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Marc Faber And Nassim Taleb On Risk, And The One Asset To Own Whether One Is Bearish Or Bullish
Last year's Russia Forum was one of the must see events of the year, pitting such high powered independent thinkers as Marc Faber, Hugh Hendry, Nassim Taleb in a free for all. While the cliffhanger back then was the suggestion by Hendry that he had recreated the Paulson ABX trade with "1.5% downside and 75% upside" (which has since not been fully revealed aside from some occasional snippets in the periodic letters that it is a synthetic China short trade), the true brilliance was in the debate between the Treasury skeptics and the fan (Hendry). That said, with the entire curve surging wider, we hope Hendry took profits on his short as we are now virtually exactly where we were a year ago. This year's forum was just as entertaining, and while it didn't have quite a distinguished audience, it did feature Marc Faber and Nassim Taleb in a discussion of whether Russia is the best or worst BRIC. That said, trust both Faber and Taleb not to stick to the script and go off on wild tangents. Sure enough, the line of the night as usual belonged to Faber: "We have a big debate in the world whether we will have a deflationary collapse or an inflationary boom...usually after a period of very heavy money printing war follows." That is the philosophical gist of it. As for Faber's recommendation, it is precisely the asset which has become a short-seller's nightmare in the current geopolitically fragile environment: oil. "Whether you are very bullish or very bearish you should invest in oil."
Some other key quotes from Faber:
"When it comes to assets there is no asset that is always the best. An asset can be the best at the right price, when the price can be depressed. And the best asset when the price is too high is not a good asset."
"In a deflationary bust you have a credit collapse so the one thing you don't want to own are US government bonds, because they won't be able to pay, and before they can't pay they would print money like there is no tomorrow so the dollar would continuously depreciate which would obviously be good for assets that you can't multiply such as commodities and precious metals."
"I also think it they print money what then usually happens is that standards of living of the middle class and the working class go down, because the cost of living increases faster than wage gains, and so the population becomes very distraught and dissatisfied and eventually the government to stay in power or distract the attention of the people, either goes to war or blames a minority for the mishaps, but usually after a period of very heavy money printing war follows."
"If I invest today, I am considering the following: it is conceivable that because of ultra expansionary monetary policies in the world, and ultra expansionary fiscal policies in the US in particular, we have a temporary crack up boom. And the demand for oil in the western countries which has been declining since 2008, starts to pick up, and combined the oil demand in the world surprises on the upside, and pushes up oil prices, which would be beneficial for the oil producers, in particular Russia and Kazakhstan. Or you have what I think eventually happens: a complete systemic breakdown. I am the most bearish person long-term. If there is a complete breakdown, as I described with money printing and war, you want to be in commodities, specifically oil, because during war times commodity prices go ballistic. So whether you are very bullish or very bearish you should invest in oil."
"I think most emerging stock markets will go down for the next 3-6 months."
As for Taleb, the NYU philosopher once again looks at the world in terms of his favorite risk parameters: fragility vs robustness. Nassim compares the US and Russia on the fragility vs robustness scale. Try to guess which one according to the polymath is the fragile and the robust one.
Faber starts at 25 minutes into the clip, while Taleb is 40 minutes in.
Is Russia the Best or Worst in BRIC? from Troika Dialog on Vimeo.
And as a reminder, here is what Hendry said of Treasury's almost exactly one year ago to the day:
"I am hugely intellectually bullish on Treasuries. I am long. I fear the
end of QE, the money funds are making on the [curve], I am aware of the
issuance, I am aware that the States is going to have to sell $2.5
trillion of this stuff. But that's the marketplace - the marketplace
disseminates the bad stuff. I think there is a lesson in Japan. You
think they are going to succeed - Mark [Faber] thinks they are going to
create inflation. The precedent of Japan suggest that if you allow
leverage in your society to breach a certain level, let's call it 200 or
230% of GDP, then what happens is monetary policy doesn't work, fiscal
policy doesn't work. They've had helicopters, they have distributed free
money to their citizens, they have built bridges to nowhere and prices
are falling and look set to fall further. My fear just now is that the
community of risk is very short treasuries, and is very long risk: risk
assets are the hedge against inflation. Now if something untoward
happens, the gamma on that trade bankrupts you."
Link to the 2010 Russia Forum.
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The Patiot Act Provisions just FAILED TO GET PASSED ... the WH released a Statement that they would like a 3 YEAR EXTENTION!
btw anyone whatch this one on CSPAN Live??? I only heard one comment called in support of it on all 3 party lines ...
ps I got on air
KEEP TELLING SOME TRUTH ZH... BECOME OUTSPOKEN!
That's good news. Fuck the Patriot Act! Obama criticized it when he ran. Now he's in love with it more than Bush.
By a vote of 277-148, the House failed to pass the extension, needed 290(2/3) Yea votes to pass- click here for the roll call vote to see how your representative voted! See list of traitors of our nation here. http://clerk.house.gov/evs/2011/roll026.xml
Thanks again for all you've done, but remember, we can't let up pressure now. This won't be the last we've heard of the PATRIOT Act renewal in the House.
FINAL VOTE RESULTS FOR ROLL CALL 26
H R 514 2/3 YEA-AND-NAY 8-Feb-2011 7:04 PM
QUESTION: On Motion to Suspend the Rules and Pass
BILL TITLE: To extend expiring provisions of the USA PATRIOT Improvement and Reauthorization Act of 2005 and Intelligence Reform and Terrorism Prevention Act of 2004 relating to access to business records, individual terrorists as agents of foreign powers, and roving wiretaps until December 8, 2011
Yeas Nays NV
Republican 210 26 5
Democratic 67 122 4
Independent
Barney Frank voted "Nay" to let them expire. Barney, you finally got one right.
Shame on any "conservative" for voting to extend these extraordinary powers.
agreed my comments exactly on cspan
1/3 Dem, 2/3 Rep Yea votes. That's a shameful bipartisan response for the dems.
The Dem voters better get their asses on the phone and give those 67 D votes an earful if they want to retain any credibility.
Gimme a T...gimme an E...gimme an A.
You know what that spells ;-)
"The vote came as several tea party-aligned members of the new freshman class had been expressing doubts about the measure."
http://voices.washingtonpost.com/44/2011/02/ahead-of-patriot-act-vote-some.html?hpid=moreheadlines
Just think about all the people who monitor the web traffic at the Fusion Centers, the NSA, programming people and companies who will be put out of business should the Non-Patriot Act go down in flames?
Without missing a paycheck they'll be re-employeed as Michelle's calorie counting crusaders.
kalorie kounting.... ?
You think they'll actually stop what they're doing even if the act isn't renewed?
We're past that point now, I'm pretty sure. They don't need no stinking badges...
above the law and above the budget
<cough> what he said...
Agreed, it will not stop some of the agencies but there will be some positive effects.
that's pretty much what I'm thinking too, some way they will continue on as they have, I can't think that they stop now.
This will go on, but it'll all be covered up. No one ever willingly gives up a portion of their power without 1) a big fight or 2) knowing that in reality they aren't giving up anything.
http://thehill.com/blogs/floor-action/house/142871-gop-defections-lead-t...
On Kudlow
Ron Paul on Fed Policyhttp://www.cnbc.com/id/15840232?video=1785971349&play=1
"Front page on the politics page..... What a great picture and what a great story. I hope somebody will consider this front page material and put this photo embedded right above the story!..
Washington (CNN) - Will Ron Paul make another bid for the White House?
.
A senior adviser to the 12-term representative from Texas says it's a strong possibility.
.
"Congressman Paul is very pleased with his strong national organization and flattered by his growing national profile. He is strongly considering a presidential run and is assessing all of his political prospects," Paul Political Director Jesse Benton tells CNN.
.
An influential pro-family social conservative group in Iowa, the state that goes first in the presidential caucus and primary calendar, announced Monday that Paul accepted an invitation to speak next month at a presidential lecture series."
http://politicalticker.blogs.cnn.com/2011/02/08/paul-strongly-considering-another-presidential-bid/
run Ron run!
Ron Paul will be on Fox Biz Freedom Watch Tomorrow
I hate Freedom Watch. When is the Judge going to stop yelling his opinions. He sounds like Walter Winchell on steroids.
Don't diss Judge Napalitano!
If you're talking about someone who merely yelled their opinions, you must be thinking of Keith Olbermann.
I am Chumbawamba.
What makes you think it will make any difference? They will do what they want to do anyway. Who will stop them? We have such blatant fraud and corruption in government and business, no one stops that. Laws are a farce in this country. Unless you are a peon who steals a loaf of bread to feed the brats. Then you go to jail.
reject apathy it on serves TPTB!
Not apathy, reality. Nothing is gonna change until the SHTF.
Citizens of Gotham (America) need a caped crusader- Batman!!
The P Act was pushed through early needing a 2/3 vote to pass.
This thing will get pushed through once again in a week or so, with only a majority needed, it will pass then.
We can't think we won this battle, not with these crooks in office. As we saw with the healthcare bill, they will keep pushing until it comes out of the other side, looking like a piece of e coli riddled sausage.
It failed because Democrats voted against it.
I'm begining to think all people that talk in an English accent are idiots. Especially on CNBC.
www.silvergoldsilver.blogspot.com
FINALLY SOME GOOD SENCE!!
Oil is sooooo yesterday.
REEs, bitchez!
(Know I'm not first, but the repeat crap above doesn't count. Fukking CNTL-V)
Looks great. Um, why don't they have any revenues?
No revenues cuz they are all in development. MCP is next year. All current production comes from Chinee.
http://seekingalpha.com/article/251449-the-long-case-for-avalon-rare-metals
Oil is the gateway resource for all other resources. The higher the price of oil the less revenue for REE and PM miners.
No REEs, no flat screens for the Welfare class.
here's some truth from Larry King about bank
fraud.
http://www.xtranormal.com/watch/11079067/?listid=20867736
PS hendry and I appeared to be wrong.
just treading water which is the way he basically sets himself.
Risk, you want risk? How about this?
WikiLeaks cables: Saudi Arabia cannot pump enough oil to keep a lid on prices US
Diplomat convinced by Saudi expert that reserves of world's biggest oil exporter have been overstated by nearly 40%
http://www.guardian.co.uk/business/2011/feb/08/saudi-oil-reserves-overst...
Paging Travis, Trav7777 to the white courtesy phone.
Don't worry. The 22.5% unemployed won't be using much of it in the foreseeable future.
Oil, beechez....
but seriously
Let’s look at the data:
1) Recent storage data on tankers show that off-shore storage is about 60-80 m bbls. To put this number into context, it is about 1 day of demand or 2 days or net oil exports from producers.
2) Net Oil exports from producers peaked in 2005. There is simply less oil on the market. This chart is the tell:
http://www.theoildrum.com/node/7327#comment-756659
3) Sometime in 2008, the forward oil curve went into contango for the first time. They was a lot of debate about what this implied. My take is that the smart money figured out that demand would be outstripping supply into the foreseeable future. In essence, it now trades like a currency.
4) Breakdown what is called oil into its real components
C+C, NGL, Other liquids
Now, generously give an EROEI of 6 on “other liquids”, in other words from an energy perspective multiply by 0.85, otherwise you double count the oil to produce the liquids.
NGL is 65% of the energy density of crude
Ignore Refinery Gains, that is simply increasing the volume for the same energy content…
And fold in existing fields are declining at 4.5% (CERA, IHS etc..) per annum and that new fields are barely keeping up.
http://www.theoildrum.com/node/7385
The energy of Liquids production has been flat for 5 years.
This is why oil is the alpha asset.
And I am plenty long precious metals as well.
You cant eat oil, but if shit really came down to it, I would eat the shit out of my shiney maples...yummy
www.silvergoldsilver.blogspot.com
forget oil...bonds about to get crushed,,,short TLT what a move in the 2 and 10
high ho silver!
Fuk Saudi. Drill, Baby, Drill!
Especially drill those dumbass SINators' skulls.
There are places in Brazil, Russia and China where western person could feel quite comfortable, but the rest of these countries would be considered a tough place to live in for a used to modern comfort sissy European or North American.
Patagonia is sweet. Bring dry wood.
Spent a couple of weeks hiking Torres Del Paine and ice hiking the glaciers near El Calafate. Truly a beautiful part of the world.
You guys still have not caught on.
This is not a matter of celebrating "getting it right" or sneering at a downtick in oil.
This is forever territory, folks. There are no charts to show you recovery. There will be no value to education. There will be no economic policy that changes anything significant at all.
This is the ball game. Oil gets scarce. Someone doesn't eat. That someone complains and that someone's leadership makes a choice: Appeal to the UN to take oil away from the US (we have 3% of population and consume 23% of global oil production) or try to bomb US cities, kill 10s of millions, and thereby cut US oil consumption.
Yes, folks. THAT is what it means. It's not a market issue. It's death.
If you're an American, you have to sign on NOW to the concept of killing them before they come for us.
How does someone that doesn't eat complain, and not become Soylent Green?
You quit driving yet, ya fukking Lib?
Libs quit driving. Americans get ready to eliminate competing consumption. You ready? I am.
I drive a hybrid. Fell in luv with it when those front wheels lit up, going out of the lot. 100% torque, bitchez!
I dont think he is a lib. I think he is a peak conventional fuels kinda guy ready to kill or be killed. When the mass.die off of brown people happens soap is the best use of all those human fats. Our soylent green can be.heart healthy and low fat.
If you're an American, you have to sign on NOW to the concept of killing them before they come for us.
Sign on to what? Throwing rocks at the bankers like in Egypt? Ok, the massively armed american public will empty their cases of ammo(primarily on each other) before picking up chunks of ashphalt. Its not like you go to the office and say "Hey dude, lets go to war over the oil". Can't get any representation now, what makes you think it will change in the future.
hey tyler, should we buy physical oil and store it in our swimming pools? aftrerall, cushing is full and a tanker costs $40k per day.
oh yeah, us demand is at decade lows. and, as you claim, china's bubble will pop...which means the oil play would be dead.
LMAO!
Will solar heaters work with oil....will the pool pump handle the viscosity....will check.
Plan fails: cat won't be able to drink out of it.
someone mentioned they just topped off a 10k storage yesterday on the Scanal news
If you mean gasoline, I don't think it stores well. Try starting your lawnmower in Spring with gasoline left over from last fall.
Won't work. Crude stores (underground). Refined gasoline not so well.
Gasoline stores fine with a stabilizer, but you don't want to leave it in your mower because the ethanol will gum up its insides.
Egypt is the tipping point for the collapse of a Middle East paradigm that supports US Oil consumption.
I gots an idea, let's have Fox and Rush and Hannity pimp that jackass that lost Nam for another week!
We were running out of oil when it almost touched $150 in 2008 and then it plunged to $40. Now it is again around $100 and reports of the world running out of oil are in circulation. The actual usage and the actual consumption have not changed so drastically in the last decade.
The only thing driving up commodity prices worldwide are speculators armed with cheap money provided by central bankers and super fast computers. This volatility in prices is causing a havoc in the lives of rest of the population and pushing them towards poverty as they can no longer afford the basic necessities of life.
Regulators are either hand in glove with the banksters or are too slow to react and take ages to identify and take measures to solve the problems.
http://www.marketoracle.co.uk/Article24581.html
i think hendry is runing a 6-12 mth bet against china, UST will be well bid as will USD.
May god have mercy on our greedy souls......*steals a gold coin from neighbor*
Does this mean all that bullshit paperwork is going to go *poof* ?
Hard to believe...
Oil? What about Chinese solar shares?
chinese solars are .05% of our current energy consumption...
Can we burn those solar share certificates to power our destroyers and fighter/bombers?
I think Uranium is hot right now (no pun intended)
Look at Uranium futures/stocks. I've seen a couple up like 300% in 6 months
The video is a pile of garbage. Not worth watching. Not neccessarily for the sound bites. But for the fact vimeo is a useless venue to rewind or forward a spot to. If you want to video dump at leat use youtube. they have a 120 minute limit now for useful video placements. I watched 40 minutes of that shit and entertained the fact two boobs understood that things are going on. While watching them I couldn't stop to think "ivory tower twits" listening to them.
Nice article. They are right. Oil is a great investment, because it has value and use.
time123
timer at http://invetrics.com
zero hedge,
wire rumor that Moody's are going to downgrade Japan 6.00pmGMT...
watch for it.
The Business of Climate Change Conference 2009
http://www.youtube.com/watch?v=wYuLjGQQ-jg
There must be exponential growth in something going forward. Cancer rate should.
long treasuries trade made 20% from April to August 2010. Hugh was spot on.
CRUDE OIL weekly and monthly charts remain neutral and are not bullish at present.
This indicates that market consensus for CRUDE is mixed at best and is currently suggestive of lower demand and lower global growth.
Geopolitical events affecting the CRUDE price are an unknown variable of course.
http://stockmarket618.wordpress.com
no comment
So how does a retail investor invest in oil? USO and the like with their negative roll yield don't work over any time period. XOM? BP?
HA HA HA HA HA. He doesn't.
You could buy futures, but they don't include storage, so if your aim is to buy and hold you end up massively overpaying for storage through that negative roll. Futures are good for short-term speculation but they are a loser's way to buy and hold.
I prefer oil services and refiners at this time.
Sure, there's all sorts of oil-related investment possibilities open to the retail investor. You could write a hundred books on the subject and still not cover all the territory.
But there is no reasonably priced retail opportunity to buy and store oil. It doesn't exist. And there would be a big ruckus if anybody tried to offer it, as it would only work in scale, and the offer would basically be an opportunity to corner oil supplies.
I prefer some vaseline before getting raped at the pump next time.
$5 gas homies...
PBT and their ilk.. Own the cash-flow.
You can invest in oil trusts like ERF, MVO, BPT. Look closely at the SEC 10K reports to see what amount of oil the trust has access to.
I remember having the same discussion about reserves, storage capacities, rate of new field finds, cost of refining shale oil, blah blah blah back in 2002. The thing about people who love oil so much that they can never see it ending is that they don't understand we live on a tiny little dirt ball spinning around an unremarkable sun situated in the dodgy end of the Milkyway in a universe bigger than all of our imaginations combined, and this tiny little dirt ball contains only so much of the black stuff that the monkey inhabitants burn in clever little ways. It's finite and it's precious because you need the capacity of an entire planet's ecosystem and millions of years to produce it. A pretty rare thing in the universe.
That rarity equates to price, and since we reached peak production of known reserves in bbls/yr of sweet light a few years ago, it'd be stupid not to make money from it. The only variables in this equation are political (Including war), but no amount of burying your head in the shale tar pits is going to change demand and production unless you have Mr.Fusion(tm) squeezed into the back of your DeLorean.
As for the academics blithely discussing the prospect of war and its aftermath on prices, there will be no aftermath in a world war fought between 1st world countries, just coackroaches discussing the price of flesh and bone.
This failure to pass is just good TV. Who here really believes the government's not already doing much worse than written in the Patriot Act? Or that its failure to pass hasn't already been remedied by some secret executive order or new fiction of law.
Doesn't matter if it passed or failed, the government will do what ever it wants. No judge, no congress can stop it. You people need to realize that your just the masses and tools to do the governments work. Listen to the un-elected Czars not Congress. That is where the real government resides. Stop listening to Gibbs, he's just a foil.
Your little 2001 A Space Odyssey thing is cute. "the black stuff little monkey inhabitants burn". Rather than millions of years, I prefer a shorter span with little sinners getting out of hand, and God squashing them with the animals and vegetation between layers of mud, as the water came up, so they oozed oil. Mega changes, mountains rise, earth cracks, ice age: buried deep. New sinners extract.