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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 is rational and makes sense. You do not. You must have voted for Barry.
The following is about as rational and sensible as what Faber said:
US and EU nations: "Comeon, Canada and Australia... everybody's doing it...default already."
Canada: "I don't want to. My debt to GDP is only around 20%."
Australia: "Mates, my debt to GDP is nothing like yours, even if we have a bubble. Don't be Sheilas about this."
US and EU nations: "Oh, you're mean. We'll be your friend..."
Riiiiight. Let's all chant together now, ready? U-S-A! U-S-A! U-S-A! That's about the about the full extent of jm's logic.
Wow. My Outlook's out-of-office auto reply to selected message senders just got a ctrl-c/ctrl-v upgrade.
Thank you Quanttrader.
...unexpectedly...
HAHAHAHA
Kneale is a such fucking tool.
Between he and Kernen there is enough stupid to lower the average IQ of NYC.
True, but certainly TD knows that whenever he puts the Constant Noise and Bullshit Channel on his blog that the comments go up. Everybody enjoys watching this trainwreck. Is it me or are Kneale and Denninger starting to look a lot alike. I give them six months and they'll be sounding alike too. Both loonies, there.
him
Sun is also going to go nova. How's that for bold, of course my models can't quite tell you when but by golly it's coming.
My models have it predicted fairly well, actually.
According to the data, the sun will go nova between here and 38,428.4 years from now.
certainly BOLD, but incorrect ..
The Sun does not have enough mass to explode as a supernova. Instead, in about 5 billion years, it will enter a red giant phase, its outer layers expanding as the hydrogen fuel in the core is consumed and the core contracts and heats up. Helium fusion will begin when the core temperature reaches around 100 million kelvins and will produce carbon, entering the asymptotic giant branch phase.
This Prediction is NOTHING without a timeframe... Eventually it will happen. What is the point.
Absolutely one of the best comments on this post.
kind of like me and gold... pick a direction :^)
+10
(.Y.) cleavage?
Doom and Gloom
Thanks, Doctor, for the diagnosis. Now, will two aspirin be sufficient or will I really need a ton of gold?
How is the weather in Singapore?
I'm glad were past the shock and awe...now we trade...soybeans (the new steak). BTW overdose on soy and you'll turn feminine, we'll be a nation of Hillary's.
Huh? I thought you said that soy makes one feminine?
sorry started to refer to the Aztecs using beans as currency
+1 LOL - feminine usually refers to something other than the antidote for Viagra...
Who cares if Faber is right or wrong on financial matters, I want his insight on the Thai nightlife and beer!
Faber prefers Thai lady-boys and Zima Light.
Last time I saw him in the Beer Garden Soi5 Sukhumvit Marc was sandwiched between to two lookers laughing loudly at his jokes. Generally speaking Beer Garden's not a ladyboy hangout, more the freelancer type.
Negative on government debt, very positive on precious metals. No wonder they shut him up.
SLW any good as a silver proxy?
sure is. stay away from US stocks. SLW.TO et al
Faber is not saying that all countries will OFFICIALLY default.
He is saying they will do a stealth default by printing money, thereby paying creditors with increasingly worthless currency. It is a default because you are giving the creditor maybe half or less of the purchasing power he would usually get. That would be the same as restructuring debts at 50%.
This is a coward's default on debt, but a default all the same.
Time for Faber to default on his career....
Come on, you guys. Everything will be just fine. I'm so sure of it that I just went long rose petals and unicorns.
As another blogger put it so eloquently, There are no unicorns that crap skittles.
Apparently, Kneale begs to differ.
unless we are going to abandon the pretense that this is a democracy and the citizens are "free" and go straight to, hey, we do have a peasant class dedicated to paying for the lifestyles of the elites....
faber is right.
my bet is we abandon the pretense in the next two years. there are peasants and there are the elites. doesn't matter how smart or dumb you are, (john thain), if you have a card punched as one of the elites, there are millions dedicated to preserving multi-generational wealth for your family.
and fox news will do everything in its power to convince the peasantry that this is the way things should be.
When will we all understand that the corollary of assets being what people are wiling and able to pay for them also applies to outstanding debt.
Now, I may be wrong but there are few regimes in the world where a debtor is not, to some extent allowed protection from his creditors (AIG aside).
So lets presume the worst. Default. Collateral reclamation. Its not such a bad thing, its been worked through before. Surely?
But think of sovereign debt, when people are in the streets. How are your 1035 Cuba bonds trading? Your Tzarist marks? The IOUs on Iranian Regime of 1969?
Regardless of what Greece has to do, or what the Eurozone has to do - what they cannot do is cause a revolution in a country that has been fascist/communist/populist/communist in the space of 120 years. what are the chances?
When the people do REVOLT as some on this blog would seen to advocate, thats when the REAL and PERMANENT losses occur.
Don't ask for what you wouldn't eally wish for. Because the possible alternative to a "mild" default by a lot of countirs is a few sacrificial lambs which would achieve the currency depreciation that the UK/Europe can't politically mandate themselves.
Greece blowing up is a silver lining for a lot of large, uncompetitive European countries. Do you really think that exporter Germany is keen to preserve the Euros value when Chin (we will increase wages instead of the currency) is on the verge of a capex/consumption splurge?)
Greece blows, its a tiny party of the EU, the other PIIGs are are shamed/scared into IMF type distress packages and Germany and France (The engineers) clean up and the Eurozone as a whole survives as people make use of labour mobilty.
This is what people forget, full labour mobility is a novelty in the EU. it ha never seen a significant downturn to prompt migration between the rich counties and in this connected age, language (and location) is not the barrier that it was to getting work.
"This is a coward's default on debt, but a default all the same."
No it is in no way the same. A default is a legally defined state, not some loosely defined circumstance offered by Faber
The US empire will never default, it will just decline.
I say it over and over again.
How or why would a nation that can print the currency the debt is paid in, willingly default.
There is no logic in saying that they have to default.
Economics don't apply when we are talking about monetary and military world hegemony.
War maybe, default of the US, certainly not.
Maybe the US will not default ouright, but the dollar will keep loosing purchasing power. All stuff that you need will be chased by oversupply of inflated currencies. Couple this with population growth and you get depression.
I am depressed thinking about my kids.
Maybe not default, but instead capitulate to the math. Or conversely, outlaw math.
Anyone see http://www.iamned.com ?
Serious question: When will you be planning to finally fuck off?
Back when Limewire was just starting up, they had this great feature that you could block anyone from showing up in your data stream. The person was still there, and posting, and anyone who hadn't blocked them would still see their posts, but for you, the annoyance was gone.
Don't I wish that that Junk flag was an Ignore flag.
I checked it out and it sucks balls.
Um, User 10, AIG, can`t you just make it impossible for posts containing iamned to be allowed by perhaps using a modified filter for swear words?
I am sure you are getting sick of being foiled by ned. te-he
That was hilarious...Faber was like Albert Einstein attempting to explain his theories to Ms. P. Hilton - or like me trying to tell my wife why a 50-year-old wind-up watch beats any modern quartz model...funnily enough, only Dennis Kneale asked a semi-relevant question...
To: All CNBC Anchors
Do any one of you follow/read anything outside of a Bloomberg terminal?
I ask because as the "World’s Business News Leader" it seems quite evident that NOTHING that does not make the headlines makes it to your Teleprompters.
I’ve (We’ve) watched the steady drum beat for 15 years.
“Now is the best time to buy “X” product and/or stock….”
We (The Few viewers that still have the volume turned on) don’t believe the BS anymore. We’re that mass majority of money on the sidelines that you keep waiting on to get back “in”. We’re out, and we’re staying out. Because your hype mantra has burned us so badly over the last 10 years.
Never, and I mean never, have I heard a “Sell and sit” call on your network. (Cramer called one after the bad burn he got, but even your network has a disclaimer before and after everything saying CNBC is not responsible for him)
Please – Begin some digging and reporting.
If the CEO’s of major companies know that they can tout they’re latest and greatest by agreeing to a sit down on your network, you know you have some soul searching to do. Why would you make it Soo easy for them? They need your advertising more than you need their interview.
Whomever, produced your “Greed in America” series should be promoted to producing your prime time line up as well.
Anyone remember this piece, from 1992:
http://mises.org/daily/1423
THIS is one of the paths that our officials are playing around with, guaranteed.
Hmm. EU and US default. So all those UST held by China would be worth pretty much nothing.
They'd still have about $USD 2.5T in cash reserves by then. But those are $US, so they quickly go to nothing too, or we re-issue the dollar or we adopt the Canadian dollar. Annnnd ... we've just declared economic warfare with China.
So now what do they do? Invade Taiwan? Invade Japan? Invade California? Seriously, they'll want to claim their collateral on those debts, whatever it was. I guess they get to decide what it was, and make themselves whole.
Explain to me again how anybody actually survives any of this.
cougar
Yup, China and oil-exporters are the bag-holders.
Nationalizing assets of the US companies in China can work for them to a certain extent, after that they'd be looking at the Middle Eastern countries that are allied with the US - Saudi Arabia in the first place. Destabilize them, make them Chinese clients, trade oil for yuan (sounds crazy, but why not?).
Of course the US is going to default if it comes to that. US debt as a percentage of GDP is not much different than in Greece. Deflating it away is an experiment. There is no guarantee that it will work. Based on history, I bet it doesn't. Why anybody listens to these fudgepackers on CNBC is beyond me.
Worldwide jubilee is starting to sound like the sane route here.
Not if you're one of the 4 billion people living in Asia making a few bucks a day while your country invests its savings with fat gov't employees in the West making 50K plus a year on a retirement that could last 20 years. I'd be pissed if I were them at the thought of a debt jubilee. There are 6.8 billion people on the planet, about 2/3 in Asia (not including Japan). You can't ignore those numbers.
Why is everyone still so pessimistic?
My business is up from last year and I'm not selling guns.
Sure there's lots of negativity out there but at some point, we have to look for solutions rather than bashing the banks and the politicians.
I've been a bear since early '08 but it's time to come of out hibernation imo.
Money and debt are one issue but let's remember that his country has great potential, great talent and a fucking great geopolitical presence that cannot and will not disappear overnight.
The Chicoms know that, the Mad Mullahs know that.
The Euros believe in Pax Americana and will continue solidify US hegemony around the globe any which way they can.
There's nothing better out there, folks.
[Money and debt are one issue but let's remember that his country has great potential, great talent and a fucking great geopolitical presence that cannot and will not disappear overnight.]
... said the proud Roman in 400AD.
You mean well. That's good. But my friend we've been here before.
Try to remember. It was only 1,600 years ago we last had this conversation, just before we bacame history.
cougar
Rome had an economy which was able to deliver to its citizens consumer goods in quantity and quality not seen again until the 19th. Century.
Gigantic amounts of pottery around the former empire to prove it - must have used an immense amount of fuel. Did they run out of easily used energy resources, as in "Peak Wood"?
I saw a documentary on Discovery or History Channel a couple of years ago about Ostia (a port city of the Roman empire. The streets and shops looked like a village from the 19th Century. Amazing technology. Civilization can indeed fall a long way
I thought peak wood was about age 50 or whenever you need to pop the blue little pill?
last saw peakwood @ around age 32.
Wow, it's nice to know someone finally sees through all the propaganda and realizes there are no problems with the government or banking. I feel so much better.
what is your business? Mine is furniture and business
is down since Nov 2007...trendline intact
Faber uses the term "eventually" to quantify the timing of a default.
Thats really not a very informative comment and also not really that outrageous of a prediction when "infinity" is the targeted investment horizon.
The CNBC clowns remain clueless (3 years and counting since I last allowed CNBC on my TV)
Respect
"Explain to me again how anybody actually survives any of this..."
Don't participate.
If your life and livelihood are not dependent on the mechanations of global finace and fiat currency, then you'll be fine. If your life is fed to you via the ATM & drive-thru, like cattle, then you'll have to make some adjustments.
I live in California. I'm the collateral. But as far as it goes, I don't want the Japanese to go down either.
The Tiawanese ... well they've been living on borrowed time. Sorry guys. You get to go first.
WTF, I thought they got rid of Kneale. Made me puke.
A man of importance like Dennis Kneale can't be bothered with basic economics and lessons of history. How do you think he got so far in the world of financial news???
All Dennis Kneale asked was whether Faber had ever been bullish on stocks! It IS possible to be an economic bear and a stock bull.
Faber has been bullish on stocks on numerous occassions. He called the rally off the March 2008 lows almost to the exact date. That dumb f Kneale shouldn't even be allowed to ask questions of people without doing a modicum of research.
I noticed the same thing too, can you even call him a reporter? What is he? Does he still think the "great recession" is over?
I meant 2009 lows. Basically that kneale needs to stop his flip comments and shut his pie-hole until he's done at least a basic review of CNBC guests before they appear. Essentially, do a professional job Dennis.
Faber's back on Bloomberg TV right now.
anyone see: http://www.iamned.com ?
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considering the earlier references to this ascii image... i have to say it's not the weapon, but rather the application.
nicely done
Shouldn't that headline read "...are in the process of defaulting on..."
Faber's assumptions will prove correct....
Why ?
Think about it this way....
1) US needs are more than the world has in dollars....
2) US needs more than the total savings in banks....
3) The US refuses the only remedy it really has....
Which is tax reform.....ie a 15% consumption tax only
4) Here is a list of the sustainable solutions offered to date :
a)
b)
c)
.......................................
The world needs a new refined universal exchange built for retail....This would be the fastest and most beneficial way to build the numbers....
I strongly disagree. The total govt expenditures were 75% of GNP, BEFORE the current communist administration jamked up the rates. Crazy? Add fed, state, county, and local. When the Federal larceny began, it was pretty low and everyone thought it was 'reasonable'. And it quickly started growing a bit at a time. How long will it take the VAT to make the total go over 100%? Not long. Then it is stupid to either 1) work at all or 2) to allow the government to know how you are making money, and make like the USSR; just lie about it. I propose we cut all budgets in HALF, cut the black budget from 60% to a maximum of 10% EVER, and cut all elected positions in HALF, and hired fed by 'only'40%. They already make over 150% of private sedtor and no possibility of ever being fired, as long as they don't commit a crime, or get caught anyways.
CNBC had to get Faker on cause he was on Bloomie with Maggie a couple of days ago. Lucky for him, he got on with the worst group of CNBC anchors on the network. (Do you believe that these people are only on air a couple hours a day. What the frig do they do the rest of the day?) These people are no different than the other anchors on CNBC -- they can read a teleprompter or newswire, but have no capability for thinking for themselves. Kudlow gets it, he knows its entertainment as much as if not more than economic analysis. Faker is like everyone else -- just trying to make a buck. Do yourself a favor, do your own homework and don't depend on the opinions/advice of others.
Good articles: http://www.iamned.com
I think we're headed for phase 2 of this crisis
You know, I was thinking of bookmarking that site, but the way you are pumping it constantly and under different names is shameless. Your site is gone from my history and bookmark list
Forecasting equities, at this point in time in FY2010 is very difficult. I am very cautious about making any forward looking predictions, outside of some basic diversification, in this very volatile year.
Faber stumbled around in his sensationalistic demeanor, but he got his measage across. Technically the US cannot default, it can just debase the currency to the point of paying off all the debt. If we get that far.
Faber also likes alternatives to holding USD, which is also not uncommon. So he is really not saying anything he has not said before. Unfortunately, he never seems to present any real data, or sequence of events, or anything I can really use, beyond his basic premise, which is really just old news.
For the US, we need to watch the trend of funding Government through revenue and Treasuries. There will come a point when we start to outpace the overall influx of funds, after the expected accounting games, and there is no way to fund government without the FED openly buying our debt again. When this happens, i believe it is just a matter of when, capital will once again flee the US.
But, I think the real question people want answered is what will happen to me? At some point, the government(FED) will have to protect the currency. When this happens we will see a cut in Government services. I think the first to get cut will be Social Security. It is by far the easiest to cut back, in what ever guise the headline may hide behind.
The reality is costs have to be cut, for the SS demographics, medical entitlements and financial sector bailouts. If you do not cut, the currency will eventually collapse, which results in the same thing, loss of real wealth.
So we wait for events to unfold.
Mark Beck
Forecasting equities at this point in FY2010 is not difficult. They are going down. How's that? That was easty. Equities are going to deflate so fast, the government (fed) will be too far behind to do anything of any substance. The reality of cutting will be forced upon us, it won't be a choice.
whoa. whoa! WHOA!!!
oh man. that was toooooo funny. fucking cnbc. "did you miss out?" "i was on bberg and said..." ahhahaahhahahhahahhahah
The huge unfounded liabilities of governments are real liabilities that need real wealth to be undertaken. To print money redistributes existing wealth but does not create new wealth. Robbing Peter to pay Paul will not work this time. The world has consumed the existing savings. The world is now poor, it's that simple.
wow -- all this faber bashing is kind of funny and kind of sad too.
I have been following him for years and he really is a sage in my view. But like all pontificators, you listen, keep your mind open and make your own calls in the end.
Those guys who are faber bashing - beware of cognitive dissonance: your mind is hard-wired to rule out all the views of those who you dont 'believe,' no matter how factually correct. uggh.
keep an open mind. hear all the arguments and challenge yourself.
AH
BTW - I think Faber is correct. (the guy who pointed out his track record at the barrons for 2 years roundtable nailed it - jesus I wish I had that track record). Also check out Nial Furgason's piece in the financial times - he says the same: US levels of debt are unsustainable. Other currencies (save the commodity currencies, CAD, NOK, AUD) are probably in for tough times too. Fabers call is to side step all the money printing and go into hard assets. Ergo Paulson - his fund #1 holder of GLD etf in the world. Is he off his rocker or after 10,000 man-hours of research is he coming to the same conclusion as faber? it may not be now - maybe 5 years but the fiat currency & current global monetary system is in for massive trouble. Gold is that hedge. And for the Faber-bashers: Its not un-american to say this. On the contrary - its patriotic to cite our weaknesses and try to fix the situation.
Previous choppy sideways action for DOW/SP500 and EURO have resolved once again to the downside.
So SP500/DOW downtrend and the USD uptrend reasert their dominance yet again.
This is very bearish for equities.
Substantial USD rally I forecast, just gets closer and closer.
http://www.zerohedge.com/forum/market-outlook-0
Faber is a jackoff.
US WILL NEVER DEFAULT. PERIOD. EU ENTITIES MIGHT (NOT GERMANY OR NORTHERN ONES)
Interesting. You really seem to know what you are talking about. By the way, I have a bridge for sale, interested?
kneal got faced
DON'T WORRY, JIMMY CARTER OBUMBLER WILL SAVE US! YES WE CAN (BANKRUPT AMERICA).
Hi! My American Friends:
We were encouraged to locate our thiniing level into the same kind of a morass as the instabilities regarding the arguments attempting to sutain those upholding global warming: emotionalisms vs. scientific evidenses.
Faber's science vs. such emotions as patriotism, reflected by his oponents whomsoever they are or maybe will become in the future, will by natural laws fall in favor of Mr. Faber. We may differ during the evolution of these outcoms but have no doubt that natural laws know to Faber and not Faber himself alone will mandate the natural coarse of eventualities towards the truth always moves events.
The Constitution calls for gold & silver coins in Americans' pockets and, by natural law their intrinsic values allows for them to be posted on the World's Atomic Charts; while the paper of our present patriotic operations is a delusion, because no paper currency has ever nor ever will be even focused upon as eligible to be posted on the Worlds' Atomic Charts. Paper money by natural law has always brought in devaluations with higher prices; while precious metals money is never monetized due to the limitations inherent within availabilities offered only by Mother Nature & never by talking heads facing off Mr. Faber. They've already lost the fight; except to dive into the realms of diversion towards delusionary gradulisms that always accompany the gradual demise of paper money. Thus Mr. Faber was abely allowed to refer to the upward momentum we wil be seeing in the hedged prices of both gold and silver. Paper money can never hold par with specie and that's the basis of Greshams' Law. If the talking heads don't know about Greshams Law they should look it up in Websters Dictionary which by the way was put together by Daniel who wrote about paper money/inflation when he stated: "Of all the contrivances produced for cheating the laboring classes of mankind; none has been more successful than that which deludes them with issues of irredeemable paper money!!" Did or didn't Dan know Greshams' Natural Law?
Cheers,
RUSS SMITH, California
resmith@wcisp.com
Marc Faber with an apocalyptic message in an interview with Bloomberg.....:
http://www.youtube.com/watch?v=oJeSTshAHl8
...very nice video....
In the introduction he says:
>>The Hour of Truth happens one day, now I Don’t know when it’s gonna be, tomorrow, or in 3 years, 5 years, ten years, but the next crisis will bring down the entire capitalistic system.<<
It could happen..... What do you think?
If Marc had more time he probably would have added a few more developed countries (he only mentioned Singapore) to the list of those who will not default on their debt. Why? Because their unfunded liabilities and debt are manageable and they have natural resource based economies, such as:
Canada, Australia, and Norway
Remove the debt to get us back to zero!
Worldwide, 561 trillion dollars is evaporating, from money 'invented' by the banksters. 20 trillion so far from just the US. They printed up 10 trillion, so where does that leave us now? Well, -10 trillion I believe. So I am not expecting inflation anytime soon. But I am concerned about the future, as the govt. has assumed, if I recall, 120 trillion in obligations, unfunded. Liars and crooks. 'Kill all the lawyers' Shakespear
All you have to see is gold hitting new highs in Euro terms to
realize what is real and what is not.
When I hear Fabers voice I fall right to sleep, so I missed this. Oh no Fabers on. ZZZZZZZZZZ
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