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Faber's Bold Prediction: Both The US And Europe Will Default On Their Debt
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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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.
" 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?
"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'.
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.
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!'
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?
What in the effin craphole are you talking about?
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
Faber Bitches!
I am not Chumabwumba.
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.
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.
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
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
"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.
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
No! You Visigoth! Now I will NEVER get that mental image out of my head!
Hope you are satisfied.
cougar
“As long as our culture continues to fawn over its downward-aspiring lowest common denominators, the United States will remain a social and political punch line. As long as we continue tracking the every deed and fart of the Paris Hiltons and Kevin Federlines among us, we will continue to come out sixteenth best with regard to producing and introducing to the human race things of true substance worth appreciating for their aesthetic ingenuity.” Anthony Beal
"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.
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?"
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!
Why explicitly default when you can just inflate your debt burden down to size?
Currency manipulations can lead to hurt feelings.
And latent emotional resentfulness that could later manifest itself in insurrection, civil war, and political revolution.
It all ends in tears, I just know it.
Thursday afternoon, a very special episode of Hallmark Theater: "Not Without My Currency!"
Brought to you by iPad.
LOL. Good one FB.
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.
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
"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.
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... :(
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)".
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 !!
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.
Saying US will default is just as preposterous as those who said the Investment banks were doomed in 2008.
You contradicted your own point? Oh are you counting all those new BHCs as IBs still?
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.
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......................
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.
seriously, do you work for the CIA
+50
Christians in Action.
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.
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?
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.
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.
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
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.
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.
That quote is my new e-mail signature
Thanx
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.
Interesting analogy...
Very nice. Just like Christianity, except we're all being crucified
California, Illinois, New York, New Jersey, and Massachusetts.
You almost spelled out Cinnamon, could we add Oregon and (some state that starts with 'N'? Then we could compete with PIIGS.
New york, Illinois, New jersey, CaliforniA, and Massachusetts, Pennsylvania, OhiO, Purto rico = NINCaMPOOPs
...unexpectedly (drunk)...
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?
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.
Give California to them :-)
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.
And look where that has gotten us.
My only regret is that I have but ONE junk to give to this post.
leveraged it
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.
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
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?
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.:)
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.
Why do you keep linking Faber w/ Prechter? It's asinine and annoying.
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
(Leo Kolivakis) -- Jim Cramer, is that you?
Faber is bad for your financial health.
Let's not let the facts get in your way...
http://online.barrons.com/article/SB126363054005030393.html
Yippee, 2009, BETA ON STEROIDS! Give me a break! Let's see how the pontificators do in 2010.
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...
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???
Are you fucking serious? At this point, I have to think that the joke is you. And not funny, unfortunately.
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?)....
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?
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?
Maybe you should get a Barron's subscription?
http://online.barrons.com/article/SB126402638407932269.html
He does manage money.
How to invest for a global-debt-bomb explosion
http://www.marketwatch.com/story/how-to-invest-for-the-debt-bomb-explosion-2010-02-09?pagenumber=1
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?
Definitely working on plan B, have been for a couple of years now.
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.
Plan B for humanity? No, just family. Not interested in destroying anything.
Plan A is always give us more money, more power, more control.
Plan B is what they do when we fight them.
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.
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.
In Bailout Nation, bank robs YOU.
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.
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.
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.
Whoa, whoa, what?, hold on there, ALL governments? ...
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).
Was that deuce bag beaker? fantastic! made my day laughing at that clown.
"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.
possibly he meant "bag full of shit"
+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.
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.
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
simply +10
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.
I'd say it qualifies as bold given how many legions of dumbasses are still betting the other way.
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?
When people are saying "credit crisis" like it's "beat earnings."
Well folks. Ex-items can only keep the balloon afloat.
but the crisis will get worse .. hat tip to: http://www.iamned.com
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.
+10
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.
"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...
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.
Debt is just like taxes Timmy, eventually, you must pay up
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
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.
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
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.
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.
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.
Pissing on green shoots just gives fertilizer to retarded growth.
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.
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.
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.
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?
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.
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.
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".
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.
your last three sentences seem cogent.
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.
I believe the current "jobs bill" is exactly what you describe... in drag.
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...
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...
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.
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.
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.
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.
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:
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........('(...´...´.... ¯~/'...')
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hat tip: Quanttrader
Congratulations on forcefully supporting your case with facts, logic, and sound reasoning.
....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.
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.
...then I assume it will be visiting us often.
With unparalleled frequency....
+1 jm.
clown
Hey... pot... you're calling me black.
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."
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.
Does ZH have an "ignore" feature yet?
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.
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.
In the Civil War, the USA became like the Mafia or the Hotel California, once you enter you can never leave.