctor
TheGoodDoctor's picture

LOL. Good one FB.

Wed, 02/10/2010 - 22:42 | 226103 Anonymous
Anonymous's picture

Inflate is the plan. I hear Ben has asked that several thousand helicopters be made ready for money drops. But should the current World War III expand into WW IV, defaulting on debt held by your enemy would be a no brainer. One should be prepared to live without cheap crap made in China.

Thu, 02/11/2010 - 00:47 | 226258 Anonymous
Anonymous's picture

Ditto,
And Hank Paulson spent alot of time dealing with the Chinense banks while at Goldman and as Treasary. At Goldman he made over 60 trips to China.

Out of the ashes will come the one world currency.

Patrick

Tue, 02/16/2010 - 10:57 | 232360 DosZap
DosZap's picture

"Out of the ashes will come the one world currency."

Did you you catch the Greece edict?.NO  One can pay  cash  for any purchases over 1500 EU, they want the Tax  revenues............and are making damn sure they get em'.

Look  for this coming to the US shortly.

Wed, 02/10/2010 - 23:11 | 226133 JOHNICON
JOHNICON's picture

I don't think it's that simple unless the US federal government starts printing it's own money like in the olden days.  Right now, in order to monetize our debts, we'd have to print up Treasurys and sell them to the Federal Reserve.  The result of that process is that we would still have outstanding Treasurys (held by the Fed) that have to be paid off eventually.  If we do that enough the only buyers of new Treasurys would be the Fed (who else would want them?) and then...?  I don't think anyone wants to see the other side of that particular event horizon...  :(

Thu, 02/11/2010 - 01:11 | 226286 Anonymous
Anonymous's picture

wrong, and like most americans including many college economics professors, you still wrongly believe that the Fed can only print money via the Treasury's route.

As we speak, the Fed is invoking the Monetary Control Act of 1980 which explicitly allowed the Fed to buy any assets it deems fit, including foreign debt. It is bypassing Congress' debt ceiling on Treasuries issuance. The MBS, GSE toxic wastes were all bought via money printed directly. The MCA of 1980 was incidentally passed under Volcker. Irony that Volcker said last year in Congress hearing that Heli Ben was pushing the envelope of The Fed Reserve Act by buying directly assets by money printing. Ben was only invoking Volcker's MCA of 1980. A quid pro quo for Obama's re-appointment is certainly the requirement for Hei Ben to support the government's requests for direct monetisation in the event the GOP stalls his next "budget(s)".

Thu, 02/11/2010 - 12:41 | 226785 Anonymous
Anonymous's picture

I find that fact very interesting (i.e. the purchase of assets under the MCA of 1980). Can you, a) explain this in depth and educate those of us not familiar, and b) where do you see these purchases ? What source data? Also, monetary policy and workings is not my expertise, so please be gentle and assume additional background needed !!

Sun, 02/14/2010 - 10:33 | 230562 Anonymous
Anonymous's picture

The big scheme now is for our government to tap into those trillions of US citizen's dollars sitting there like ripe apples in retirement accounts. Yeah, they will pay you back just like they have paid back the money they robbed from the Social Security system... when hell freezes over... I think the hedge here is to physically hold some gold & silver and anything else you can barter. When the bottom falls out of this mess, you'll need it. I consigned to the mantra "Better to have it and not need it than to need it and not have it". Folks, the banksters have sold us out. The world's ultra wealthy (all 10 of the Soros' type) are pulling all of the strings and it ain't in our favor.

Wed, 02/10/2010 - 19:01 | 225744 Tommy
Tommy's picture

Saying US will default is just as preposterous as those who said the Investment banks were doomed in 2008.

Wed, 02/10/2010 - 19:26 | 225781 VegasBD
VegasBD's picture

You contradicted your own point? Oh are you counting all those new BHCs as IBs still?

Wed, 02/10/2010 - 22:18 | 226078 Cognitive Dissonance
Cognitive Dissonance's picture

Once again CNBC can't count on Faber to stay on message. The poor guy strayed off script and almost had is head handed to him by the news repeaters/readers.

"I'm not interested in any government or sovereign debt because I think that all governments will default, including the US."  

Suddenly everyone acted like they'd just been told they're the ugliest people on TV. They seemed to take what Faber said personally. Now they can't get this loose cannon off the air fast enough.

It's just so obvious that there's an agenda that to say otherwise requires large doses of drugs. When someone says the emperor has no clothes, he or she gets the bum's rush exit stage left.

Tue, 02/16/2010 - 11:06 | 232375 DosZap
DosZap's picture

Oh they won't default, they will inflate their way out of it...........

And rest assured, they ARE coming for your 401k's, and IRA's.

Already rules are in place, to not allow you access to your own freaking (out of pay), unless you  quit, or retire.

You MAY( love that wording, ) take a loan,if  for a divorce,or health  issues arise, or education expenses are needed.

But, the bottom line, YOU cannot remove YOUR contributions.

Skanks......................

Wed, 02/10/2010 - 19:02 | 225746 Leo Kolivakis
Leo Kolivakis's picture

Faber is bad for your financial health. The game is rigged folks, keep buying them dips, and let Faber, Prechter and the rest of them growl as the market keeps grinding higher.

Wed, 02/10/2010 - 19:06 | 225753 boiow
boiow's picture

seriously, do you work for the CIA

Wed, 02/10/2010 - 20:01 | 225845 35Pete
35Pete's picture

+50

Christians in Action. 

Wed, 02/10/2010 - 22:52 | 226114 Anonymous
Anonymous's picture

The original joke about the meaning of CIA was Central Investment Agency because William Donovan used so many people from the east coast financial establishment. Quite relevant in light of recent events.

Wed, 02/10/2010 - 19:10 | 225759 Shameful
Shameful's picture

Hope your right Leo. So what do you figure is the carry limit of debt in the US and when do you expect us to hit it?

Wed, 02/10/2010 - 19:23 | 225782 Leo Kolivakis
Leo Kolivakis's picture

Back in the late 90s, I was working as a fixed income analyst at the Bank Credit Analyst (BCA Research). I remember helping the Managing Editor on a research piece asking whether the US current account deficit was sustainable. It was a hot topic back then. Not only was it sustainable, it got much, much worse. So forgive me if I am not in Faber's gloom & doom camp.

Wed, 02/10/2010 - 19:34 | 225797 SilverIsKing
SilverIsKing's picture

It's sustainable...until it's not.  This is a math equation and a very simple one at that.

There's no way out of this without defaulting or inflating unless of course our creditors just wanna be good guys and let us off the hook.

Maybe we give away a few states in exchange for eliminating some of the debt.

Wed, 02/10/2010 - 19:48 | 225821 cougar_w
cougar_w's picture

My god, it's not even math anymore.

Now it's down to religion. You gotta believe.

The problem with running things from belief is that one blasphemy too many and the illusion evaporates like so much morning mist. Look out when that happens, things can come unhinged.

cougar

Wed, 02/10/2010 - 19:56 | 225833 Shameful
Shameful's picture

I have been saying that the US economy and dollar was the worlds largest religion since high school. "Everyone in the world believes in it, and everyone in the world has to believe in it or it won't work. From the Queen of England to poor kids in Africa, we all have to believe." Even then I knew that the trade deficits and no manufacturing was a problem. But religious beliefs can hold long after they have been proven wrong and comically false.

Wed, 02/10/2010 - 20:28 | 225906 Hephasteus
Hephasteus's picture

People will get disillusioned and some will get tired of it and go back to the illusion but many will NOT. I won't. You don't ascend. You don't graduate. You don't advance. You simply become to hard to teach bullshit too.

Thu, 02/11/2010 - 02:23 | 226335 Double down
Double down's picture

That quote is my new e-mail signature

Thanx

Thu, 02/11/2010 - 03:35 | 226374 TheGoodDoctor
TheGoodDoctor's picture

I call it thinking for yourself. Unfortunately, part of this is your own personal BS-O-Meter. Some people don't have them and some people can't think for themselves. Which is scary.

Wed, 02/10/2010 - 20:29 | 225908 carbonmutant
carbonmutant's picture

Interesting analogy...

Wed, 02/10/2010 - 23:33 | 226153 DaveyJones
DaveyJones's picture

Very nice. Just like Christianity, except we're all being crucified

Wed, 02/10/2010 - 20:02 | 225850 35Pete
35Pete's picture

California, Illinois, New York, New Jersey, and Massachusetts. 

Wed, 02/10/2010 - 20:29 | 225912 Anonymous
Anonymous's picture

You almost spelled out Cinnamon, could we add Oregon and (some state that starts with 'N'? Then we could compete with PIIGS.

Wed, 02/10/2010 - 23:09 | 226132 Anonymous
Anonymous's picture

New york, Illinois, New jersey, CaliforniA, and Massachusetts, Pennsylvania, OhiO, Purto rico = NINCaMPOOPs

...unexpectedly (drunk)...

Fri, 02/12/2010 - 23:15 | 229455 35Pete
35Pete's picture

If the Texans don't stop sending complete fuck ups to the white house then I'm tempted to toss them into the mix too. 

LBJ, George Herbert Walker Lucifer Bush, Satan George II. 

Who's next, Rick Perry? 

Tue, 02/16/2010 - 11:11 | 232385 DosZap
DosZap's picture

The Texans?....................

If memory serves, the rest of the country had a "Small" say in that.

Also, give me, any of them, compared to the fascist we have now.

As bad as they were..............Never seen anything like the Kenyan Keynesian.

Thu, 02/11/2010 - 00:16 | 226213 Anonymous
Anonymous's picture

Give California to them :-)

Wed, 02/10/2010 - 19:43 | 225810 Shameful
Shameful's picture

I appreciate the response but you did not answer my question. The article you reference says that of course we will need to eventually change, no doubt. I was looking for a time-line or a debt/trade amount that you think is unsustainable for us poor slobs in the states. Or can we safely ignore the deficits of both gov spending and trade deficits indefinitely? Thanks.

Wed, 02/10/2010 - 20:31 | 225914 Anonymous
Anonymous's picture

And look where that has gotten us.

Wed, 02/10/2010 - 20:44 | 225943 Hephasteus
Hephasteus's picture

My only regret is that I have but ONE junk to give to this post.

Thu, 02/11/2010 - 03:35 | 226373 faustian bargain
faustian bargain's picture

leveraged it

Thu, 02/11/2010 - 06:39 | 226415 Nout Wellink
Nout Wellink's picture

It's the typical 'this time it is different' approach. Sounds to me like 'housing prices cannot go down' (thank you, quants), 'we cannot lose more than 35 million a day' (yeah, right LTCM), 'interest rates will not go up' (woops, they did in the 1990's) and so forth. Learning from the past seems to be the most difficult for financials, so I have absolutely no hope they will do better this time.

Thu, 02/11/2010 - 08:31 | 226447 Crime of the Century
Crime of the Century's picture

Somebody is too obtuse to grok Fekete's Marginal Productivity of Debt. We are at the point now where all forces lead to downside pressure. The only sustaining factor is the very large smokescreen thrown up by the PPT/Renton gang.

http://www.financialsense.com/editorials/fekete/2009/0330.html

Wed, 02/10/2010 - 19:49 | 225826 Gilgamesh
Gilgamesh's picture

Ok Leo, you have just solidified yourself as the biggest fucking tool on this site (regardless of your profession or personal experience).  "Faber is bad for your financial health"???

Nov 21 '08:

http://www.youtube.com/watch?v=UDsaUD5KPdE

http://www.youtube.com/watch?v=QLeHPOVJsxc

Mar 6 '09:

http://www.youtube.com/watch?v=1BgnSPnO-I8

Mar 9 '09:

http://www.youtube.com/watch?v=Bcs2BSqCAQM

 

Shall I (or he) go on, lest you call cherry-picking?

Wed, 02/10/2010 - 20:57 | 225967 Leo Kolivakis
Leo Kolivakis's picture

LOL, you guys that are in love with Faber and Prechter make me laugh. It's like a cult following. To be honest, I own and thoroughly enjoyed reading Faber's book, Tomorrow's Gold. Even though I did not agree with everything in there, I do think propsects in Asia are immense. That's why I am long Chinese solar stocks - tomorrow's true gold.:)

Thu, 02/11/2010 - 03:41 | 226379 TheGoodDoctor
TheGoodDoctor's picture

I'm not sold on Prechter, I'm still trying to figure out the Elliott Wave Theory.

Edit: I did find it hilarious that CNBS was saying it was him that caused the market drop a couple of weeks ago. Funny stuff.

Thu, 02/11/2010 - 08:36 | 226452 Crime of the Century
Crime of the Century's picture

Why do you keep linking Faber w/ Prechter? It's asinine and annoying.

Thu, 02/11/2010 - 22:57 | 227913 Gilgamesh
Gilgamesh's picture

Yes, that is weird.  Case in point, Faber on BBG yesterday, and the first "viewer" comment said he is no different than Prechter...  Immediate disqualifier.

~19:45 here: http://www.youtube.com/watch?v=vTs3MJUPDDU

Wed, 02/10/2010 - 20:20 | 225882 MarketTruth
MarketTruth's picture

(Leo Kolivakis) -- Jim Cramer, is that you?

Wed, 02/10/2010 - 20:26 | 225895 Astute Investor
Astute Investor's picture

Faber is bad for your financial health.

 

Let's not let the facts get in your way...

http://online.barrons.com/article/SB126363054005030393.html

Wed, 02/10/2010 - 21:00 | 225969 Leo Kolivakis
Leo Kolivakis's picture

Yippee, 2009, BETA ON STEROIDS! Give me a break! Let's see how the pontificators do in 2010.

Wed, 02/10/2010 - 21:17 | 225998 Astute Investor
Astute Investor's picture

Beta On Steroids?  I thought that was reserved for solar stocks..LOL!

Faber's ideas generated strong returns in 2008 as well.  Do I need to go back to 2007, 2006, etc.?

http://online.barrons.com/article/SB123156273219070849.html?mod=article-...

 

Facts are simple and facts are straight
Facts are lazy and facts are late
Facts all come with points of view
Facts don't do what I want them to...

 

Wed, 02/10/2010 - 21:36 | 226022 Leo Kolivakis
Leo Kolivakis's picture

Is this a joke? The guy goes short in 2008 and long in 2009. It's ALL BETA stupid! I am going to be impressed with the Fabers of this world when I see how he does in the next five years. Also, if he is that good, why isn't he running money???

Wed, 02/10/2010 - 21:42 | 226030 Gilgamesh
Gilgamesh's picture

Are you fucking serious?  At this point, I have to think that the joke is you.  And not funny, unfortunately.

Wed, 02/10/2010 - 22:02 | 226055 Astute Investor
Astute Investor's picture

It's ALL BETA stupid!

Sorry, but Faber had both long and short ideas in both 2008 and 2009 so it wasn't just directional bets.  Have you even reviewed his specific ideas or investment calls?  I know it's time consuming, but it helps to review the data before making conclusions and not the other way around.

Despite your BETA comment, I'm guessing you (like so many) confuse alpha with beta when it comes to your man-crush on Chinese solar stocks.

Stick to you knitting (pensions?)....

Wed, 02/10/2010 - 23:17 | 226135 Leo Kolivakis
Leo Kolivakis's picture

If Faber is that good, why isn't he running money like Ray Dalio over at Bridgewater? Please answer me that question. If anyone is that good, they should be running money. Also, what are his long/short calls for 2010? Anyone know?

Thu, 02/11/2010 - 02:12 | 226331 jeff montanye
jeff montanye's picture

from the tv clip it sounded short tsy long gold.  still all beta.  why is that a criticism if you are dealing with multiple asset classes, short and long?  

Thu, 02/11/2010 - 12:17 | 226748 Astute Investor
Astute Investor's picture

Maybe you should get a Barron's subscription?

http://online.barrons.com/article/SB126402638407932269.html

Thu, 02/11/2010 - 20:10 | 227654 Anonymous
Anonymous's picture

He does manage money.

Wed, 02/10/2010 - 20:24 | 225898 Rusty Shorts
Wed, 02/10/2010 - 22:27 | 226088 Frank Owen
Frank Owen's picture

Swiss Family Robinson.... great. I would prefer Blue Lagoon but don`t have the money to buy an island or a Brook Shields...

Uh, Is anyone out there working on plan B?

 

Wed, 02/10/2010 - 22:50 | 226112 Rusty Shorts
Rusty Shorts's picture

Definitely working on plan B, have been for a couple of years now.

Wed, 02/10/2010 - 23:33 | 226155 Frank Owen
Frank Owen's picture

Not a personal plan B. I meant a plan B for humanity... though maybe destroying plan A is plan B. Been thinking of the Georgia guide stones lately.

Thu, 02/11/2010 - 00:09 | 226205 Rusty Shorts
Rusty Shorts's picture

Plan B for humanity? No, just family. Not interested in destroying anything.

Thu, 02/11/2010 - 11:19 | 226621 Hephasteus
Hephasteus's picture

Plan A is always give us more money, more power, more control.

Plan B is what they do when we fight them.

Thu, 02/11/2010 - 12:34 | 226777 Frank Owen
Frank Owen's picture

funny, but since we all know money is debt, it's more like less money, less power, less control. In the short term the illusion seems fine, but it's like a mansion with a termite ridden wooden foundation.

Wed, 02/10/2010 - 23:59 | 226178 perchprism
perchprism's picture

Uh, Is anyone out there working on plan B?

You mean, what do I do if I don't win the lottery?  Rob a bank, of course.

Thu, 02/11/2010 - 10:18 | 226543 Anonymous
Anonymous's picture

In Bailout Nation, bank robs YOU.

Wed, 02/10/2010 - 20:40 | 225935 Thoreau
Thoreau's picture

Think Zimbabwe. 3rd world country, but similar market structure. They printed their market to the moon; see where it got them? Markets no more reflect economic reality than the lifestyles of the corrupt cabal that punch in the numbers.

Wed, 02/10/2010 - 23:11 | 226134 Burnbright
Burnbright's picture

If you even bothered listening to Faber's statement you would realize how asinine your comment is.

Faber said "I am actually rather bullish on stocks as countries inflate their currencies". Or something like that. He knows the game is rigged, but you should head his words when he says a correction is comming in the short run.

 

Wed, 02/10/2010 - 23:33 | 226154 Oracle of Kypseli
Oracle of Kypseli's picture

Leo,

If the market is rigged, how do you know when the riggers will reverse it or loose control? You can get wiped out.

Why not keep your cash until sanity returns? It's been very soothing not to have to worry market up or down since I got out.

Enjoying the newly found tranquility. No need for profits. Just save save save.

 

  

Wed, 02/10/2010 - 19:09 | 225748 monmick
monmick's picture

Whoa, whoa, what?, hold on there, ALL governments? ...

Thu, 02/11/2010 - 08:41 | 226455 Crime of the Century
Crime of the Century's picture

Noo - he mentioned Singapore as an example of a Gummint that isn't overleveraged. If I remember correctly, a certain riverboat gambler named Jim Rogers agreed - with his feet (and family).

Wed, 02/10/2010 - 19:05 | 225750 putbuyer
putbuyer's picture

Was that deuce bag beaker? fantastic! made my day laughing at that clown.

Wed, 02/10/2010 - 19:58 | 225834 Anonymous
Anonymous's picture

"Deuce Bag??" Not unless you are in Vegas, and keeping it close to the vest.

IT'S DOUCHE---- Learn how to spell it!

Sweet baybeeeeee Jesus.

Wed, 02/10/2010 - 20:52 | 225955 Anonymous
Anonymous's picture

possibly he meant "bag full of shit"

Wed, 02/10/2010 - 20:46 | 225949 John McCloy
John McCloy's picture

+1

I actually have to stifle some vomit when I watch Kneale, Liesman & Kernan blindly defend the markets almost to the point where they wear their corruption on their sleeves. Either it is corruption or stupidity. You would also think the constant hate mail they receive along with the continuing off a cliff CNBC rating would be a message to them. They simply do not care because CNBC accepts bribes in the form of advertising from these large banks. Do you honestly think Merrill would be running all those ads on a network that is permitted to bad mouth stocks? Legal bribes is all it is.

Kneale & Liesman are both dreaming of corner offices and monthly lunches with Blankfein & Dimon once CNBC fires them. Keep dreaming boys.

As much as you would like to believe yourselves Satan for accepting money and misleading the public at the end of the day they are just the guys who run out to get Satan a pack of cigarettes.

Wed, 02/10/2010 - 22:56 | 226117 Ned Zeppelin
Ned Zeppelin's picture

Putting it in the best possible light, they do it to keep the mortgage paid and the tuitions current, No other reason.  I know people who worked on nuclear weapons who had identical reasons, and a dislike for what they had to do.  They're not much different from the maid or the garbage man, actually, just on TV.  If they won't do it, they'll find someone who will. It's not like they are purists or idealogues.

Wed, 02/10/2010 - 23:39 | 226157 Tethys
Tethys's picture

I used to get epically pissed listening to what I perceived as propaganda on the 'news' stations.  But if you think about it (and approach it without emotion), there is a lot to be learned - they provide a clear picture (like Bernanke) of what the government wants the 'people' to believe.

Now when I observe the 'news', I do it like I'm watching a magician - once you identify the nature of the misdirection it helps you focus on what the other hand is doing..

http://www.youtube.com/watch?v=_qQX-jayixQ&feature=player_embedded

Thu, 02/11/2010 - 00:30 | 226231 i.knoknot
i.knoknot's picture

simply +10

Wed, 02/10/2010 - 19:09 | 225758 Shameful
Shameful's picture

How is this bold?!? Don't get me wrong I love Marc Faber but this is hardly a bold statement. Math says the game is over eventually, there is no poetical will to even tame the growth of deficits and the unfunded liabilities hang over us the like the Sword of Damocles. This is like saying "Shameful makes bold prediction! Claims that water is wet!"

The only real question is will they do an honest open default or just print piles of new money to pay for it.

Wed, 02/10/2010 - 19:16 | 225766 drwells
drwells's picture

I'd say it qualifies as bold given how many legions of dumbasses are still betting the other way.

Wed, 02/10/2010 - 19:22 | 225776 Let them all fail
Let them all fail's picture

Just don't tell CNBC that, we exist now and therefore will exist forever....duh - When I watch this I feel like the stock market is CNBC's little newborn and bearish people are calling it ugly, they just seem so offended that our economy might have issues, are these people that stupid or just sell-outs?

Wed, 02/10/2010 - 19:22 | 225778 Dirtt
Dirtt's picture

When people are saying "credit crisis" like it's "beat earnings."

 

Well folks.  Ex-items can only keep the balloon afloat.

Wed, 02/10/2010 - 20:19 | 225885 lostmywages (not verified)
lostmywages's picture

but the crisis will get worse .. hat tip to: http://www.iamned.com

Wed, 02/10/2010 - 20:27 | 225894 lawrence1
lawrence1's picture

Will do both, printing now, actual defaults later.

It´s an longstanding US tradition .... Let me count the ways ...Roosevelt devalued the dollar and defaulted on US Treasures that were to be redeemed in gold.  AND NIXON, WORSE OF ALL, DEFAULTED BY NOT HONORING PROMISES TO BACK THE DOLLAR WITH GOLD.  And the previous and coming changes in social security and pension matters are basically defaults, e.g., eliminating the cost of living increase.

  And, here´s the legal precedent....In 1935 the US Supreme Court upheld 5 to 4 the US governments rights to break it own contracts when the supremes were presented with the gold bond default.

 

 

 

 

 

 

Wed, 02/10/2010 - 22:17 | 226077 Anonymous
Anonymous's picture

+10

Thu, 02/11/2010 - 03:24 | 226362 Gold...Bitches
Gold...Bitches's picture

Its not as if the SCOTUS doesnt almost always decide in favor of the govt on the big stuff, especially during times of crisis, or claimed crisis.

Wed, 02/10/2010 - 23:14 | 226137 Anonymous
Anonymous's picture

"The only real question is will they do an honest open default or just print piles of new money to pay for it."

Yes. Yes.

...unexpectedly...

Wed, 02/10/2010 - 19:14 | 225762 Rainman
Rainman's picture

But...but....Timmy said no way Amerika will lose it's AAA.

This guy's got a lot of nerve pissing on all them green shoots.

Wed, 02/10/2010 - 19:24 | 225783 DaveyJones
DaveyJones's picture

Debt is just like taxes Timmy, eventually, you must pay up

Wed, 02/10/2010 - 19:17 | 225767 putbuyer
putbuyer's picture

Michael Ledeen has the story about the Iranian "Punch". Looks like a regime vs people clash. All cell and internet service has been shut down in Iran. Michael Ledeen will be live on mark Levin in a few minutes.

http://www.925foxnews.com/listen_live.php

Wed, 02/10/2010 - 20:12 | 225865 Andrei Vyshinsky
Andrei Vyshinsky's picture

You pose this Nazi as a serious news source? Fox News exists for one purpose: To act as a bull-horn for war propaganda and the dissemination both of Israeli foreign policy interests and the most noxious Muslim hating out there. They and ReichsChurch brownshirts like John Hagee and Richard Land ought to be required to register as agents of a foreign power. Haven't these Nazis and their allies in the munitions and financial lobbies done enough to fill our veteran's hospitals with walking dead? One day the people will detain, interrogate and publically try scum like Ledeen. That day can't possibly get here soon enough.

Wed, 02/10/2010 - 20:21 | 225886 putbuyer
putbuyer's picture

You call a Jew a Nazi. There you go. You make no sense. Love Barry all you want. We will defeat you, but don't worry - we will share our bread with you brother.

 

http://article.nationalreview.com/408368/the-metamorphosis/david-kahane

Wed, 02/10/2010 - 21:17 | 225997 Andrei Vyshinsky
Andrei Vyshinsky's picture

When a Jew acts like a Nazi I'll call him a Nazi, capische? That's the sense and the bread I have to share with you, ace. And what a colossal schmendrik you are to have characterized me as sympathetic to Obama. I've been posting here for several months and not once have I expressed anything but contempt for the man. So you know, its the self-same contempt I bear toward that poor man's Der Sturmer you read, National Review. Hold your next Reichstag fire in some other country, Hermann.

Thu, 02/11/2010 - 02:27 | 226337 jeff montanye
jeff montanye's picture

if i may, the jew (really more like likudnik) as nazi is a simile of which further exegesis is profitable:  substitute the arabs of 1948-current for the european jews of 1932-45 and the similarities are ironically telling.

Thu, 02/11/2010 - 03:57 | 226389 Andrei Vyshinsky
Andrei Vyshinsky's picture

What is so sad is how much the experience with National Socialism has served as a model for present day Israeli behavior. It is almost as though they were so profoundly effected by it that they have come to emulate their persecutors. We have a ghetto in Gaza treated in 2009 to a 1943 Warsaw ghetto-like incineration and de jure ethnic cleansing on the West Bank compliments of Oberstgruppenfuehrer Avidor Lieberman. Such things are a disgrace to Jewish history.

Wed, 02/10/2010 - 19:18 | 225769 Dirtt
Dirtt's picture

Pissing on green shoots just gives fertilizer to retarded growth.

Wed, 02/10/2010 - 19:20 | 225772 InflationBomb
InflationBomb's picture

What do you mean Leo?  Faber said to buy stock last March and he even says int he interview that going forward stocks may be a good bet as we destroy the currency.

 

Wed, 02/10/2010 - 19:28 | 225791 Leo Kolivakis
Leo Kolivakis's picture

Ok, so the US will default on their debt, let the greenback slide to oblivion, but stocks are a buy going forward?!? Hmmm, I must watch that video tonight and pay close attention to Mr. Faber's pontifications. Think I will make some popcorn to have as I watch it.

Wed, 02/10/2010 - 19:55 | 225831 Orly
Orly's picture

In that way, he must be calling for the hyperinflation of the currency, in which case, one would certainly want to be long in anything that can inflate.  Stocks are the simplest and most accessibe way to do that.

Wed, 02/10/2010 - 20:05 | 225855 InflationBomb
InflationBomb's picture

Why is that so hard to believe Leo?  If I have one dollar today that will be worth 90 cents next week, 80 cents the week after that and 60 cents a month later etc. etc. I can either A) use those dollars to wipe my ass or B) look for something that may have some value going forward ie: stocks in real companies, pm's or real estate.  Seems like econ. 101. (see Zimbabwe and their booming stock market)

I guess you believe that we will be able to grow our way out of the 100 trillion plus dollar hole we are in? 

Wed, 02/10/2010 - 21:19 | 225973 Leo Kolivakis
Leo Kolivakis's picture

US recovery will continue, greenback will strengthen, stocks will grind higher, gold will dwindle, oil will surge, and renewable energy is the likely next bubble. I do not understand how he can still call for the dollar to continue sliding, debt default AND stocks to continue to grind higher. Something is missing in his "brilliant" analysis. If the bond market gets whacked hard because of major sovereign debt defaults, stocks will go lower.

Wed, 02/10/2010 - 23:30 | 226150 Burnbright
Burnbright's picture

Have you even looked at the DXY and the correlation to the stock market for the last 10 years? Down dollar days are almost always up stock days and vice-versa. The same with the gold/dollar reverse correlation.

And when Faber talks about debt defualt he is talking about QE.

Personally I don't understand the bond market but I don't see how the bond markets getting hit will cause the market to go lower or the dollar to strengthen. I would think it would be the opposite.

 

Thu, 02/11/2010 - 02:42 | 226342 jeff montanye
jeff montanye's picture

viewed in isolation, lower bond prices (higher yields) discount future earnings/dividends at a higher rate giving a lower present value.  higher (especially short-term) yields make holding a currency more attractive, emphasis on "viewed in isolation".

Fri, 02/12/2010 - 08:38 | 228227 Anonymous
Anonymous's picture

Hey Burnbright, the reason all is correlated is because all is driven by debt, either getting more of it (assets up and Dollar down) or when the shit hits the fan then trying to get rid of it(asset prices down and Dollar up). The reason the Dollar strengthens relative to other currencies in deflation is that most debt in the world is in the reserve currency and so when people are trying to pay off debt then they are all scrambling for Us dolars to do so and so it appreciates. Credit cycles have been doing this for over 300 years. Be warned we have entered another bout of deflation, the gold/silver ratio says so - another 300 year lesson.

Thu, 02/11/2010 - 02:37 | 226340 jeff montanye
jeff montanye's picture

your last three sentences seem cogent.

Thu, 02/11/2010 - 06:33 | 226413 Nout Wellink
Nout Wellink's picture

US 'recovery' will slip in H2 2010, debt woes will spread around the world, markets will correct, deflation is going to stay the main game for quite some time. If the debt issue is not resolved, deflation will kick in, causing Ben and his fellows to panick and print even more useless debt no one wants. Ben & Co. look like geniuses in 2009 for what they did, but they are powerless against a bursting debt balloon.

Thu, 02/11/2010 - 09:07 | 226470 Crime of the Century
Crime of the Century's picture

deflation will kick in, causing Ben and his fellows to panick and print even more useless debt no one wants

I believe the current "jobs bill" is exactly what you describe... in drag.

Fri, 02/12/2010 - 02:45 | 228120 Anonymous
Anonymous's picture

Leo, Before I can start to accept any of these suggestions of yours, you'll have to explain how the solar energy industry, which doesn't exist without the aid of government subsidies and tax credits, is a viable solution to anything. It is laudable that solar energy production reduces our dependence on fossil fuels, but at what cost? The inefficiency of the system and the dwindling resources needed to produce panels coupled with the need for subsidies to keep the industry afloat are somewhat unsettling. And if you see solar, with all of its obvious shortcomings as a desirable solution to our current energy infrastructure, then how do you expect any of us to buy your views on US recovery, strengthening dollar, market growth, dwindling gold prices, etc.? Especially in light of the overwhelming bundle of evidence that points toward hyper-inflation, massive credit defaults and the like?

Just wondering...

Thu, 02/11/2010 - 02:34 | 226339 jeff montanye
jeff montanye's picture

stocks as inflation hedges are belied by their performance in real terms from 1965 to 1980 when they delivered essentially the same return as in 1929 to 1932, about an 85% loss, pretty much all from inflation in the latter case.  gold on the other hand...

Wed, 02/10/2010 - 21:10 | 225985 hettygreen
hettygreen's picture

At the risk of having the large bash Leo club turn on me I have to agree with you about Mr. Hyperbole, I mean Mr. Faber. As the various debt dominoes begin to fall where will the world look for safety and liquidity? Where it has always looked: US Treasuries. Oh and Leo I suggest you begin re-working your tired market grinds higher thesis before it eats you alive.

Thu, 02/11/2010 - 05:34 | 226403 perchprism
perchprism's picture

 

Hey, Dumbass, clean the wax out of your ears and listen again--he said he was relatively bullish on stocks because they would be a store of wealth. 

Wed, 02/10/2010 - 19:24 | 225784 Sancho Ponzi
Sancho Ponzi's picture

What's really interesting is that the total net debt issuance for 2009 was about 5% of World PPP GDP. I believe the IMF posted 2009 World economic growth of 1% so if net issuance had been zero, the World economy would have contracted by 4%. 

World money supplies will be choked off as countries and zones continue issuing massive amounts of bonds. Without massive QE, the resulting money supply contraction would almost certainly lead the World economies into some sort of deflationary spiral.  

Wed, 02/10/2010 - 19:25 | 225786 Anonymous
Anonymous's picture

I was hoping Faber would respond to her question "do you want to buy Greek debt" by simply saying "LOL" but I guess he's probably too old for youngster internet slang.

Wed, 02/10/2010 - 19:28 | 225789 jm
jm's picture

The US, EU, and the developed countries all default on their debt!?!

.... snicker, snicker, chortle, hehehe, Ah HA HA HA, BWHAHAHAHA

Hey Faber, got something for ya:

....................../´¯/) 
....................,/¯../ 
.................../..../ 
............./´¯/'...'/´¯¯`·¸ 
........../'/.../..../......./¨¯\ 
........('(...´...´.... ¯~/'...') 
.........\.................'...../ 
..........''...\.......... _.·´ 
............\..............( 
..............\.............\... 

hat tip: Quanttrader

Wed, 02/10/2010 - 19:35 | 225800 SWRichmond
SWRichmond's picture

Congratulations on forcefully supporting your case with facts, logic, and sound reasoning.

Wed, 02/10/2010 - 19:37 | 225801 Rainman
Rainman's picture

....brilliant and creative artwork, JM. I'm going to print it and mount it next to my 5x7 framed pic of Ben.

Keep up the good work.

Wed, 02/10/2010 - 19:40 | 225804 jm
jm's picture

This is Quanttrader's work.  It should only be used when a statement is so preposterous that you can't stop laughing at it and the only recourse is this finger.  

Wed, 02/10/2010 - 19:48 | 225819 Rainman
Rainman's picture

...then I assume it will be visiting us often.

Wed, 02/10/2010 - 20:31 | 225915 geopol
geopol's picture

With unparalleled frequency....

Wed, 02/10/2010 - 20:52 | 225956 spekulatn
spekulatn's picture

+1 jm. 

Wed, 02/10/2010 - 19:46 | 225814 putbuyer
putbuyer's picture

clown

Wed, 02/10/2010 - 19:49 | 225824 jm
jm's picture

Hey... pot... you're calling me black.

Wed, 02/10/2010 - 20:02 | 225849 putbuyer
putbuyer's picture

If you have a soul, and if this chokes you up, you are human. I wonder...

“ Four score and seven years ago our fathers brought forth on this continent a new nation, conceived in Liberty, and dedicated to the proposition that all men are created equal.
Now we are engaged in a great civil war, testing whether that nation, or any nation, so conceived and so dedicated, can long endure. We are met on a great battle-field of that war. We have come to dedicate a portion of that field, as a final resting place for those who here gave their lives that that nation might live. It is altogether fitting and proper that we should do this.

But, in a larger sense, we can not dedicate...we can not consecrate...we can not hallow this ground. The brave men, living and dead, who struggled here, have consecrated it, far above our poor power to add or detract. The world will little note, nor long remember what we say here, but it can never forget what they did here. It is for us the living, rather, to be dedicated here to the unfinished work which they who fought here have thus far so nobly advanced. It is rather for us to be here dedicated to the great task remaining before us—that from these honored dead we take increased devotion to that cause for which they gave the last full measure of devotion—that we here highly resolve that these dead shall not have died in vain—that this nation, under God, shall have a new birth of freedom—and that government: of the people, by the people, for the people, shall not perish from the earth."

Wed, 02/10/2010 - 20:46 | 225948 Anonymous
Anonymous's picture

Bullshit. Lincoln used slavery as a wedge to destroy the south. He cared not at all for freedom, the black man or anything other than Union power. The Gettysburg Address is no different than any other government speech. It was opportunistic tripe and it insults those who died believing in freedom.

Wed, 02/10/2010 - 22:36 | 226095 Anonymous
Anonymous's picture

Does ZH have an "ignore" feature yet?

Thu, 02/11/2010 - 02:55 | 226352 jeff montanye
jeff montanye's picture

i'm going out on a limb here but slavery was a wedge aimed at the south a good deal prior to the lincoln administration.  and he didn't destroy the south:  it even got quasi-slavery back, for a century, about ten years after his assassination.

 

Wed, 02/10/2010 - 22:33 | 226093 Anonymous
Anonymous's picture

Four score and seven years ago our fathers brought forth on this continent a new nation, conceived in Liberty, and dedicated to the proposition that all white male landowners are created equal.

Wed, 02/10/2010 - 22:42 | 226104 Anonymous
Anonymous's picture

In the Civil War, the USA became like the Mafia or the Hotel California, once you enter you can never leave.

Do NOT follow this link or you will be banned from the site!