Marc Faber: If The U.S. Was A Corporation, Its Credit Rating Would Be Junk
Marc Faber discusses America's unsustainable debt load in this interview with Margaret Brennan on Bloomberg TV. An amusing observation: the GDP growth from each $1 of new total debt has dropped from $0.25 to -$0.60. Also some much deserved Bernanke and Krugman bashing. Why it is so difficult to realize that the only way out of the crisis is to cut corporate and sovereign debt, we don't understand. Ah yes, because for that to happen, equity values across virtually all of the US economy would be wiped out... And that would destroy the myth that there is any real equity value in America.
Full Faber interview.
via Gurufocus, h/t Mike
(13 votes)
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on Mon, 02/08/2010 - 17:21
#222580
...and in other news another strong auction...
on Mon, 02/08/2010 - 22:44
#222902
From direct bidders, what filth!
on Mon, 02/08/2010 - 17:28
#222588
well that's great, but government doesn't have a junk rating because it has a remarkable ability to...extract capital...from the markets...via methods other corporations don't have...
on Mon, 02/08/2010 - 20:13
#222776
well that's great, but government doesn't have a junk rating because it has a remarkable ability to...extract capital...from the markets...via methods other corporations don't have...
Indeed. It's called the United States Air Force. :>0
on Tue, 02/09/2010 - 00:02
#222956
Corporations leveraged credit a thousand times higher than any government in history, and in doing so, collapsed the entire global economy.
on Tue, 02/09/2010 - 00:13
#222960
There is a point at which not even the USAF can extract anything. Once you are unable to expand inflation any farther (credit and money supply) then you have to confront your debts...
http://research.stlouisfed.org/fred2/series/MULT
That there graph represents the limit of what inflation can achieve in terms of GDP progression.
But you are right. The USAF will be employed. We are going to have us a world war this time around. A war this one, that will be the real deal with civilians packed off to the front and food and energy rationed at home.
It is the only way we can recreate the conditions that will allow us to restart the inflationary cycle because I can guarantee that no Western main stream politician is going to do what needs to be done otherwise; that is, confront the public, expiate their guilt and their blunders and tighten their belts for many years to come. So war it is. I say by 2015 latest.
on Tue, 02/09/2010 - 04:39
#223034
This chart really isn't accurate. The fed can't properly measure the money mult because of the new forms of money that keep developing that are hard to track. One of Mishkin's colleagues talked about this recently. As more and more of these forms of new methods of payment become prevalent/are used, the multiplier will keep falling. This chart really doesn't mean much anymore because of this.
on Tue, 02/09/2010 - 10:16
#223203
I am willing to countenance that idea... however, the trend... the 30 year trend is unmistakable already from prior to the new fangled ways to pay...
on Wed, 02/10/2010 - 09:35
#224819
And by the way, what Faber is on about is Tobin's Q ratio... which really, buttresses the contention that inflation is an exponential dynamic thus you always need more inflation in order to achieve the same degree of GDP expansion... ergo, new units of currency gradually loose efficiency...
on Mon, 02/08/2010 - 17:30
#222589
America fully exported it's human "equity" 15 years ago, a process that began 30 years before that.
Today, America is little more than a gigantic casino for the poor; people living on credit cards, scrambling for jobs, pretending they know what they are doing. Everyone, just going through the motions of making any difference. The fact that gambling is openly practiced in so many places and at the State level, rather than confined to alleys and basements, is a sign that the music has stopped, the dance is over, and nobody knows what to do.
We have no plan. We have only the open road.
on Tue, 02/09/2010 - 01:44
#222995
Actually, we (the U.S.) still kick ass in science and engineering research. Sadly though, we've forgotten how to develop/implement our discoveries domestically (probably due to backwards corporate lobbying). Most countries (including those from Asia) still send their top scientists to be trained here. It's hard for other societies to really develop their scientific base if they are homogenous, "conformist", and "obedient" (Noam Chomsky's own words). For example, my wife's company (a large Swiss drug maker) has to recruit western trained chemists (many from the U.S.) to run their research laboratories in China because the "human equity" there is grossly inadequate.
Please be a little less draconian in your assessment of the intellectual talent still left in the U.S.
--Cheers
on Mon, 02/08/2010 - 17:32
#222592
Faber is one of the best, hands down.
on Mon, 02/08/2010 - 17:49
#222631
I was waiting for Faber's patented "you're an idiot" giggle when Margaret asked him, and then tried to defend, about "America being a Gold standard."
on Mon, 02/08/2010 - 17:32
#222593
But, the point is, a country is no a corporation, so your headline makes as much sense as saying:
If Tyler Burden were a banana, his favorite hobby would be biking.
on Mon, 02/08/2010 - 19:50
#222747
The headline should be in quotes because that line was from Faber, if you cared to listen to the interview.
That guy doesn't always make a lot of sense, but the point he brought up about the marginal productivity of debt was a great one.
on Tue, 02/09/2010 - 08:39
#223099
Something Professor Antal Fekete put in writing some time ago.
on Mon, 02/08/2010 - 17:34
#222599
That may be a little harsh considering the current credit speads. This ain't Greece...yet.
on Mon, 02/08/2010 - 19:36
#222728
As a top priority, conditions would have to include a complete change in the way that economic statistics are collected in Greece, ending years of political manipulation and book-cooking so that data from Greece can be relied upon (indeed, the distrust is so deep that nobody would be astonished if even the latest Greek deficit number of almost 13% underestimates the full horror of the situation).
From the Economist.
Political Manipulation and book-cooking. Can't be happening here...
And yes, unlike a corporation, countries can tax and print (printing meaning delayed taxation).
Unfortunately, countries must generate wealth in order to tax. America's wealth generator was transferred to China by Chinese Wallmart and Jack Welch's disciples. Six Sigma to you too, Jack.
So-called World trade is nothing short of importing cheap Crap from China, while China hoards everyone else's currencies. So, why call it trade, if they do not reciprocate by purchasing an equal value from other countries? Americans have been and continue to be ripped off by these Chinese Communist Fascists.
Send their crap back and demand a refund- that ought to wipe out their ongoing trade surpluses and manipulation.
Outsource Wallmart and insource American jobs.
on Mon, 02/08/2010 - 20:16
#222780
Walmart was a massive monopoly officiated, sanctioned and protected by our government--just like the privately held federal reserve cartel and it's member banks. The private owners of the federal reserve have sucked away value from the US citizens so long they own more than half of the DOW, so naturally, their puppets (the president and legislative bodies) are captured to protect their interests--and no better way than good old fashioned legalized, protected monopolies.
on Mon, 02/08/2010 - 20:25
#222793
Funny.
Walmart basically redefined global capitalism and harnessed distribution efficiencies distribution you want to shut it down? For what, so you can work at a pen factory making twenty bucks an hour? Sorry, those days have passed, grow up.
Yes, please kill the american spirit.
on Mon, 02/08/2010 - 22:54
#222912
yes, it is too late to do anything to stop the process, and also, since prices are lower for everyone, to argue what i said does make me sound like a kill joy for all--but i don't mean to kill the joy of the low prices, i am strictly speaking of what should have been done earlier on with Walmart and with the big banks, but monopolies are what do well, and since the largest shareholders of these giant firms have captured our legislature, what is good for their value is what gets legislated, regardless of the human cost or the cost to our nation.
Singing the praise of the genius of the Walmart process has nothing to do with my point... you might pause a few years so that you aren't so quick to judge.
on Mon, 02/08/2010 - 17:36
#222604
But the U.S. isn't like a corporation. They have a captive revenue stream that they control. That alone improves their credit rating. If a corporation is in a harsh economic climate, they have to worry if they'll have enough top line revenue growth to grow organically.
If the U.S. needs more top line revenue growth, they just create it via taxes.
This is why you can't analyze a country like a company. The country can last a lot longer than a company can.
on Mon, 02/08/2010 - 17:40
#222614
No, raising taxes beyond a certain point does not raise more revenue, it just makes tax avoidance more rampant.
And the mobile wealthy leave the country and renounce their citizenship if tax avoidance becomes too hard.
on Mon, 02/08/2010 - 19:55
#222753
That is part of the issue with Greece, I have seen estimates that 30% of their economy is underground.
on Mon, 02/08/2010 - 20:20
#222785
The number is 66% the underground economy is twice as big as the GDP.
Lot's of cash transactions, bartering, non reporting income from oversees sources, income from tourists, restaurants, rentals, you name it.
on Tue, 02/09/2010 - 09:12
#223129
If raising taxes increases revenue, then why is the country hurting for revenue after the Bush tax cuts?
They neither increased economic activity, or revenue. The results are in the deficits left behind.
on Mon, 02/08/2010 - 18:00
#222652
They have a captive revenue stream that they control.
I have often asserted that we are exactly one viable national tax resistance movement away from the restoration of our Constitutional Rights and the liberty that is our birthright.
on Mon, 02/08/2010 - 18:29
#222690
Hows abouts Social Security/Medicare/Medicaid "pay as we go"....we are not GOING anywhere except down.
Also, the Federal Income tax is not only illegal (it is not an apportioned tax) it has not been ratified by most states. Once people can not pay they will not pay, and that will be A-O-K. Too bad it will be too late...waiting on a miracle.
on Tue, 02/09/2010 - 09:14
#223131
Okay, well Federal mariuana laws are unconstitutional too. I dare you to walk past a DEA with a pound of the stuff and see if you win that argument in court. You'd have as much of a chance of winning that as getting away with not paying your taxes...
on Wed, 02/10/2010 - 18:45
#225813
Strawman.
on Mon, 02/08/2010 - 19:46
#222741
I am also sure you have asserted a lot of other things that have never come true.
Nothing to see here, just SWR digitally flatulating, please move on...
on Mon, 02/08/2010 - 22:47
#222904
+1, SWRichmond.
G#dspeed.
on Tue, 02/09/2010 - 09:16
#223134
But who wants to be the first to assert this power?
Who is going to start the movement? Are you? Are you going to be the example that they make out of somebody?
on Mon, 02/08/2010 - 18:03
#222659
True, sovereignty does distort things somewhat.
However, the math is irrefutable -- under no scenario will the debt be serviced.
Of course, employees and shareholders usually do not forcibly overthrow and execute corporate management and directors either. ;-))
on Mon, 02/08/2010 - 18:07
#222665
There's a limit to how much revenue a country can 'just create' via taxes, just as there's a limit to how much money a company can make just by raising prices.
on Tue, 02/09/2010 - 09:17
#223137
We used to have top marginal tax rates in the 70s and it never stopped people from paying before...
on Mon, 02/08/2010 - 19:54
#222750
So by your logic no country would ever go bankrupt. But they do, all the time.
The only difference with the USA is our debt is denominated in USD. So in nominal terms we will always be able to pay off USD debt by printing dollars (or more accurately, rolling over our debt with Bernanke buying the new issuance).
Also your premise of a country lasting longer than a company, there are plenty examples of Argentinian companies that didn't default when the government did.
on Mon, 02/08/2010 - 20:25
#222791
Countries do go bankrupt. But since there is no recourse on the loans, debt is forgiven and the bond holders loose all.
Then the country, starts over with most likely new government and the game starts all over again.
on Mon, 02/08/2010 - 20:09
#222775
<The country can last a lot longer than a company can>
A sovereign debt is only as good as the state that backs it up. Many times you don't even need a government change for sovereign debt to become worthless, like defaults and debasements. Either way for a little perspective, wikipedia is helpful.
<According to the Bank of Korea, there are 837 companies lasting over 200 years in Germany, 222 in the Netherlands and 196 in France>
http://en.wikipedia.org/wiki/List_of_oldest_companies and http://en.wikipedia.org/wiki/List_of_extinct_states
on Tue, 02/09/2010 - 00:14
#222964
and they can print as much "money" as they would like. No?
on Tue, 02/09/2010 - 08:19
#223088
The country can last a lot longer than a company can.
Beretta firearms has been around since about 1526. How many times has Italy's government come and gone since then?
on Tue, 02/09/2010 - 09:20
#223142
Okay, so I meant an economically unviable country can last a lot longer than an economically unviable company.
I'm not trying to parce words here, but you know it's the truth.
on Tue, 02/09/2010 - 09:28
#223154
I wasn't trying to parse words, either. I was simply responding to what you wrote.
But sure, "economically unviable" companies tend to not last too long - unless they're taken-over by their "rich" Uncle (AHEMgmAHEM), that is.
on Tue, 02/09/2010 - 12:41
#223510
yes it's a shame people forget that we can simply print our way to permanent prosperity
on Mon, 02/08/2010 - 17:36
#222606
I can't look at Margaret Brennan's random facial expressions. tourettes?
on Mon, 02/08/2010 - 17:59
#222648
I can't stop looking at Margarets err assets ..... I wonder when see will wear that famous red dress again.
on Mon, 02/08/2010 - 20:01
#222763
+100
on Mon, 02/08/2010 - 17:37
#222607
cougar_w,
Your comment gave me a chuckle. It's a complete "Casino" Economy.
on Mon, 02/08/2010 - 17:37
#222608
Credit ratings are irrelevant for a country which borrows in its own currency.
on Mon, 02/08/2010 - 17:40
#222613
how many people want to see Iran demand gold for oil? just to see the whole fiat salad get tossed?
on Mon, 02/08/2010 - 17:48
#222626
Then the bank holiday better be before the Islamic celebration on Feb 11th if the treasury does not want to lose their shirts and shorts; but actually I bet they close the banks the day after (Feb 12th), cut the currency, and blame Acch MAD redeem 'em in the JAW. Perfect ploy if you ask me. This is like the scene in Inglorious Bastards when they all have their pistols pointed at each others balls.
on Mon, 02/08/2010 - 17:59
#222649
The only payment Iran should get for its oil is lead.
on Mon, 02/08/2010 - 22:54
#222913
Well, they import almost all their gasoline.
on Mon, 02/08/2010 - 19:43
#222739
So junk bond Treasuries do not matter ? They certainly will matter if U.S. savers do not wish to buy more U.S. Government toilet paper (slightly used, one side only.)
on Tue, 02/09/2010 - 06:54
#223061
+100^10
on Mon, 02/08/2010 - 17:39
#222612
Junk implies someone would be willing to buy it.
Is "Chapter 7" a credit rating?
on Mon, 02/08/2010 - 17:41
#222615
I hear ya Mr. Faber but the US has the most powerful army in the world, and I bet you a few hundred nuclear missiles that its credit rating will never go down. Ever.
on Mon, 02/08/2010 - 17:43
#222621
Whoa. And I thought I was in a dark mood today.
on Mon, 02/08/2010 - 17:45
#222624
Credit Ratings are about as useful as a thumbs up from Siskel.
on Mon, 02/08/2010 - 17:52
#222635
+1
"I am an oil man"
on Thu, 02/11/2010 - 03:36
#226395
Credit ratings are slightly less credible than a World's Greatest Grandpa Award
on Mon, 02/08/2010 - 17:51
#222634
Would you continue eating at a 5 star restaurant if everything tasted like shit?
on Mon, 02/08/2010 - 17:54
#222641
Leo would, just to prove you wrong. LoL btw.
on Mon, 02/08/2010 - 18:02
#222656
LMAO....one does not need to eat shit to identify shit.
on Mon, 02/08/2010 - 18:10
#222669
I'll join Leo for dinner. Someone give him a nuke and I'll just keep slapping him and screaming nuke me you pussy. Till he finally figures out nukes only work for losers not winners because the person who is winning doesn't want to stop winning. Which is probably why we don't want Iran having one because they are probably so sick of our shit right now.
on Mon, 02/08/2010 - 18:19
#222683
Listen up folks, mock me all you want, but the US credit rating ain't going down, ever. And even if it does, they'll just tell everyone to fuck off, which is what they've been doing for years. "Read my lips, what we say goes" - George Bush Sr.
on Mon, 02/08/2010 - 18:30
#222692
Didn't George Bush Sr. also say, "Read my lips, no new taxes." ?!
on Mon, 02/08/2010 - 18:36
#222700
GWHB is no American! He is a merchant of death. Time for a Thomas Jefferson quote I presume...."Merchants have no country. The mere spot they stand on does not constitute so strong an attachment as that from which they draw their gains." -TJ
on Mon, 02/08/2010 - 19:01
#222705
C'est la guerre? (and I mean military, economic or trade wars, one or a combination) That's M.A.D. - mutually assured destruction. That's when the S *really* HTF. Not worth it.
on Mon, 02/08/2010 - 19:24
#222724
Hard to take you serious when you make a living selling US equities...
on Mon, 02/08/2010 - 19:40
#222735
Wow, Leo, history shows that it is not military might
that secures credit worthiness, but the obverse. Even
I knew that.
on Mon, 02/08/2010 - 19:49
#222745
Fasces is the the word for an ax tied into a bundle of rods that was the ancient Roman symbol for authority and later the source for the term "fascism."
Glad you like axes leo. Cause you're just the kind of nimrod they are looking for.
on Mon, 02/08/2010 - 20:01
#222765
As opposed to you, genius? Suck up all the garbage from Faber, Prechter, and all the boogey men out there. Go buy some gold bars and shove them tightly up your arse, just to make sure nobody steals them from you. Then hunker down and wait for the world to end. Have an ample supply of fresh underwear so you don't stain yourself.
on Mon, 02/08/2010 - 20:54
#222821
From a BusinessWeek article Jan 1991 <Still, German banks, which stopped lending money to the Soviets last year after their previous unsecured credits fell into arrears, are refusing to lend any more money without 100% government backing. And several, including Deutsche Bank, are making loss provisions for half of their Soviet loans and are downgrading the Soviet Union's once-stellar credit rating.> http://www.businessweek.com/archives/1991/b319721.arc.htm
I couldn't find exactly when credit ratings agencies downgraded the Soviet Union but I know in 1985 it was AA at least. Here the Soviet nukes and military were probably the only reason banks were still downgrading their debt when months away from collapse they should have been bottom rung. So to your point, there would be no USA before there would be a downgrade.
ps: its the nature of these forums for people to take shots at the authors n call em out by name. i hope it doesn't discourage you from responding to comments on articles because I enjoy seeing what you have to add whether I agree or not.
on Tue, 02/09/2010 - 05:15
#223039
the "soviets" stopped existing in 1989.
on Mon, 02/08/2010 - 22:10
#222880
Leo, you are a cliche ridden, name calling, minimally informed less-on, i.e., one step below moron.
on Tue, 02/09/2010 - 00:43
#222980
No, he is just another clueless, ignorant and gullible American in furious and desperate denial of the paradigm shift staring him squarely in the face. One can pity the supine intellectual and moral surrender he displays in his many posts, but I feel nothing but contempt.
on Mon, 02/08/2010 - 22:01
#222867
No new taxes, eh?
Leo, are you an alter ego for Timmy?
Lassie come home...
on Mon, 02/08/2010 - 22:12
#222871
Leo, you seem to approve the attitude of telling everyone to fuck off. Well, Nixon told all countries on the gold standard in 1971 to fuck off by refusing to honor dollar redemptions for gold and now the ¨blowback¨is here. You will not tell the blowback to fuck off, the destruction of this economy and the middle class and its pensions. And did not most if not all the pension professionals partificipate by investing and recomming investments in most of the shit financial instruments? How many had any position in gold although it was gaining year by year? You call yourself professionals, missing obvious trends, iInvesting in shit?
And, if you really look at the reality, the US credit rating is already down because real buyers are withdrawing and the Fed is secretly monetizing the debt. Unfortunately, the blowback is destroying the middle class and your clients, while all you money financial professional have gotten your fees for massive incompetence.
on Mon, 02/08/2010 - 18:32
#222694
"Excuse me waiter, but this shit tastes like shit. I ordered my shit medium rare and this is medium. Take it back if you can't cook it right. For gods sake isn't there a restaurant around here that can cook a fine piece of shit!?"
on Mon, 02/08/2010 - 20:37
#222810
Most Excellent Mr. Lennon Hendrix
Loved it... I would invite you out to dinner, but your tastes are a little too rarefied for me.
AAA must mean Arrogant Asswipe Aroma; I wonder how many AAA Reisch Notes Leo has hidden away instead of Gold.
After all, AAA rated by the government or by government mandated credit rating agencies it is all the same. AAA rated CDO's were asswipe.
P.S. the only gold I hold are my fillings. but buying government debt, while every country is racing to become ( NUMBER ONE, MOST INDEBTED NATION IN THE WORLD; WE WIN !) does not appeal to me either.
on Mon, 02/08/2010 - 23:01
#222917
+1000
on Mon, 02/08/2010 - 18:00
#222651
F'in A man!
on Mon, 02/08/2010 - 18:02
#222655
Yeah, and the Soviets - oh, excuse me, former Soviets - were too. Before they spent a decade breaking their empire on the dark stone of that dusty shithole.
on Tue, 02/09/2010 - 05:18
#223040
excellent. and too often ignored, point
on Mon, 02/08/2010 - 18:04
#222662
And that army is quite nearly useless if the oil stops, even for a day or two.
on Mon, 02/08/2010 - 18:08
#222667
Sure kid---the US has the most powerful army in the world.
Please explain how a small group of terrorists with no drones, tanks, warplanes, missiles, com-sat, intelligence forces, humvees, navy, 2000 lb "smart boms" can humiliate and confound said "powerful army" for over eight years.
How many nuclear weapons have we deployed since Hiroshima and Nagasaki?
The last thing we need to worry about is our credit rating.
on Mon, 02/08/2010 - 18:26
#222691
"Please explain how a small group of . . ."
That's an easy one! Restraint. If one is concerned about collateral damage, the deaths of innocents, targeting rather than obliterating, public opinion, etcetera, then it rather puts some limits upon capabilities.
on Mon, 02/08/2010 - 23:14
#222925
+111
on Tue, 02/09/2010 - 05:25
#223042
what's your idea of gwb's "mission" to be "accomplished"? ditto for afghanistan (yemen, somalia...?) how does it work? kill "them" "all"? even hitler missed a lot of jews (again, sorry godwin but this is an apocalyptic site).
on Mon, 02/08/2010 - 18:32
#222693
The simple answer is that NO terrorist without "drones, tanks, warplanes, missiles, com-sat, intelligence forces, humvees, navy, 2000 lb "smart boms""can humiliate a military force like the US....unless of course it's all made up. Get it?
on Mon, 02/08/2010 - 19:15
#222715
Errr, reading until here I would like to say this was a cnbs-like circle jerk, but its more akin to y'all just laying fetal in a circle, crying and beating off on the depression and your spam/gold/bullets.
on Tue, 02/09/2010 - 05:28
#223043
i like these careful distinctions.
on Mon, 02/08/2010 - 18:33
#222695
America on their knees because of 12 guys with box cutters....
Joke
on Mon, 02/08/2010 - 18:34
#222696
Correct: Hiroshima and Nagasak=no underground oil or apparatus to irradiate. We cannot afford to destroy oil or its machinery and operators via nuclear attack.
on Mon, 02/08/2010 - 19:54
#222751
Of course we can. Thats why people invented neutron bombs. Biological matter destroyed, hard assets survive. If America practiced Roman/German style response to threats, there would be no Afgans or Pakistanis. Except for the ones living in dearborn.
on Tue, 02/09/2010 - 05:30
#223044
worked well for the romans and the germans.
on Mon, 02/08/2010 - 22:06
#222875
Check out depleted uranium some time.
Iraq suing UK and USA for all the monsters
born from DU since Persian Gulf I...
http://www.legitgov.org/price_use_200m_try_bush_instead_of_ksm_010210.html
on Mon, 02/08/2010 - 23:37
#222942
It's criminal. Gulf War Syndrome is caused by this same thing with some of the PTSD. Even our soldiers are having children with birth defects. And we won't even give them the medical attention they need. Did I mention it's criminal? Total bullshit.
on Mon, 02/08/2010 - 19:48
#222744
Many an Empire crashed and burned when their armies returned to find their country looted by home-grown criminals.
And don't forget that a diabetic goat-herder still eludes the most powerful army in the world.
Course, it helps a bit when your Daddy's friends lent money to Dubya.
on Mon, 02/08/2010 - 19:59
#222758
Another BS argument. Russia defaulted on their debt while holding one of the largest nuclear missile arsenals in the world. This "strong military" argument is something that comes out of the mouth of a child, which you are.
A country will never default on debt that is issued in its own currency, at least not in nominal terms. That is the only thing saving us from financial armageddon.
on Mon, 02/08/2010 - 22:10
#222861
How about a little fact checking shall we Leo?:
USA is number 7 in total military size
after China 7 M, N Korea 6M, Vietnam 6M,
S Korea 4.2M, Russia 3.8M, India 3.8M,
USA with 3.4M, Brazil 2.4M.
Thanks to the export/theft of strategic technology
by Clintons et al from Loral, Sandia Labs et al,
China and Russia now target US and our 6000
military installations around the world with ICBMs,
fighter jets, missiles and tactical nuclear subs
as well as exporting military hardware to Iran,
Libya, N Korea and Syria. Plus Cosco runs world
ports. All China has to do is stop buying and
start selling mortgages and Treasuries as Russia
urged in 2008 to bring USA to her knees.
The borrower is slave to the lender...
http://www.jubileeprosperity.com/
on Tue, 02/09/2010 - 05:11
#223038
so did rome. so did britain. so what.
on Mon, 02/08/2010 - 17:50
#222633
Man, he has worn that pink(ish) tie for 5 years, at least... Otherwise, Markus is da man...
on Mon, 02/08/2010 - 17:52
#222636
The pink tie I can deal with. Just be thankful Faber doesn't take his fashion advice from Jim Rogers.
on Mon, 02/08/2010 - 19:35
#222730
Jimmy does have issues in that department...
on Tue, 02/09/2010 - 00:52
#222984
Yah nothing like getting financial advice from a guy who looks like a used car dealer.
on Mon, 02/08/2010 - 17:58
#222646
And if a corporation could print money and require all potential customers to pay specified revenue streams or go to jail, it would be rated AAA!
Also, if shit were edible, there'd be no world hunger!
on Mon, 02/08/2010 - 18:02
#222658
Nuclear weapons? Now what nation would stoop so low to actually use one of dem things? What nation could be so unethical to vaporize innocent civilians? Where would you find such a peaceable nation?
on Mon, 02/08/2010 - 18:03
#222660
A great idea: Iran has the oil. America loves and needs the oil. Make peace with Iran . Seems logical to me.
on Tue, 02/09/2010 - 05:50
#223048
it does seem logical, and is. harry truman set this particular baby carriage down the steps in 1945-1948 when he helped gestate israel against the advice of his secretary of state general george marshall. and the foolishly craven behavior of each administration since the six day war in 1967 has further worsened our "national security". one can search for a long, long time and not find an irony as ironic as the establishment of israel as a haven, a place of safety, for the jews after the holocaust. they (and we) would have been far, far safer had they settled in suburban munich, for example.
on Mon, 02/08/2010 - 18:04
#222664
I am tired of Faber. He has basically said the same exact thing for a decade (or more?). T. Boone Pickens is brilliant...no, he has just been long oil his whole life. A broken clock.
The debate about the US being "junk" is sort of like doing credit analysis on a senior secured bond of WMT. Sure, it might default, but if and when it does will you really care? Probably not because you will be living in a cave.
There is another World War before the US defaults...
on Mon, 02/08/2010 - 19:35
#222731
NO Money, no war. And do we really want another war? Wars don't fix anything.
on Mon, 02/08/2010 - 21:43
#222854
You do not need money to deploy weapins already owned and to pay soldiers who have "faith" in the United States, and thus the dollar. You simply need a scapegoat...
on Mon, 02/08/2010 - 20:03
#222767
We need a new refrain. Anyone buying solars at these bargain prices? LOL!
on Mon, 02/08/2010 - 20:57
#222830
Ya love winding the boyz up Leo. Is there anything you really believe in, cause it can't be solars. N'est pas ?
on Mon, 02/08/2010 - 22:13
#222881
Find something good and do it well.
Worked for XOM.
We are in world war now in case we
did not notice...
on Tue, 02/09/2010 - 06:02
#223050
no, we are (badly) fighting colonial wars a bit like nineteenth century britain fought better. when they got into a world war in 1914-1918 (actually mostly in extreme northwestern continental europe but whose counting) they noticed the difference.
on Tue, 02/09/2010 - 00:21
#222967
Bingo! But not "before" the US defaults. Because the West defaults.
The precursor to default is a decrease in social spending. This will create resentment and unrest. Before the natives start roaming the streets looking for some politician or banker to lynch, they'll be packed off to the front to fight some bogey man somewhere. This next world war will be the real deal and I say we'll have it by 2015 latest.
on Tue, 02/09/2010 - 05:56
#223049
the only thing between us and the cave is walmart? kmart and sears before it had their moment in the sun. don't confuse your adult lifetime with the history of the nation (or the species).
on Mon, 02/08/2010 - 18:07
#222666
USA = Japan 2.0
on Mon, 02/08/2010 - 18:14
#222672
OMG, someone else trying to revive the "Japan Scenario". When will it stop?
on Mon, 02/08/2010 - 18:11
#222670
In 2 short, fast years...we will wish we were like Japan.
on Mon, 02/08/2010 - 19:56
#222754
Japan does not have external debt. America does, and it is growing.
on Mon, 02/08/2010 - 18:15
#222676
Www.dow10000tshirts.com
going to get a lot of miles out of this one.
on Mon, 02/08/2010 - 18:17
#222678
Q: "So what was the Fed smoking all those years?"
A: Green shoots, of course.
on Mon, 02/08/2010 - 18:18
#222680
Who said it wasn't a corporation?
http://www.youtube.com/watch?v=UVSz3IynjAA
on Mon, 02/08/2010 - 18:19
#222684
Without timing and detail, this is just not an investible thesis.
I mean seriously, the yield curve is as steep as it has even been, there is no inflation in sight, and the world debt burden (hugely denominated in US dollars) is crushing on every conceivable scale. What's the curve gonna do, steepen to infinity and then fall over on itself?
I wonder how much of the current credit-rating bologna and anti-dollar sentiment is emotional reaction to disappointment in what America has become and the corruption and failure of its leaders.
Feeding crushed ideals and shattered dreams never made anyone better off. Better to protect those who you love and keep feelings out of investment decisions.
on Mon, 02/08/2010 - 22:17
#222882
The investable thesis is short...
http://www.jubileeprosperity.com/
on Tue, 02/09/2010 - 00:26
#222968
Timing is a bi@ch indeed. However, you can look at trends to see where we are going and how far the default is...
You want to look at the performance charts on page 5
http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID3585763
That trend is saying something. Particularly in light of the fact that the "authorities" are still bending over backwards to try and discourage the average man in the street to participate in this bull market. That's because this bull market spells the bankruptcy of the institution of power. This bull market is saying that not all is well within the institution of power. This bull market is a bull market now untill it will no longer be. In the meantime, this bull market is warning us all.
A bon entendeur...
on Tue, 02/09/2010 - 04:27
#223029
This is interesting work. Thank you.
on Tue, 02/09/2010 - 06:21
#223055
good stuff. thanks.
on Tue, 02/09/2010 - 06:09
#223052
steepen to infinity? no. but 6% (or 8%) seems feasible. government bond yields rose in the early thirties (see sidney homer's "a history of interest rates", truly a profitable read).
on Tue, 02/09/2010 - 08:35
#223096
I don't disagree at all with the notion of bond yields going up because of deflation. I just think we've had that run.
If 2s/10s goes to 800 basis points, I can't fathom the consequences they're so bad.
on Mon, 02/08/2010 - 18:21
#222687
How could it be junk? It's just as good as every bank and most corporations out there :)
Whoops. Move along.
on Mon, 02/08/2010 - 18:35
#222698
would love to know a link to the "counterproductive debt growth" plot. Antal Fekete wrote some essays on this last year and stated that the marginal productivity of debt had turned negative.
on Tue, 02/09/2010 - 00:27
#222970
It is not a plot. It is arithmetical.
I am no Antal Fekete but you may want to take a look at this:
http://guidoromero.wordpress.com/2009/11/07/the-utility-of-a-fiat-moneta...
on Mon, 02/08/2010 - 19:08
#222708
Cambodia??
What's Faber doing over there -- getting himself some lady-boy action?
on Mon, 02/08/2010 - 19:34
#222729
Inquiring minds should know better---Viet Nam, Laos and Cambodia are very promising EMs with Cambodia the least developed. He is going to make a lot of money...
on Mon, 02/08/2010 - 19:59
#222757
Sure.
But the abundance of lady-boys there don't hurt, either. *wink wink*
on Mon, 02/08/2010 - 20:47
#222779
interesting because of the historical predominance of buddhism in these three countries. i read where china is preaching the state religion of confucianism lately. we know they have an angle. this inquiring mind would ask what would these EMs represent? quick form these 3 countries with an acronym, might need a vowel. another question why don't they make these media plugins mac os friendly?
on Mon, 02/08/2010 - 20:52
#222820
huh video doesn't work with mac os? Everything works well on my white box pc with foc linux ubuntu, all hardware made in vietnam or bangladesh. TD does have a point that America doesn't have much equity left in it, even expensive apple machines have become white elephants. now I understand why Denninger is frustrated.
on Tue, 02/09/2010 - 07:44
#223073
China made a $900 million+ investment in Cambodia last year in agricultural land to guarantee food supplies to China.
on Mon, 02/08/2010 - 19:18
#222719
But the U.S. is not a corporation. As long they have the most "iron" in the world, nobody will really challenge them.
on Mon, 02/08/2010 - 22:19
#222884
Bioweapons are real cheap...
on Tue, 02/09/2010 - 06:25
#223057
not really challenge them? two (or three or four) wars going badly and you can say that?
on Mon, 02/08/2010 - 20:01
#222764
I will agree with that thesis when I see the usa dollar universally rejected around the world.
on Mon, 02/08/2010 - 20:34
#222805
This guy is right.... any body that understands
his message already has 30 % or more in Gold and
Silver.... it's the only thing that will hold up..
on Mon, 02/08/2010 - 20:39
#222814
Marc Faber is right.. when the crash comes... there won't be any time to switch out of paper investments and into Gold and Silver.
everyone who understands this guy already has 30 % + in Gold and Silver.... The US Dollar is Dog Food... Cheap Dog Food..
on Mon, 02/08/2010 - 22:20
#222887
Every crash since the USA left the gold standard
resulted in gold going down, hello...
http://www.jubileeprosperity.com/
on Tue, 02/09/2010 - 00:34
#222972
true enough whilst inflation has room to run... not so true when inflation has no more room to run...
Many people will not know or will have forgotten that in the 60s the USA were exactly in the same position we find ourselves in today globally; i.e. bankrupt. What saved the US then is the fact that the US$ was adopted as reserve currency and all countries around the world gradually moved onto a US$ based fiat monetary system of floating exchange rates. Thus since the 60s we've been pushing inflation into the markets and new currencies. The trouble is now, that all markets are pretty much saturated with inflation. This fact is attested by the Money Multiplier I posted above:
http://research.stlouisfed.org/fred2/series/MULT
This graph represents the limit of what GDP expansion inflation can bring about.
This is a time to have at least some gold in one's portfolio. At least until the trend changes that is... so far, the trend is your friend in gold
http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID3585763
Look particularly at the charts on page 5
on Tue, 02/09/2010 - 06:30
#223059
calculate the inflation adjusted return to the stock market and to gold from 1972 to 1982 and let us see your homework.
on Mon, 02/08/2010 - 20:54
#222823
Faber reminds me of one of the lunatics in the movie "12 Monkeys", which everyone laughs at and ignores.
The established Ponzi merchants hate the loons as they disrupt the action but no one gives them any credit when they are right. Remember we are all "monkeys" to them:
http://www.youtube.com/watch?v=y12hkHdN3Ds
on Mon, 02/08/2010 - 20:57
#222829
Great line in the movie:
"We're all monkeys, know your drugs."
Do you know your drugs?
on Mon, 02/08/2010 - 21:56
#222857
The difference between countries and companies is that countries can print their way out of the problem.
on Mon, 02/08/2010 - 22:22
#222889
Central Banks and Shadow Banks have
the same effect in deflationary defaults,
which is to say, none at all...
http://www.jubileeprosperity.com/
on Mon, 02/08/2010 - 23:12
#222923
http://www.xerox.com/index/enca.html
on Tue, 02/09/2010 - 06:33
#223060
well put
on Tue, 02/09/2010 - 00:35
#222973
http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID3585763
That is exactly our current problem... the printing has lost traction...
on Mon, 02/08/2010 - 22:03
#222870
The US Army? Per its own data, the US army lost every evenly matched battle in WW2; the highest AWOL; so I dont know.
on Mon, 02/08/2010 - 23:42
#222946
Hi, the way to exit from the serious collapse of sovereign debt is to devalue the currency against gold, or QE.
Going through some of the comments here suggests that Faber's example of the 'Long Depression' during the Gilded Age are ignored, that wages were stable in an environment of declining prices.
I would be looking for negative interest rate policy.
on Tue, 02/09/2010 - 01:07
#222987
Personally, I wouldn't listen to anyone, especially Faber. I didn't hear anything I didn't already know.
on Tue, 02/09/2010 - 02:32
#223005
I hope we don't get downgraded by those respectable credit rating agencies. They always do a good job .
on Tue, 02/09/2010 - 07:03
#223063
You don't ever hear Faber talk about Japan or UK defaulting. He's a USA hating shill.
on Tue, 02/09/2010 - 07:28
#223070
He hates our freedoms?
on Tue, 02/09/2010 - 07:58
#223080
This market has support and more counter trend rally looks likely. SP00/DOW downtrend on the daily chart continues.
http://www.zerohedge.com/forum/market-outlook-0
on Tue, 02/09/2010 - 08:16
#223085
My CIO doesn't hang his ass out on TV telling everyone how it is, why do you listen to these clowns that talk their own book all the time?
on Tue, 02/09/2010 - 08:19
#223087
"And that would destroy the myth that there is any real equity value in America."
Now THAT is harsh!