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Marc Faber: Relax, This Will Hurt A Lot

Tyler Durden's picture


Marc Faber closed out this week's Agora Financial Symposium with a speech that pretty much recapitulated the view that the end of the world is if not nigh, then surely tremendous dislocations to the existing socio-political and economic landscape are about to take place (with some very dire consequences for the US). His conclusive remarks pretty much summarize his sentiment best: "We've had a trend for most of the past 200 years: GDP of countries like
China and India went down while the West surged. That's now changed.
Emerging economies will go up, and your children in the West will have
a lower standard of living than you did. Absolutely. We won't sink to
the bottom of the sea. But other countries will grow much faster than
us. The world is very competitive, and the odds are stacked against us.
Americans, with their inborn arrogance, will not let it go that easily,
so there will be lots of tension going forward." While long-time fans of Faber will not be surprised by the gloom and doom (not much boom) here, anyone else who still holds a glimmer of hope that at the end of the day the CNBC spin may be right, is advised to steer clear of Faber's most recent thoughts.

And while we do not have the full presentation yet, the salient points have been recreated below courtesy of the Motley Fool. For those who desire a far more in depth presentation from the inimitable Mr. Faber, we direct you to his June 2008 capstone presentation: "Where is the boom, and the doom" - link here.

On reality: My views are not all that negative. I
think they're just realistic. I want to face reality. You have people
like Paul Krugman who thinks we should have another bubble to pull us
out of this. He actually said that. But he said the same thing in 2001.
And you know how that turned out.

On unintended consequences: The Fed doesn't seem to
have learned anything at all from its mistakes. Their current policy of
cutting rates to zero is designed to create sustainable growth, but
they've created larger and larger volatility in markets. There are many
unintended consequences of their actions.

The oil bubble of 2008 is a good example. In 2008, the price of oil
went ballistic, but the U.S. was already in a recession [it began in
Dec. 2007]. There was no rational reason oil should have gone
ballistic. The Fed's easy money just fueled a bubble. It was like a
$500 billion tax on consumers courtesy of the Fed. That's the added
amount that it cost you, and it helped push consumers over a cliff in
late 2008.

On the Fed: The Fed doesn't pay any attention to
asset bubbles when they grow. That's their official policy. But they
flood the system with cash when bubbles burst. They only care about
bubbles when they crash. It's a very asymmetric response and it has
many unintended consequences.

Letting bubbles inflate and then fighting them when they burst
actually worked for a while. That's what makes it dangerous. It worked
in the '90s. But you shouldn't read too much into this: This period was
assisted by unusually favorable conditions. From 1981 until early last
decade, commodities were in a bear market after a bubble in the '70s
and early '80s. And interest rates were falling throughout the '80s and
'90s, too. They almost never stopped falling. That made Fed policy look
like it was working.

Bubbles can still happen without expansionary monetary policy. In
the 19th century, you had bubbles in railroads, for example. But today,
the Fed has created a bubble in everything -- in every single asset
class. This is an achievement even for a central bank. Stocks.
Commodities. Bonds. Real estate. Gold. Everything goes up when the Fed
prints. The only asset that goes down is the U.S. dollar.

On deflation: I'm a believer that the stock market
lows of March 2009 will not be revisited. You have people like Robert
Prechter who think the Dow will collapse to 700 because of debt
deleveraging. Debt deleveraging could happen, but the Dow will not fall
because of monetary policy. The Fed will keep everything inflated in
nominal terms. And if the Dow does go to 700, you'll have more to worry
about than your investments. All the banks will be bust. The government
will be bust. You don't want cash if massive deflation happens. On the
contrary: It will be worthless. You have to think very carefully about
hardcore deflation.

On credit addiction: In a credit-addicted economy,
you don't need credit to actually fall for there to be problems. All
you need is a slowdown in the growth rate, and you get big problems.
Now, the government and the Fed are aware of this, so they are creating
debt through fiscal deficits and monetization. That creates a hugely
volatile environment. In 2008, government credit creation was inferior
to private credit contraction, and asset markets tanked. In 2009,
government credit creation was higher than private contraction, and
asset markets went ballistic. Lately, government credit creation has
slowed, and asset markets have gone down. Now, the Fed is aware of
this, and it's only a matter of time before it throws more money into
the system. I guarantee this.

On what the Fed will do from here on out: The
easiest way to fix our debt problems is with 6% inflation per year.
That bails out everyone in debt. Interest rates will stay at 0% in real
terms forever, in my opinion. If inflation is 5% per year, the Fed will
keep interest rates at 5%; that's how you get 0% real interest rates.
Now, we could have debt contraction in the private sector, but it
doesn't matter. It will be more than an offset with government debt
creation. So it's not a good idea to be all in cash and out of stocks.
Cash is very dangerous when central banks want real interest rates at

On the rest of the world: The U.S. today is much
worse off than it was 10 or 20 years ago compared with the rest of the
world. The Asians should thank the Federal Reserve for this. The Fed
practically created the emerging market economies. The Chinese pegged
its currency to the dollar in 1994, and until 1998 not much happened.
When the Fed began printing and boosting asset prices in 1998, there
was this huge debt growth, and U.S. consumers began spending at a
massive rate. That increased our trade deficit from $200 billion to
$800 billion. Of course, trade deficits have to be offset by trade
surpluses in other countries. So the Chinese began ratcheting up
production. Then their employment went up. Their wages went up.
Entrepreneurs began investing more money in capital spending. The Fed
is not the only factor that led to strong emerging market growth, but
it certainly was a major factor in it.

On delusions of grandeur: In the U.S., we still
think that we are the largest consumer market in the world. For some
services we are, but in general this is the wrong way to look at things.

There are huge differences in how statistics between countries are
produced. For one, the U.S. is the most leveraged. Other countries
factor this in. Also, consumption in the U.S. is 70% of GDP, but it's
almost all on domestic services. Spending on actual goods is only 20%
of consumption. In the U.S., we spend $600 billion a year on defense.
But $300 billion of this goes to personnel and retiree costs. In China,
the cost of personnel is basically nothing. When you adjust for
purchasing power, China probably spends about what the U.S. does on
military capital.

We also think that we have all the knowledge of the world. We think
that's our edge. But knowledge in countries with much larger
populations have the edge. Research now is being done in Asia because
it's cheaper there. Companies like Intel, IBM, and Microsoft are researching in Asia. It's just so much cheaper there. And they are
smarter than the U.S. in many ways, too.

h/t Ajay


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Mon, 07/26/2010 - 20:36 | 489440 Rusty Shorts
Rusty Shorts's picture

 - and then, there's the Cotton Gin.

Mon, 07/26/2010 - 20:45 | 489457 thesapein
thesapein's picture

From wiki:

Between the twelfth and fourteenth centuries, dual roller gins appeared in India and China. The Indian version of the two roller gin was prevalent throughout the Mediterranean cotton trade by the sixteenth century. This mechanical device was, in some areas, driven by water power.[4]

Mon, 07/26/2010 - 22:08 | 489597 nmewn
nmewn's picture

Isn't wiki open source? The free encyclopedia that anyone can edit...LOL.

Just sayin...don't get your boxers in a bunch ;-)

Mon, 07/26/2010 - 22:18 | 489620 thesapein
thesapein's picture

that's what makes it so fun!

Mon, 07/26/2010 - 22:45 | 489657 nmewn
nmewn's picture

Well there ya long as everyone knows a complete moonbat can throw something on it, it's cool...LOL.

But most don't.

Mon, 07/26/2010 - 22:55 | 489666 UncleFester
UncleFester's picture

Go easy on the moonbats, "the moon is a harsh mistress".

Mon, 07/26/2010 - 23:24 | 489697 nmewn
nmewn's picture

I alternate between LMAO at them and wanting to break things.

Further up the thread we have one on some eugenics kick, whining about obesity. You would have thought breeding super races where everyone looked alike and thought alike had been resolved.

Well here's an idea...if one can afford it, they get to do what ever they hell they want. If one is a ward of the state and a good little storm trooper they get to eat carrots and celery "to keep costs contained" by the state.

Friggin idiots.

SeeYa unc.



Tue, 07/27/2010 - 00:15 | 489744 Seer
Seer's picture

Well, based on the state of the commercial food systems I'd say that nearly all of us are "Wards of the State."

Obesity is the result of a poor system, a system that we're all forced to subsidize.

So yeah, fuck the State!

Tue, 07/27/2010 - 06:55 | 489867 nmewn
nmewn's picture

Obesity is the result of no self control...period...exclamation point.

Didn't Bloomberg just mandate how much salt would go into prepared food? Fine for the plebes, but what do they eat?

We live in a nation where it's perfectly acceptable for "greenies" to watch a president fly half way around the world, emitting 600 tons of carbon in the process, to talk about "global warming" taxation on the masses, in the middle of a blizzard, yet they cannot see the hypocrisy.

Where a first lady pay's someone to tend her garden and shuts down blocks of urban traffic in order to purchase vegetables that she then claims came from her garden...and it's oooh's & ahhh's.

Where self centered Dorian Gray's fabricate boogeymen so fast yesterdays boogeyman is soon forgotten as they rush to explain to the world why they are so unhappy with themselves.

It's bullshit.

They can fix themselves, their neurosis is not my problem...LOL.


Tue, 07/27/2010 - 11:52 | 490293 thesapein
thesapein's picture

I totally agree about wiki, though I'd include any source as having the same problem of being written by a person and not a god.

Mon, 07/26/2010 - 21:01 | 489480 Kayman
Kayman's picture

Hey Thes.

If America is just a nation of "copiers" then why is China over here stealing every industrial secret they can get their hands on ???   After all, they already invented everything- didn't they ????

Mon, 07/26/2010 - 22:01 | 489581 Mr Lennon Hendrix
Mr Lennon Hendrix's picture


Aw sheeeiiit, Billy C done gave them half of theirs!

And the Bushes probably did as well!

Reagan?  The US government sells the data.  So not only are they taking your taxes to fund their regieme, they make money on the other end.

Same with drugs, only that department runs not outta VA, but from Af/Pak.

Mon, 07/26/2010 - 22:14 | 489607 ToNYC
ToNYC's picture

The Chinese people invented noodles and put Italy on the map after the French polished their helmets.

Mon, 07/26/2010 - 22:21 | 489625 thesapein
thesapein's picture

I would never say either nation is just a bunch of copiers.

Plus, I doubt many of us are very good copiers.

Mon, 07/26/2010 - 22:33 | 489646 Snidley Whipsnae
Snidley Whipsnae's picture

You left out huge water wheels dwarfing anything in the West and then combined them with levers and cams for driving huge trip hammers for forging steel, crushing rock, milling grain,...and much more. All automated as long as the river kept running.


Mon, 07/26/2010 - 18:31 | 489283 buzzsaw99
buzzsaw99's picture

That's now changed. Emerging economies will go up, and your children in the West will have a lower standard of living than you did...


My children? Has he seen them? Where are they? What are their names? The Fabernator scares me not in the least.

Mon, 07/26/2010 - 18:37 | 489287 spinone
spinone's picture

I think he's talking long term and in population trends.  Your milage may vary. 

Mon, 07/26/2010 - 18:38 | 489290 Johnny B
Johnny B's picture

And who can deal with extreme deprivation more rationally:  An upwardly mobile Chinese peasant; or a formerly comfortable middle-class fat & lazy American who does not understand why his unemployment checks have stopped?

Mon, 07/26/2010 - 19:17 | 489334 FEDbuster
FEDbuster's picture

Two bowls of rice per day, meat twice a week and a motorcycle instead of a bike, maybe a cell phone, TV or a laptop computer eventually. 

What's the difference between Socialism and Communism?  An AK47 pointed at the back of your head.

Mon, 07/26/2010 - 22:11 | 489603 nmewn
nmewn's picture

A pregnant socialist always gives birth to a bouncing baby communist.

You can quote me on that.

Tue, 07/27/2010 - 06:53 | 489863 New_Meat
New_Meat's picture

the myth of "Red Diaper Doper Baby" is no myth. - Ned

Tue, 07/27/2010 - 00:18 | 489745 Seer
Seer's picture

Ah, but we're the ones with M16s pointed at the back of our heads!  Oh, wait!  Come to think of it We ARE better off, as the AK47s aren't pieces of shit!

Mon, 07/26/2010 - 18:41 | 489293 Seer
Seer's picture

Farber's talking his book.

NO ONE'S GROWTH IS GOING TO GO UP IN ANY SUBSTANTIAL WAY, PERIOD!  This is global contraction, contraction from the industrial age.  Farber makes a living selling the same old dying status quo shit; yes, he's able to tell us the color and smell, not that anyone else with half a brain couldn't do the same, but he's still stuck on pushing shit.

Yes, the US will go down.  No, the others won't necessarily go up (esp to any signficant degree).

Mon, 07/26/2010 - 18:46 | 489295 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

I agree with Faber on every point except here:  "The oil bubble of 2008 is a good example. In 2008, the price of oil went ballistic, but the U.S. was already in a recession [it began in Dec. 2007]. There was no rational reason oil should have gone ballistic. The Fed's easy money just fueled a bubble. It was like a $500 billion tax on consumers courtesy of the Fed. That's the added amount that it cost you, and it helped push consumers over a cliff in late 2008."

Oil plateaued in '05, this stunting growth all around.  Hence housing's prominent collapse and then equity's.  Soon it will be the bond market, with currentseas, then all that will be standing is Faber in platinum and silver armaments and a gold clathed steed.

Could Hubbert call it, or could Hubbert call it!

Oh, and it is always best to listen to this while reading/watching Faber...

Faber is a machine sent back through time to kill Keynesianism....

The Terminator Theme (Orchestral):

Mon, 07/26/2010 - 18:51 | 489303 FrankIvy
FrankIvy's picture

Lennon H - Close, but I strongly encourage you to consider that your facts are not arranged properly.

The peak of production in 05 is nominal only - average production from 05 to now has been fairly flat.

Oil followed all other commodies in a spike that peaked in 08 and dropped for 1.5 years thereafter, about. 

Point is, if production caused price to triple, then why is it half that now?

I too, as a peak oil adherent, originally thought the 140 price was a supply constraint.  We'll get back there, and maybe soon, but what caused that spike was massive amounts of money dumping into commodities at the end of the housing bubble.  If that wasn't the case, then how would you explain how corn, copper, soy, and virtually every other commodity screamed up at the same time.




Mon, 07/26/2010 - 19:27 | 489320 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

"...average production from 05 to now has been fairly flat."


However what caused the spike was production, not investment.  Investment was what caused its meteoric rise in such a short fashion from '07 to '08, sure, but the root was in '05 when production peaked.  I think that the Dinosaur Kings looked at the data they had attained from around '06-'07 and said, 'Look oil production plateaued' and then revved the engines until the end (collapse of the Market in real time circa Fall '08). 

Also, the doelarr is "stronger" they oil is trading accordingly..or so they say.

This whole market collapse, it has everything to do with the oil production.

Mon, 07/26/2010 - 19:18 | 489322 Seer
Seer's picture

Exactly!  But... I still think that it's a sign of the fundamental that is declining resources, with oil being the top bill.  The markets started to realize that oil is in fact limited and that there really isn't some technological genie to get our butts out of this.  Perhaps this realization happened before the housing bubble and That bubble was the convenient outlet for the panic, I don't know; but I do know that what's going on now is the realization that there's no longer anywhere to push for growth.  From this point on it's the slinky down the stairs: eveyone rejoices when the sliky's hits its arc, but most fail to see that the trajectory is still DOWN... money to be made as the slinky slinks, but eventually we will run out of stairs, and at that point slinking won't be happening.

Mon, 07/26/2010 - 21:41 | 489544 JW n FL
JW n FL's picture

"The peak of production in 05 is nominal only - average production from 05 to now has been fairly flat."

It called peak "AFFORDABLE OIL"... not peak oil... lite sweet crude... verse what China uses almost strictly... heavy crude... our dependance on sweet light crude!

Start here...

Mon, 07/26/2010 - 22:48 | 489664 DoChenRollingBearing
DoChenRollingBearing's picture

JW, I believe that the US uses heavy & sour (H2S) crudes more than China does.

For heavy and/or sour crude, you need special equipment that most Chinese refineries do not have.  Too bad for Venezuela's Chavez has mostly heavy crude, that's why he kind of has to sell to us (or to his Chavez Oil unit Citgo) his heavy stuff.

Could be my info is out of date...

Mon, 07/26/2010 - 23:12 | 489684 JW n FL
JW n FL's picture


Published Nov 6 2004 by ChannelNewsAsia/ AFP, Archived Nov 6 2004 China's crude oil output to peak at 200 million tonnes in 2015 by AFP staffer

BEIJING: China's crude oil output will peak at 200 million tonnes annually in a decade, but even that will be far from enough to cover the country's voracious energy needs, state media said.

The prediction for crude oil production in 2015 has been made by the State Information Center, a top government think tank, based on present oil extracting technology, the Xinhua news agency reported.

China's output of crude oil reached 170 million tonnes last year, up from just 120,000 tonnes at the start of the communist era in 1949, according to previous reports.

The problem is that even though domestic output will continue to grow, it will be in no position to meet demand.

Crude oil consumption is forecast by the think tank to hit 350 to 380 million tonnes as early as 2010, up from a little more than 250 million tonnes last year.

China, the world's second-largest oil consumer after the United States, has been a net importer of oil for the last 10 years as domestic supply fails to keep up with soaring demand.

Note the date... 2004?! where was I? fishing? buying commercial real estate... good times... where did they go? sorry.. I liked it, not to your point... forgive me.. orinoco cheat page for your use(s).


China imported about 120000 bbl/d of crude oil from Venezuela... 120k a day of heavy...

as I try to find something worthy of your time... about China's Heavy Crude Production going back... I am finding other nice little reads... so please read if you want or not... just an offering...


Some 70% of China’s proven reserves are heavy oil, though only 13% of current production.


China Lends Venezuela $20 Billion, Secures Oil Supply (Update2)

That works... I guess... but China's production capabilites are geared towards Heavy not lite and have been that way for decades. I hope my sharing turned up something good to read for you.. feed the brain, right?

Tue, 07/27/2010 - 00:28 | 489749 Seer
Seer's picture

Thanks for clearing the air on that one JW!

In the US they were trying to build more refinery capacity for heavy crude, but doing so would have tipped everyone off as to how far the US was behind in being prepared for the decline in sweet crude.  The problem was that if they actually came out with that as a fundamental reason then they'd have had to admit that there IS in FACT fixed amounts of oil, and that we CAN run out if it (or, as the proper case may be, out of "affordable" oil).  And this my friends is where the "evironmental freaks" served cover well, for it was the "environmentalists" who were responsible for our not being able to increase our refinery "capacity."  The other hidden truth was that we were going to run into an economic slowdown (permanent as I claim), and increasing capacity would be contributing to over-capacity: yes, under-capacity for heavy crude, but once again the story tellers dare not go in this direction unless they have to confess that we're screwed.

Tue, 07/27/2010 - 14:31 | 490678 JW n FL
JW n FL's picture

It is hard not to like what you say...


Capacity? we had a manufacturing slow down here.. in the U.S.! becuase of electrical output demands where not meetable earlier this year.


Not wall street, not banking and not abortion.


POWER! or lack there of to be clear... any demand on the capcity now in place would cause a bullrun like none before seen. and they bitch and cry about gold? got fucking electricty? I do BITCHES! and natural gas wells... lets me be clear, I am a HUGE fan of Christmas lights and I just refuse to go without! Gold? how about ice? or a cold beer? or your mothers heart meds, maybe your wifes? Gold? thats some funny shit!

We are out of affrodable capacity... I am using your words! and the draw on capacity for any forward momentum... would cause a run in prices... thusly we have Zero movement... enviroment? No... But 300% to how much? more tacked on to the running transpo tab? becuase we are at our limit?


Money is every where! so whats the problem! party on? why the slow down?


Ok, I am done... nice to meet you and nice to see someone with a fucking clue... for a change!

Mon, 07/26/2010 - 18:56 | 489305 economicmorphine
economicmorphine's picture

When you say "Oil plateaued in 2005", I presume you mean production since you follow with  reference to Hubbert, correct?  Just trying to clarify  your thought process for personal use.  Thank you.

Mon, 07/26/2010 - 19:05 | 489313 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Yes production.

Edit: production.

Discovery plateaued in....the 30's I recall.

Mon, 07/26/2010 - 21:15 | 489501 Kayman
Kayman's picture

So happy to see Thomas Malthus is alive and well.  We're running out of food, we're running out of oil.  It is all advertising by the oil cartel- domestic and Middle East.

For a declining resource- it sure a hell is profitable.

Mon, 07/26/2010 - 21:21 | 489512 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

So where is the more of it?

Mon, 07/26/2010 - 21:31 | 489529 tip e. canoe
tip e. canoe's picture

smack dab right under the paper street soap company.

Mon, 07/26/2010 - 21:37 | 489537 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Got soap?

Mon, 07/26/2010 - 22:17 | 489617 ToNYC
ToNYC's picture

I'd be paying more attention to potable water than gold or crude oil.

Mon, 07/26/2010 - 22:28 | 489637 tip e. canoe
tip e. canoe's picture

got spring?

Mon, 07/26/2010 - 22:58 | 489669 UncleFester
UncleFester's picture

got irish spring?

Mon, 07/26/2010 - 23:43 | 489718 Lucky Guesst
Lucky Guesst's picture

Speaking of water. Any idea why bottled water is being attacked and taxed in favor of tap? I mean what about coffee, juice, tea and everything else that comes in plastic bottles? I personally think its because they want me to drink the fluoride.

Tue, 07/27/2010 - 00:34 | 489752 Seer
Seer's picture

Well, one could be paranoid about such things, but really... Bottled water is pretty silly.  I'd rather get it from my public utility than to pay for Nestle to bottle that same water and sell it to me for 1000x the cost!  And then I get to pretend to recycle the plastic (sending it off to China for god knows what)?

The Israelis know the importance of water, that's why they're placing their major "settlements" on major water aquifers.  If this real truth be known it would be hard-pressed for anyone to defend the Israelis (genocide) practices.

Tue, 07/27/2010 - 11:40 | 490270 hedgeless_horseman
hedgeless_horseman's picture

There is a reason it is called Evian.  People are so naivE that we think it is not just tap water.

Tue, 07/27/2010 - 14:48 | 490719 Cathartes Aura
Cathartes Aura's picture

Water is an important issue in the Arab-Israeli conflict—indeed, according to former Israeli prime minister Ariel Sharon quoted by Abel Darwish of the BBC, it was one of the causes of the 1967 Six-Day War. In practice the access to water has been a casus belli for Israel. Palestinians complain of a lack of access to water in the region.[24] Israelis in the West Bank use four times as much water as their Palestinian neighbors.[25] According to the World Bank, 90% of the West Bank's water is used by Israelis, despite their making up only a fraction of its population.

I remember reading Maude Barlow's excellent book "Blue Gold: The Battle Against Corporate Theft of the World’s Water" a few years ago, where she went pointed out the multitude of swimming pools and watered lawns in the Israeli "occupied territories" while the Palestinian's were rationing water from depleted wells. . .

swimming pools  & watered lawns. . . in the desert. . .

Mon, 07/26/2010 - 22:45 | 489658 Snidley Whipsnae
Snidley Whipsnae's picture

Over on The Oil Drum they were coming in their pants about the run up to ~$147. IT'S PEAK OIL, IT'S PEAK OIL! they shrieked every day. I tried to tell them it was lots of dollars sloshing around in all commodities and in many other assets. I also asked them why there were 12 Iranian oil tankers loaded, sitting in the Persian Gulf for weeks, but with no market. SA was saying that they could increase production but there was no buyers. Guess how popular I was?

I started shorting oil at ~145 and made a killing in two weeks. The shriekers slunk away from the site. End of story.

Tue, 07/27/2010 - 00:47 | 489755 Seer
Seer's picture

Your logic doesn't follow.  Just because you made money off of a price bet, severa tankers sitting around with oil AND Saudi Arabia saying that the could pump more still doesn't equate to (as fact) that world oil production peaked.  Peak production means peak production, it doesn't matter the reason!  Whether the demand is reduced "voluntarily" (economic slowdown), or whether through physical resource exhaustion, it doesn't matter, a production peak is still a production peak.

I was advising people many years ago about this, telling people that price didn't matter, that it was about affordability.  I said that oil at $150 might be more affordable than at $30 if you're unemployed.  Yes, MANY years ago I saw this coming...

But good for you being able to spot the shifting in the commodities!

Tue, 07/27/2010 - 06:55 | 489868 Snidley Whipsnae
Snidley Whipsnae's picture

I don't follow your logic or perhaps I did not make myself clear.

I was betting that the run up in oil prices was a function of too much sloshing money created by the Fed. IOWs, the Fed created a false price signal in commodities by the creation of a very large amount of money and the cheap money went in search of a return on investment greater than inflation, and in turn, created a type of 'push-cost' inflation in spot prices of commodities...including oil prices. 

My bet was that we were not witnessing a run up in oil prices due to peak oil, but a run up caused by speculation that the Fed (perhaps inadvertently) caused by the creation of too much money chasing ROI over inflation. Speculators will always borrow cheap money to bet with and this causes price distortions, as ZIRP is even now causing distortions.

We have witnessed Fed induced price distortions in dot com, real estate, commodities, treasury issues, etc. All in the last few years. BTW, PM prices have not been in a bubble but their prices have been forced upward by debasement of fiat currencies (printing fiat) even as the Fed and all CBs are working in concert to keep PM prices down. Investors are slowly edging into PMs due to fear of fiat currency collapse or extreme debasement of currencies.

I will say that we are past the peak in oil production when the pump prices of fuel rises above the ability of average consumers to purchase the fuel, and remains at or above that price until demand drops for some reason...probably price. So peak oil as viewed by the average consumer will be a see-saw affair as prices rise, demand falls due to price, rinse and repeat. I would also say that past peak oil we will see that 'seasonality'  will no longer be a predictable indicator of future pump demand because of the leveling effect of more countries building strategic reserves...and more consumers begin to hoard fuel when the pump price drops temporarily. 

It is absolutely possible for some countries to be priced out of the oil market for various reasons. The biggy is how much GDP is created per barrel of crude. When this point is reached you can bet that phony GDP numbers are not going to guarantee crude delivery, nor are oil producers going to be willing to accept fiat currency created with a key stroke. To the fuel consumers of priced out countries there would be no practical difference in 'peak oil production' due to lack of crude, or 'fuel available at the pump' due to the fact that they can no longer afford to pay the pump price. All those consumers would know is that they can no longer afford fuel and that their economy, which runs on oil, is collapsing.


Mon, 07/26/2010 - 21:44 | 489552 trav7777
trav7777's picture

Discoveries peaked in 1964.

the run-up in oil was driven by speculation at the margin, but the inventories data told the tale that consumption was running above production.  In that climate, price must rise and dramatically.

Since, the US's oil consumption has fallen roughly 10%.  There is your returned slack capacity.

There's a REASON the price of oil remains high and why the price of gasoline didn't ever move that much.  Those calling for oil prices in the 30s are fools; the entirety of nonconventionals production would be shut-in at that price level.

I've been pounding the oil=growth meme here for months; good to see it is gaining traction.

And, for the cornucopians, Jevon's Paradox maintains its force.  Were we to invent something like a gasoline fuel cell and convert all cars to constant-velocity ICE plus electric drivetrains tomorrow (similar to modern train engines) we'd simply free up a bunch of oil for someone to do something ELSE with.  Under no circumstances would that slack supply be "saved" for the future.  It'd be consumed to generate something...perhaps even so you could double the amount of driver-miles.

There's no impetus nor precedent for actual resource conservation, outside of perhaps Europe and Japan.  A miraculous increase in efficiency would be seen by ChIndia as cover for them to ramp up per capita consumption rates

Mon, 07/26/2010 - 21:56 | 489560 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

I must have been thinking Saud then.  I think Saud's discoveries peaked in the 30's.  And they being the swing producer (former?) I must have connected accordingly. 

Saud peak (discovery)=world peak(discovery)

....or maybe the US peaked in the 30's?  Oh gosh I am getting all mixed up!

Thanks for the clear up.

Tue, 07/27/2010 - 01:04 | 489761 Seer
Seer's picture

No, I was clearly in your head and recall that you were thinking it was US oil discoveries which peaked :-)  Good recall! :-)  (but seriously, it was the US whose oil discoveries peaked in the early 1930s)

Mon, 07/26/2010 - 20:14 | 489413 PBRmeASAP
PBRmeASAP's picture

Yup, you're right... Hubbert called it!

Mon, 07/26/2010 - 21:51 | 489567 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

"The junker does not agree!"


Mon, 07/26/2010 - 18:51 | 489304 lynnybee
lynnybee's picture

great, just what I need is more pain .    Go ahead, BRING IT ON ..... ...... like HUGH HENDRY said on one of his YOUTUBE clips ,  " let's purge this system of it's rottenness" & from a different YOUTUBE clip he said at the very end, "I'll see you on the other side."  (i think he meant he'll see us on the other side of depression / austerity ).    By the time this mess is over with I'll be pushing 80 years old & there's nothing left anyway .......... I'm all doom / gloom today, just like Dr. Faber ......

Mon, 07/26/2010 - 19:13 | 489323 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

I think we need to purge the system too.  Once it is over I think those who are ready can start fresh.  I think a new beginning is just what we need.

To see a sunrise as if is the last, but to remember the first, everyday, just like today, and there will always be, a tomorrow.

Mon, 07/26/2010 - 21:16 | 489503 honestann
honestann's picture

Well, yeah, that's essentially correct... except for one supremely nasty fact.  If the tiny minority who "get it", who are sane, rational and productive, simply WAIT until we arrive at the other side - then I can guarantee you that the other side shall never happen.  The predators-that-be are quite intent on applying every modern technology to assure they can PERMANENTLY enslave mankind.  And believe me, they can do this, unless the tiny minority who "get it" take serious actions to destroy the predators.

This is why I am pessimistic... the vast majority of even "the best" folks are disabled.  They believe talking and voting will somehow do the trick.  But that's just crazy.  Until they decide to lock and load, in some/any real form and effective form each individual chooses, the "good side" will remain utterly impotent.

Mon, 07/26/2010 - 21:25 | 489518 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Who's waitin'?

Mon, 07/26/2010 - 21:26 | 489520 saulysw
saulysw's picture

What a depressing, but probably quite realistic, thought.

Mon, 07/26/2010 - 21:50 | 489563 JW n FL
JW n FL's picture

Are you suggesting "We the People"? do something?

Start here...

When you are done... let me know, maybe the few the proud? wait, your crazy and they are all sane and you are a threat to whatever is... can you keep up? the fact that you printed that here in this site... means you are fishing or stupid... so if you are not law enforcement, your hard drive is being looked at or already has been flaged. Enjoy your evening... a parting gift. it should say ten times (10) times... but unless you clear cache and all other info.. its a useless exercise.

Mon, 07/26/2010 - 22:32 | 489644 Cathartes Aura
Cathartes Aura's picture

wow JW. . .that video clip. . . don't know whether to laugh, cry or make sure my passport is up-to-date. . .

hmmm. . . answer: c) all of the above.

Mon, 07/26/2010 - 23:20 | 489694 JW n FL
JW n FL's picture

I wanna cry, why can't we get our shit together as a Country... answer: the majority is stupid... not ignorant... but no child left behind? helped? how? "We the People" with a brain that even half way works are few and far between! Cry Borther, Cry!

I am prepped... but its sad that nothing will change for the better.

Mon, 07/26/2010 - 22:41 | 489654 DarkAgeAhead
DarkAgeAhead's picture

As a harddrive wipe, wouldn't a 20 pound sledge work just as well?  Except of course for your cloud and all that.

Mon, 07/26/2010 - 23:15 | 489688 JW n FL
JW n FL's picture

God Bless MicroSoft and Google... true patriots those two...

Mon, 07/26/2010 - 23:28 | 489699 fxrxexexdxoxmx
fxrxexexdxoxmx's picture

How many correct answers did this video producer get? When the outcome is chosen finding the route is easy.

Ask home schooled children these questions and see the what happens.

Mon, 07/26/2010 - 23:08 | 489679 UncleFester
UncleFester's picture

(Fester As Mako)

Binge and then purge, binge and purge, rinse, repeat.  You cannot beat math. 

" assured, this will be the sixth time we have destroyed it, and we have become exceedingly efficient at it."

Mon, 07/26/2010 - 20:35 | 489437 THE DORK OF CORK
THE DORK OF CORK's picture

Iynnybee you must still be a teenager.

Not to worry it will be good to see the coming renaissance is your declining years

Mon, 07/26/2010 - 18:57 | 489306 imapopulistnow
imapopulistnow's picture

Faber is right on every point.  Those who work the hardest and smartest will prevail.  No, it ain't us.

Our next step will be to tax and regulate multinational corporations until they move out of the United States to more friendly economies.

Mon, 07/26/2010 - 19:25 | 489347 Seer
Seer's picture

You can work as hard and smart as you like, but if you're working for the big corporations you're not going to land in utopia.  I've seen lots of extremely hard-working (and smart) people NOT climb above it all.  This mantra was primarily developed by the Big Corporation for suckers.

NOTE: If EVERYONE worked equally as hard and was equally as smart, then what?  Remember, there's 6.5+ billion people on the planet.

Mon, 07/26/2010 - 22:19 | 489622 ToNYC
ToNYC's picture

Smarter monkeys win.

Tue, 07/27/2010 - 00:04 | 489735 Lucky Guesst
Lucky Guesst's picture

Good, they need to go. They don't pay taxes anyway. It is still our choice to buy or not to buy. When everyone smartens up and uses small business instead, you will have better products and better prices and more jobs...... eventually.

Tue, 07/27/2010 - 01:38 | 489771 Seer
Seer's picture

I can't speak to the issue of prices or "better" products, but I can say that we'll have more meaningful products.  Yes, more people will be employed; many will be in farming/agriculture...

Mon, 07/26/2010 - 18:59 | 489308 godfader
godfader's picture

Faber is very tiring to listen to. The same non-sense all the time. Interesting from a historic perspective - after all he gained his PH.D. in economic history - but completely irrelevant to a trader that looks at world markets and commodities over a time frame of say a couple of months. That's why Faber writes newsletters instead of trading for a living or running a hedge fund. This guy would be roasted alive by the markets.

Anyone notice Faber's obessession with the US Fed. This guy has been remarkably quiet on the European crisis and the catastrophic management demostrated by the ECB. Also why does he never mention the monetary bubble of epic proportions in China? No, all he keeps mentioning is Bernanke, the Fed and how the US is going down the drain. Yawn.

Mon, 07/26/2010 - 19:27 | 489354 Seer
Seer's picture

Exactly!  He's talking his book!  Yes, there's some truth, but his "solutions" are shallow.

Mon, 07/26/2010 - 19:30 | 489359 bigfootmm
bigfootmm's picture

ah godfader, I suppose you have seen a chart of the US budget along with the unfunded liabilities the US gov't has accumulated. And you certainly have noticed that interest rates on the US debt are low. For now. These factors in addition to rising energy costs, rising unemployment, rising health care costs, and an imbalance in the current account do paint a picture of the sort Faber paints.

Mon, 07/26/2010 - 20:03 | 489399 thesapein
thesapein's picture

You sound hungover. Maybe that's why he's tiring you out.

I could care less about your trading habits and maybe more about the habits of producers, laborers, and anybody else who matters more than a leach.

Mon, 07/26/2010 - 19:14 | 489325 Gloomy
Gloomy's picture

July 26, 2010 - Daily Growth Index Surpasses 3% Contraction Rate: Since last week our Daily Growth Index has weakened further, surpassing a year-over-year contraction rate of 3%. This daily measurement of on-line consumer demand for discretionary durable goods has now dropped to the lowest level it has recorded since late November 2008: (Click on chart for fuller resolution) Our Daily Growth Index reflects the strength of consumer demand over the trailing 91-day 'quarter', weighted according to the contribution that goods involved in on-line transactions make to the GDP (per the BEA's NIPA tables). It is designed to serve as a proxy for a 'real-time' GDP, and it slipped into net contraction on January 15th, 2010. To put this decline in perspective we offer the following observations: ? The current contraction in consumer demand for discretionary durable goods has now extended for more than 6 months. ? The day to day level of the year-over-year contraction is now worse than a similar reading of the 'Great Recession' of 2008 was after 6 months. (Click on chart for fuller resolution) ? The amount of damage done to an economy by an economic slowdown can by quantified by multiplying the event's average rate of contraction times the duration of the event. By that measure the 2010 contraction has now inflicted 43% as much pain on the economy during its first 6 months as the 'Great Recession' did during the first 6 months of that slowdown. ? Although this contraction has not yet reached the extreme contraction rates that were seen during 2008, after 6 months it has not yet formed a bottom. Furthermore, it is now likely to last longer than the 2008 event. ? In an even broader perspective, the current level of the Daily Growth Index over the trailing 91-day 'quarter' would put it among the lowest 6% of all calendar quarters of GDP growth since 1947. Only roughly 1 in 17 quarters of GDP activity have been worse. ? The duration of the current contraction event is becoming a real problem. Our trailing 183-day 'two consecutive quarters' growth index has dropped into the 5th percentile among similar two consecutive quarters of GDP 'growth' since 1947. This means that the trailing 6 months have been statistically worse than the trailing 3 months -- less than one in twenty 6-month spans have been worse since the BEA began keeping quarterly records. -------------------------------------------------------------------------------- Our Housing Sector Index has been volatile recently, swinging as much as 10% in less than two weeks. These kinds of swings have also shown up in media reports on home sales: A substantial portion of that volatility has been the result of recently renewed interest in the refinancing of existing owner occupied residential mortgages: When that upturn in recent refinancing activity is compared to a similar chart for consumer interest in loans for the initial purchase of new or existing residences, a clear divergence can be seen: Although our Housing Index reacts on a day to day basis to both types of loan activities, it is probable that in the current economic environment they are making very different contributions to economic growth. That wasn't true as little as three years ago, when refinancing activities were an economic engine of growth, cashing out homeowner equity and reinvesting it in home improvements or other durable goods. In contrast, today's refinancing activities are much less likely to result in increased leverage and surplus cash. In fact, much of the refinancing activity may be resulting in deleveraged loans and 'cash-ins' to maintain conforming LTV ratios. All of this activity may simply be the result of homeowners seeking to lock in historically low mortgage rates, while deploying available cash into long term 'investments' with relatively high yield-to-risk ratios. In any event, we would read any upward volatility in our Housing Index with caution until consumer demand for initial purchase home loans significantly improves. At the Consumer Metrics Institute we measure day-by-day changes in the discretionary durable goods transactions of internet shopping consumers. We genuinely believe that the real economy lives where 'Main Street' consumers are (figuratively and/or literally) clicking 'Add to Shopping Cart', not where the GDP's factories slavishly follow the consumer's lead. The millions of consumers we measure each day respond collectively to what they see going on in their own local economy, with their own family and with their friends. And right now real-world 'Main Street' consumers are demonstrating substantial caution.

Mon, 07/26/2010 - 19:16 | 489333 Gloomy
Gloomy's picture

Tyler- You really need to post this.

Mon, 07/26/2010 - 20:54 | 489472 Rusty Shorts
Rusty Shorts's picture

Thanks Gloomy.

Mon, 07/26/2010 - 23:34 | 489708 fxrxexexdxoxmx
fxrxexexdxoxmx's picture

great post gloomy thanks

Mon, 07/26/2010 - 19:23 | 489336 Belrev
Belrev's picture

Asians are only good at one thing - immitation. Every business and job I ever engaged in has only solidified this view. Asians, Chinese and Indians, have no original ideas of their own. If you don't have a few white guys working with them from who they can steal ideas, and implement them, poorly so, your asian tigers will soon stall and not know what to do. What is it that these Chinese and Indians have invenvted recently that is driving global economic  growth? Cars, computers, what? The answer is nothing. And without a Western consumers these Asian miracles will pop like any bubble will.

They are buying their weapons from Russians and/or western countries. They are importing raw materials, energy supplies, and even food. They have terrible overcrowiding and uncontrolled population growth. As soon as US and Europe collapse, Asia will collapse even more. Case in point is Japan, supposedly a developed asian nation. When in 2009 we were in the midst of slump, their economy dropped 12%, because their exports to US dropped 50%. See what happens. And now think of China, whose economy is 2/3 export oriented. Marc Faber must have some special deals from the Communist party that he is pumping them so much all the time.

Mon, 07/26/2010 - 20:06 | 489402 thesapein
thesapein's picture

(from my previous post)

another self glorified American?

We copied all sorts of stuff:

paper, printing press, bank note, gunpowder, bomb, crossbow, hand cannon, rocket launcher, flame thrower, land mine, chemical warfare, compass, manned flight (kites), seismograph, science of predicting earthquakes (see 1976 Tangshan earthquake example:, blast furnace, cast iron, co-fusion steel, gas cylinder, gas pipes (used bamboo), belt drive, chain drive, borehole drilling, rotary fan, bulkhead, fishing reel, pinhole camera, etc.

And now we say they beat us in innovation only because it's cheaper to R&D in China?

Mon, 07/26/2010 - 21:05 | 489485 Blankman
Blankman's picture

We came up with the bomb and forced our central banking system upon the rest of the world - we win!!!

Mon, 07/26/2010 - 21:42 | 489548 Iam_Silverman
Iam_Silverman's picture

"We came up with the bomb"

Would that be the Atomic Bomb, or the other "bomb", Collateralized Debt Obligations and Credit Default Swaps (Financial Shock & Awe)?

Mon, 07/26/2010 - 21:47 | 489557 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

"Double, double toil and trouble;
    Fire burn, and caldron bubble"

Mon, 07/26/2010 - 21:52 | 489570 trav7777
trav7777's picture

we copied MANNED FLIGHT from China?  This is the most fucking absurd thing I've ever heard.

Do you really want to go down the list of "invented in America" vs. the ROW?  Seriously?

Mon, 07/26/2010 - 22:30 | 489639 thesapein
thesapein's picture

I said they invented it, and did so before us. I did not say we necessarily copied the idea from them. Anything that can be invented once can be invented twice.

No and no, to your last questions. America as a country hasn't been around that long and would look silly compared to all of history and the rest of the world (is that ROW as you put it?) so I would never ask such an odd question in the first place.

Mon, 07/26/2010 - 22:38 | 489649 thesapein
thesapein's picture

Oh, wait, me wrong, you right.

I did say we copied it. Did we re-invent it or copy it?

There are some things we didn't copy from that list and still can't do, like predicting earthquakes.

Tue, 07/27/2010 - 09:52 | 490050 RKDS
RKDS's picture

This is the most fucking absurd thing I've ever heard.

Understatement of the year.

About a year ago, when Obama was on his world apology tour and downplaying American exceptionalism, I saw a great rebuttal video over at PJTV.  I wish I had a link for you but I never registered to the site.  The point is that the rest of the world takes America and its achievements, particularly from the 20th century, (to say nothing of its boundless generosity) totally for granted.

Myself, I can't wait for us to finally wake up from this stupor and dump China and the Indians like the dead weight they are.  I'm sick of productive people having their lives destroyed so some worthless money shuffler on Wall Street can reward himself a little more.  I'm sick of having to constantly replace garbage-quality goods with more garbage-quality goods because there aren't any alternatives at any price.  And I'm unbelievably sick of day-traders, yachters, politicos, and other boobs who "just want their life back" telling me all would be well if I would just "compete harder" with slipshod frauds making pennies a day in a Communist hellhole.

Wed, 07/28/2010 - 00:23 | 491478 Kayman
Kayman's picture

I second that.

Mon, 07/26/2010 - 21:11 | 489487 tip e. canoe
tip e. canoe's picture

funny, i have an Asian friend whose original creations have been stolen by her bosses at American corporations for oh so about 10-12 years or so now.   of course, they wouldn't call it 'stealing' cuz they're offering her the grand ol' chance of living in the "land of the free", courtesy of the scourge H-1B.  meanwhile, they take her shit, make 1 or 2 minor alterations, slap their name on it, ship it to China to be produced for cheep cheap and make about $5-6 million/yr net net.

faber might be right or wrong with his economic predictions (the magic 8 ball says "could go either way").   one thing he is right about is that it's the ignorant arrogance, arrogant ignorance (such like that which is displayed in your comment above) that will be the true cause of the ultimate unravelling of this country in its current form, along with a malignant neglect to see who the real enemy really is (hint: it's a "person", but ain't really a person).   looks like those cagey Brits didn't really lose the war after all.

God Save the East India Trading Company.

Mon, 07/26/2010 - 21:55 | 489576 trav7777
trav7777's picture

Hey, she can always move back to China and innovate there...oh no wait, she can't.

If you are not party of the political class PARTY there, just like the aristocracy elsewhere, you're going nowhere except to the salt mines.  Someone more powerful will simply steal your IP.

What do you expect from a nation of wanton counterfeiters?  It's impossible to take China seriously when they encourage shit like Louis Vuitton and Tiffany a brand that China ISN'T counterfeiting.

Mon, 07/26/2010 - 23:01 | 489660 tip e. canoe
tip e. canoe's picture

she can go back home whenever she likes...she's not chinese (hard for you to believe i know, but some people have more than one token asian friend).  and i hate to break it to you bub, but tiffany & louis vuitton are knocking themselves off.  you want quality & durability from their labels?  goto ebay and buy something pre-21st century.  otherwise, it's all CRAP with a brand on it, so women on both sides of the atlantic & pacific can walk around like the property of some sheep farmer/magician.  how 'intellectual' is that?

again, you allow your inherent (and most likely karmic) racial biases to cloud your otherwise very sharp mind into making incorrect assumptions and blanket generalizations.

oh, and fuck you too {grin}

Tue, 07/27/2010 - 01:41 | 489774 Seer
Seer's picture


Wed, 07/28/2010 - 00:25 | 491481 Kayman
Kayman's picture

When the argument wears thin, don't forget to play the race card.

Mon, 07/26/2010 - 22:04 | 489592 lizzy36
lizzy36's picture

Jesus, i thought your racist rants were limited to posts that contained the word Israel or Jew. 

Don't you have a david duke link for us?

Mon, 07/26/2010 - 19:23 | 489343 Richard Whitney
Richard Whitney's picture

Faber went on to praise Chinese drywall, sheetrock, melamine and lead paint. He praised the Politburo for creating so many empty apartments, and said that they proved that governments should run economies.

Mon, 07/26/2010 - 19:33 | 489365 robobbob
robobbob's picture

"Americans, with their inborn arrogance, will not let it go that easily"

It was that trait that brought our success. And our best chance at saving ourselves. It's the pathetic "everyone gets a trophy" entitlement mentality that is sinking us.

Training, skill, planning, hard work. It's okay to be an a$$, as long as you have what it takes to back it up. Sadly, too many people today think just showing up for the game and  having attitude is enough.


Mon, 07/26/2010 - 19:44 | 489372 buzzsaw99
buzzsaw99's picture

Our arrogance kicked Germany's ass in two world wars. Closet nazi imo.

Mon, 07/26/2010 - 19:53 | 489386 bigfootmm
bigfootmm's picture

Our arrogance kicked no one's ass. Hitler's mistakes kicked Germany's ass along with US materials production.

Mon, 07/26/2010 - 21:46 | 489554 Cistercian
Cistercian's picture

 That and some great Polish mathematicians who were instrumental in breaking Nazi codes.

Mon, 07/26/2010 - 22:08 | 489598 traderjoe
traderjoe's picture

And the confident self-reliant can-do spirit has morphed into an arrogant, slovenly, I want mine attitude. 

If the above is going to quote win/losses at war, what have we done since WWII? I'm not a fan of the analogy, but we haven't done so well since then. 

Tue, 07/27/2010 - 04:41 | 489829 Escapeclaws
Escapeclaws's picture

Don't forget the Russkies!

Mon, 07/26/2010 - 22:18 | 489616 Anarchist
Anarchist's picture

The tide had turned against Germany long before the US entered WWI and WWII. The US waited till the Germans expended themselves both militarily and financially. In WWII the Russians inflicted over 80% of all German military personnel losses. The Brits and other allies accounted for maybe another 10%. The Brits and Russians killed the majority of German air crews. The only thing the US and Britain outdid the Russians in was killing German civilians.

As far as technology, in WWII the Germans were 15 years ahead of the US and England in aircraft and missle design. The US, Britain, France and Russia looted Germany of tens of thousands of German scientists and academics. 

Mon, 07/26/2010 - 23:57 | 489729 fxrxexexdxoxmx
fxrxexexdxoxmx's picture

Old Uncle Joe had no need of war materials from the USA for his wanton,cruel, and fucking stupid use of human capital killing them thar Jermans.

Tue, 07/27/2010 - 01:46 | 489777 Seer
Seer's picture

Like, what, they were going to roll over to the Germans?  Besides, this still doesn't dispell the myth that it was the Good Ole USofA that came to the rescue.  Never mind that it was Good Ole USofA industrialists who helped back and arm Hitler to begin with.

Tue, 07/27/2010 - 08:41 | 489962 Rusty Shorts
Rusty Shorts's picture

"Never mind that it was Good Ole USofA industrialists who helped back and arm Hitler to begin with."


Dude, you got that all wrong, it was the Russians who armed and feed the Nazi's.

Tue, 07/27/2010 - 15:09 | 490765 Cathartes Aura
Cathartes Aura's picture

. . . but it was amrkn companies that helped the nazi war machine:

An ..lite of about twenty of the largest American corporations had major German connections including General Motors, Ford, Standard Oil, Du Pont, Union Carbide, Westinghouse, General Electric, Gilette, Goodrich, Singer, Eastman Kodak, Coca-Cola, IBM, and ITT. American banks were deeply involved in Germany under Hitler, among them J. P. Morgan, Dillon, Read and Company, and the Union Bank of New York, owned by Brown Brothers & Harriman (now Halliburton). Union Bank was managed by Prescott Bush, grandfather of George W. Bush. Prescott Bush was an eager supporter of Hitler who made considerable profits by doing business with Nazi Germany. With the profits he launched his son, the later president, in the oil business.

Read more:
Wed, 07/28/2010 - 00:28 | 491484 Kayman
Kayman's picture

And the British- yes, the British supplied Germany with capital and goods.

Tue, 07/27/2010 - 00:12 | 489741 RockyRacoon
RockyRacoon's picture

I think you just told our ultimate story:

US waited till the Germans expended themselves both militarily and financially


The US, Britain, France and Russia looted Germany of tens of thousands of German scientists and academics

Mon, 07/26/2010 - 19:47 | 489376 bigfootmm
bigfootmm's picture

Integrity and an approach to work that embraces excellence for its own sake will take you a hell of a lot further than being an ass. The essence of business is cooperation and the main feature of prosperity is division of labor. The asses in this mix only cause problems others have to solve or work around.

Mon, 07/26/2010 - 19:55 | 489390 buzzsaw99
buzzsaw99's picture

Integrity and an approach to work that embraces excellence for its own sake will take you a hell of a lot further than being an ass...


The hell it will. Steal what you can, it's the maggot way. Slaving for bennie-clownbux is a fool's errand.

Mon, 07/26/2010 - 20:04 | 489400 bigfootmm
bigfootmm's picture

Looks like Faber's point about arrogance has merit just gauging by some of the recent comments. Morality is in decline here in the good ol' USA as happens in every country where redistribution of income becomes established as a right by the receivers. More thieves ain't gonna help, buzzsaw.

Mon, 07/26/2010 - 20:14 | 489415 buzzsaw99
buzzsaw99's picture

More thieves ain't gonna help, buzzsaw.


Ain't gonna help whom? Looking out for #1 is what the pontificating Faber does as well. People like him have made things the way they are so I will shed no tears when the rabble storm his moat.

Mon, 07/26/2010 - 20:34 | 489435 bigfootmm
bigfootmm's picture

Everyone looks out for number 1. But that cannot explain what is the best course of action. If looking out for number 1 means you steal what and wherever you can because others are doing so, you are anything but constructive to yourself or to society. Instead you are just another sheep conforming to what the flock is guided to do in its internment. Escape is impossible so long as you cannot see your prison walls however you believe you can widen them. Belief is itself the problem.

Mon, 07/26/2010 - 20:41 | 489447 THE DORK OF CORK
THE DORK OF CORK's picture

In  a debt fueled monetary system it is powerless to be a frugal altruistic sheepdog as all your pack sheep are going to the slaughter anyway.

Your only hope at rebellion is to bet on the farms collapse and come out the other side and become a wolf again.

Mon, 07/26/2010 - 20:42 | 489450 buzzsaw99
buzzsaw99's picture


also - Hide the silver.

Mon, 07/26/2010 - 20:52 | 489466 bigfootmm
bigfootmm's picture

That buzzsaw can discern any sense out of this insensible post makes a certain kind of sense.

Mon, 07/26/2010 - 20:41 | 489448 buzzsaw99
buzzsaw99's picture

If looking out for number 1 means you steal what and wherever you can because others are doing so, you are anything but constructive to yourself or to society...

yourself - wrong on #1.

society - don't care about #2.

Mon, 07/26/2010 - 20:47 | 489460 bigfootmm
bigfootmm's picture

Yes, no doubt many people will form packs in a crisis and attack whom they can for their resources. Then you can live like the lowest humans in history after your work is done.

Mon, 07/26/2010 - 20:56 | 489476 THE DORK OF CORK
THE DORK OF CORK's picture

When it gets to the dark age phase it will be about survival and not morality.

Most people who are moral and have some understanding of the monetary system have done what they could to prevent this but to no avail - it seems now that collapse is probable as the bankers have been much more successful pushing this episode out into the future and indeed part of me wants them to do it for another few years - but morality will come after the lesson in monetary humility that we will all experience

Mon, 07/26/2010 - 21:19 | 489504 bigfootmm
bigfootmm's picture

I see. So morality is something you shelve when push comes to shove? What you have to understand is that you are not moral now but you are just like all the other sheep. If you were moral now and in the past, along with your fellows, we would not have the government we now have. Centralized power is a result of sheep doing what sheep do. But worse in that the voting sheep believe in stealing from one according to his ability and giving to another according to his need. Isn't that what we have? By accident? Not. By design through taking advantage of immoral people who look out for number 1 and somehow believe that society is not something to care about but only something to exploit as if bread appeared on grocery store shelves by magic.

Mon, 07/26/2010 - 21:31 | 489528 DarkAgeAhead
DarkAgeAhead's picture

Sadly it makes sense that morality will find a lowest common denominator, when that Dark Age, already here, intensifies.

Not all share a high morality.  Those with none or a violent predisposition shall in certain cases find an advantage, but in others, tremendous risk and disadvantage.

Not unlike corporations today.  Or our economy for that matter.  Essentially and inherently violent.

Mon, 07/26/2010 - 21:39 | 489533 tip e. canoe
tip e. canoe's picture

witness the ads for the new angelina flick...or any other movie for that matter.

maybe you should change your name to 'darkagenow'?

Mon, 07/26/2010 - 22:56 | 489659 DarkAgeAhead
DarkAgeAhead's picture

Sadly the leading edge of the Dark Age is falling, I think.  I guess I have to hold out some hope, that even as we are certainly entering a twilight period, there will still be enough Good Light to hold the situational relativists and opportunists within some beneficial rule of law.

EDIT - and the name is a nod to Jane Jacob's last book, I believe, before she died.  A fast and good read.

Tue, 07/27/2010 - 08:12 | 489928 THE DORK OF CORK
THE DORK OF CORK's picture


Your morality tale is tiresome - I wonder if you have ever run anything in this world that our Gods of Money have created.

For many years I lectured friends and work colleagues not to get into debt as I had some inkling with regards the nature of the beast - unfortunately I did not understand the true nature of money until recently and stayed in cash.

But anyway it was to no avail as these people were addicted to the spice and were consumed with the fever it generates in the human soul.

I was regarded as a crank and a spoilsport for my constantly negative views regarding the nature of wealth and society and was ignored.

I tried my best and I am not prepared to use violence to acheive objectives as I have still to much to lose and therefore not free - so be it.

When or if you risk your life for a cause get back to me - otherwise sod off.


Mon, 07/26/2010 - 21:02 | 489482 buzzsaw99
buzzsaw99's picture

Then you can live like the lowest humans in history after your work is done...


My work? I merely adapt to my environment. If morality was rewarded it might have some merit but as it is now it is every person for him/her self. Have you not noticed?

Mon, 07/26/2010 - 21:30 | 489525 bigfootmm
bigfootmm's picture

But you see, morality is rewarded. There is a book, Punished by Rewards, in which studies show that people, including children perform tasks significantly better when they are not offered a reward for doing so. The more a person approaches life with the idea that every action should be rewarded the less such a person can appreciate life itself. Humans have the fabulous potential to appreciate nature, things, and other people but this facility is compromised when the idea that anything goes is dominant.

Mon, 07/26/2010 - 21:40 | 489540 tip e. canoe
tip e. canoe's picture

Mi, a name I call myself,
Fa, a long long way to run!

Mon, 07/26/2010 - 21:41 | 489543 Blankman
Blankman's picture

Got bullets?

Mon, 07/26/2010 - 19:54 | 489387 francismarion
francismarion's picture

After the economic collapse of my eel farm, I came to the realization that business has only one option left in America.


At first I resisted.

But then I came to the realization that the winds of change are blowing something fierce. And foul.

I realized that the current climate is one of hope. And fried take-out. 

America wants something new.  And it wants a deal.  I became convinced we have entered a post-specie world where appetite can be exchanged for satiation and the price of everything is free to those with good taste.  And those that taste good.

Now you can find me most days at the Nude Eel for some raw or fried wiggley, tender and I mean tender, slippery put-it-in-yer-mouth-and- squeal with delight eel-lectric disco dancing b-girls. Cover charge included. 

Mon, 07/26/2010 - 21:20 | 489510 grunk
grunk's picture

Were they electric eels? Because nudity and electric eels might be a bad business model.

Mon, 07/26/2010 - 19:54 | 489388 francismarion
francismarion's picture

After the economic collapse of my eel farm, I came to the realization that business has only one option left in America.


At first I resisted.

But then I came to the realization that the winds of change are blowing something fierce. And foul.

I realized that the current climate is one of hope. And fried take-out. 

America wants something new.  And it wants a deal.  I became convinced we have entered a post-specie world where appetite can be exchanged for satiation and the price of everything is free to those with good taste.  And those that taste good.

Now you can find me most days at the Nude Eel for some raw or fried wiggley, tender and I mean tender, slippery put-it-in-yer-mouth-and- squeal with delight eel-lectric disco dancing b-girls. Cover charge included. 

Mon, 07/26/2010 - 20:10 | 489409 TheSettler
TheSettler's picture

3x's as disgusting the 2nd time

Mon, 07/26/2010 - 19:55 | 489392 Chartist
Chartist's picture

I don't care what he thinks, I believe the market sees SPX 480 within 18 months...just because the government cant print doesn't mean the money floods the velocity is more telling then the government's money printing.

Mon, 07/26/2010 - 20:06 | 489401 DoctoRx
DoctoRx's picture

Didn't Faber both call the collapse and then predict a partial, significant rebound that he definitely said could not go to new highs?

Overall, is anyone aware that he does not have a pretty good track record?

Mon, 07/26/2010 - 20:15 | 489416 thesapein
thesapein's picture

I remember thinking he was too optimistic then, so he turned out more right than me.

I'm curious who you think has a better track record, over, say, the last decade or so?

Mon, 07/26/2010 - 20:11 | 489410 Goldenballs
Goldenballs's picture

Truth is that the Western Countries have been let down by the people at the top.We all talk about all the imports from China and India but how much is quality stuff,most is mass produced tat.Western countries can produce there own tat trouble is profit might be only 100% instead of 500% (for who ?),import controls and quotas were there for a purpose to stop markets being swamped.When the truth comes out about India and China there will be lots of pollution,dirty lakes,poisoned land and child labour but a blind eye is turned because the corporations need the profits,do the public really need cheap toasters that last for 6 months,etc.The skills and industries that existed in the Western world took generations to build up and only a few years to asset strip.The only hope for us now is to invent new products and processes that include profit and added value.We need to cut globalisation as it is bleeding the West dry and the only people who ultimately benefit are the already rich billionaires and bankers,our corporations are too big and greedy,have no allegiance to anyone or anywhere and do not allow profits to cascade through society.We need the balls to believe in ourselves now more than ever or else we are to become just another forgotten shithole in the third world.Everything comes at a price and the last 30 years have come at too higher price.We have lost our self respect,sense of community and belief.The damage is not irrepairable but we have to get rid of the spin,short termism,profit before all,greed before sense, we must work hard and for the long term to give our children a decent future.

Mon, 07/26/2010 - 21:53 | 489574 Cistercian
Cistercian's picture

Good post! +100

Tue, 07/27/2010 - 02:25 | 489787 unemployed
unemployed's picture


 Yah, how about an appliance that will last more than 4 years, or a circuit board more than 6 years, or a capacitor that will last more than 2 years.

Mon, 07/26/2010 - 20:24 | 489417 bigfootmm
bigfootmm's picture

First of all it must be realized that the sleep in which man exists is not normal but hypnotic sleep. Man is hypnotized and this hypnotic state is continually maintained and strengthened in him. One would think that there are forces for whom it is useful and profitable to keep man in a hypnotic state and prevent him from seeing the truth and understanding his position. There is an Eastern tale which speaks about a very rich magician who had a great many sheep. But at the same time this magician was very mean. He did not want to hire shepherds, nor did he want to erect a fence about the pasture where his sheep were grazing. The sheep consequently often wandered into the forest, fell into ravines, and so on, and above all they ran away, for they knew that the magician wanted their flesh and skins and this they did not like. At last the magician found a remedy. He hypnotized his sheep and suggested to them first of all that they were immortal and that no harm was being done to them when they were skinned, that, on the contrary, it would be very good for them and even pleasant; secondly he suggested that the magician was a good master who loved his flock so much that he was ready to do anything in the world for them; and in the third place he suggested to them that if anything at all were going to happen to them it was not going to happen just then, at any rate not that day, and therefore they had no need to think about it. Further the magician suggested to his sheep that they were not sheep at all; to some of them he suggested that they were lions, to others that they were eagles, to others that they were men, and to others that they were magicians. And after this all his cares and worries about the sheep came to an end. They never ran away again but quietly awaited the time when the magician would require their flesh and skins. -- G. I. Gurdjieff -Quoted by P. D. Ouspensky                       Chauncy Gardener for president!

Mon, 07/26/2010 - 21:47 | 489559 Iam_Silverman
Iam_Silverman's picture

"Chauncy Gardener for president!"

"There will be growth in the spring."

Mon, 07/26/2010 - 22:12 | 489604 tip e. canoe
tip e. canoe's picture

“In properly organized groups no faith is required; what is required is simply a little trust and even that only for a little while, for the sooner a man begins to verify all he hears the better it is for him… Accept nothing you cannot verify for yourself.”  --G.I.g.

Mon, 07/26/2010 - 20:25 | 489425 Mefistofeles
Mefistofeles's picture

I suggest reading the Constitution, and the Declaration of Independence... There is a strong cultural memory in the US of the ideals written in those documents. 


America strikes as me as being very similar to the old Soviet Union in this respect.  People talked alot about marxist/leninsm socialism but their society was filled with the very same class priveleges that they were supposedly working so hard to eradicate.   In this respect America is no different.  People always use the word "freedom" when they speak of the United States.  Honestly it's hard to imagine any country with a more oppresive and arbitrary tax system.  After all what other country forces it's citizens and corporations to file taxes even if they're abroad?   How many other countries penalize their citizens if they chose to expatriate and renounce their citizenship?   Honestly freedom is nothing more than an empty and hollow word in American politics/economics.  

In truth freedom died a long time ago in the US.  We wouldn't be where we are as a people if we actually did value freedom.

Mon, 07/26/2010 - 20:52 | 489467 PBRmeASAP
PBRmeASAP's picture

Well, you could be right, in which case we're screwed... I personally don't think you are right.  Perhaps I'm a bit of an optimist! We shall see... 

I believe there is tremendous power in our cultural memory. Example: "I disagree with what you say, but I will defend to the death your Right to say it." (Thomas Jefferson). With obvious exceptions, this mentality is still our internal mode of operation. It will allow us discuss, argue, dis-agree, and eventually figure it all out. 

Remember: Not many true postings from China on ZH, I'd wager!

You can call me an optimist, a patriot, an ostrich with head-in sand,or whatever, but I think we'll still be numero uno in 100 years. 

Mon, 07/26/2010 - 22:11 | 489602 desgust
desgust's picture

HAHAHAHA ASAP good joke. Yes, when you nuke the rest of the world with your "democracy"!

Mon, 07/26/2010 - 23:08 | 489615 tip e. canoe
tip e. canoe's picture

U-S-A-#-1-!  keep it to the pitch and no problemo.  keep thinking life is a competition between arbitrary lines drawn on a map and be prepared for several more lifetimes of these futile debates & fruitless discussions.

and lots of indiscriminate killing & abusing other human beings for absolutely no reason at all other than some pathological need to prove that your johnson is larger and blood bluer than the dark (or the yellow or the red or the green) boy across the street.

Mon, 07/26/2010 - 20:33 | 489431 Goldenballs
Goldenballs's picture

Basically we have to kick the arses of our politicians,business leaders and the great and the good and tell them we are sick of being sold out.That its ok attending all these conferences,signing all these treaties and conventions,etc, but that is not the fucking job,you do that when everythings ok at home and thats where its just not happening,you have to look after your own because no-one else will.Immigration with no jobs,handouts to the rest of the world,spending time writing laws and rules instead of building up industries and creating wealth,splitting society for political ends its all bullshit from an ellite who feel they are above accountability and don,t have to work hard or produce anything for a living.We either work together and achieve something or fragment and go down the toilet of history.Are we too educated and conditioned to think for ourselves any more ? 

Mon, 07/26/2010 - 20:35 | 489436 BeerGoggles
BeerGoggles's picture

Americans, with their inborn arrogance...

Never was a truer word spoken. :)

Mon, 07/26/2010 - 21:09 | 489496 PBRmeASAP
PBRmeASAP's picture

American "inborn arrogance"???? We came from the four corners of the world... After all, our families immigrated here from around the world; We're all off-spring of immigrants. To agree that a people have an, "inborn arrogance" implies that you agree that there is a genetic relationship with behavior.  Thus, if you ascribe the US with an "inborn arrogance", you imply that Europe, Asia, and Africa have an "inborn arrogance" as well.


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