Marc Faber: Treasurys Are A "Suicidal Investment"

Tyler Durden's picture

Marc Faber, who just like Nassim Taleb has never hidden his disdain for investments in US-backed paper, is back to bashing Treasurys, although with logic diametrically opposite to that espoused by those such as Morgan Stanley who see rising rates as a sign of economic growth. "This is a suicidal investment,” Faber told Bloomberg in a
telephone interview from St. Moritz, Switzerland. “Over time,
interest rates on U.S. Treasuries will go up. Investors will
gradually understand that the Federal Reserve wants to have
negative real interest rates. The worst investment is in U.S.
long-term bonds.” As for equities, Faber increasingly sees a Zimbabwe outcome: “If you print money, the currency goes down and the S&P 500 goes up. By the end of 2011, people will look at 2012 and think 2012 could be a very bad year because the policies applied are not sustainable and create a lot of instability. Investors may look at 2012 and 2013 with horror.” Not Wall Street thought. By the end of 2011, bankers will most likely be looking at the second consecutive record bonuses year, and by then will have enough gold safely stashed away in non-extradition countries to where the host organism may finally be allowed to die in peace.

Treasury 10-year note yields will rise to 5 percent from yesterday’s level of 3.349 percent, Faber said, without specifying a time frame. As bonds fall over the next decade, he said investors should buy precious metals, real estate or equities. U.S. debt has returned 5.7 percent in 2010, more than erasing last year’s 3.7 percent loss, according to a Bank of America Merrill Lynch index.

Treasuries fell today as reports showed initial jobless claims dropped more than forecast, U.S. businesses expanded at the fastest pace in two decades and pending home resales beat expectations. The yield on the benchmark 10-year note advanced 0.04 percentage point to 3.39 percent at 1:54 p.m. in New York, according to BGCantor Market Data.

Faber correctly predicted in May 2005 that stocks would make little headway that year. The S&P 500 gained 3 percent. He was less prescient in March 2007, when he said the S&P 500 was more likely to fall than rise because the threats of faster inflation and slower growth persisted. The S&P 500 then climbed 10 percent to its record of 1,565.15 seven months later, and ended the year up 3.5 percent.

Below is the most recent video appearance, presented previously on Zero Hedge, of the ever entertaining Doom Boom and Gloomer:

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GlassHammer's picture

I dug out an old college textbook and the section on T-bills actually refers to them as risk free. But this is the same book that refers to efficient market theory and other defunct economic concepts. 

nope-1004's picture

Every economic textbook relies heavily on the sanity of those running the policies.  If sociopathic lunatics like Geithner are allowed to manipulate things for his buddies at the FBoNY, then no economic theory comes close to accurately predicting the trend.

wisefool's picture

+1099. I got your world bank right here.

Al Gorerhythm's picture

The one question left to be answered; When America gets put into conservatorship, where is it placed, who carries it? Won't find that in a text book either.

Id fight Gandhi's picture

Mine used to go on about roi and how p/e matters and safe ways to buy and invest. If you followed that during the 90s when I was in college you'd would have missed the tech boom and bust.

I think anyone 20 years ago wouldn't. Believe how messed up a market could be. And how it keeps rising as the world falls apart.

Fred Hayek's picture

Nothing's quite so precious as a pretentious dolt.

Unfortunately, nothing's quite so frustrating or dangerous as a pretentious dolt in a position of power.

 

mberry8870's picture

What a dick. Pretty much sums up his whole life, winging it past the sheep.

GlassHammer's picture

Yeah P/E and that ROI stuff sounded nice until you started working and learned it was a bunch of BS. 

DaveyJones's picture

it's like many of those legal concepts they taught us in law school. It sure sounded good 

TruthInSunshine's picture

Yeah, all the idiots who actually spent hard time learning the rule against perpertuities, when all they would have had to know is how to bribe judges legally.

DaveyJones's picture

instead of bribing, I just look for the judges who believe peak oil is a scam. They're the most intellecutally vulnerable

Byte Me's picture

You mean Newspeak hasn't redefined it as Pump / Excrement ??

b-b-but I thought this was the new normal.

Dr. Doom's picture

In a sense they are risk-free. You give them a worthless piece of paper, and they give you a few more worthless papers in return.

GlassHammer's picture

Risk-free....

I actually had an accountant tell me that "you don't need to price it if its risk free." And I told him if it doesn't have a price then it's probably worthless. (I think that might be a line in a movie but I can't remember where I heard it)

just_looking's picture

Faber is speaking about Treasury bonds ("Treasuries"), not Treasury Bills ("T-bills").  

traderjoe's picture

The US will never repay its debts. Jubilee!

breezer1's picture

the us won't pay it's debts. the serfs will.

ejhickey's picture

I thin the amount of US debt exceeds he total money supply of the world

macholatte's picture

I thought the US debt was the money supply for the world.

 

True terror is to wake up one morning and discover that your high school class is running the country.
Kurt Vonnegut

Sudden Debt's picture

It does repay its debts by sending their young brave heroes to war to die for economic profit.

DaveyJones's picture

not sure the wars have been a good investment. Wonder if we took 2 trillion (including future medical) and built energy and transportation systems with american jobs, wonder what that would have looked like. Wonder what the savings of not having much of the world pissed at us is worth, especially now and looking forward  

macholatte's picture

He who can no longer pause to wonder and stand rapt in awe, is as good as dead; his eyes are closed.
Albert Einstein

Ruffcut's picture

The US will not be able to repay, but they are trying to hide them first.  Continued debasing of the bucky, must resume. The biggest point of pressure, of the economic dam, full of cracks and small holes.

Id fight Gandhi's picture

I don't plan to either. Roll over on cheap money.

Better to have gold and cash when you go bankrupt.

masterinchancery's picture

The non-extradition part is the most crucial.

the rookie cynic's picture

Someone recently told me,"You can't eat gold!", so I shoved a T-bill in his mouth.

 

downrodeo's picture

+10

damn, i just laugh-sprayed drinking water over my computer...Good answer!

IQ 145's picture

 "Your majesty, the people have no silver"; "Well, then they can eat T-bills". I couldn't agree more with DrFaber; Bonds=instruments of guaranteed confistication. You'l get some "numbers" back; but you can kiss the buying power goodbye. The reference to the Zimbabwe stock market should be clarified; it went up 23000 percent, or something; but this was useless to people stuck in Zimbabwe dollars. It's alarming and amazing to me to see a huge amount of conversation and speculation about the stock market "going up" because of money printing. Yes, it will "go up"; no you will not "make anything". This is what you were supposed to learn between 2001 and 2008; the buying power is running out of the bottom of the bucket while the "numbers" get bigger. This is a classical inflationary epoch; it has started; it's very difficult to see how it will be limited or controlled.

Freddie's picture

Well America has Mugabe 2 and all the media, TV and Hollywood fawn over him endlessly.

More_sellers_than_buyers's picture

But ...But ... The Bernenke said he was 100 % confident...HAHAHAHAHA

f16hoser's picture

That's the funniest thing I've heard in a long time!

Midwest Prepper's picture

Hilarious!  I hope you included some knuckles with that T-bill for extra nutrition.

DaveyJones's picture

quote of the week award

all that fiber and zero energy calories 

suteibu's picture

LOL  So Bloomberg has him on as an expert opinion then trashes his expertise in the summary of the interview? 

oddjob's picture

BNN is a must watch for any resource investor.After just 1 day of BNN the other business channels are just noise.

 

Freddie's picture

Is BNN streaming on the web?  Bloomberg is another stogge for the Saudis and their slimy Prince Al Waleed just like CNBC.

oddjob's picture

Available by internet subscription,satellite,or any decent cable service provider.

On their website they post every segment for free,but is delayed about 45 mins.

Regular interviews with people such as John Embry,Chuck Jeannes,Sean Boyd and many other people actually worth listening too.

http://www.bnn.ca/Shows/Commodities.aspx

plocequ1's picture

No Treasurys? What else is left besides  stocks and Ron Jeremy videos.

Hugh_Jorgan's picture

How about the "G-Quad Index";  God, Guns, Gold and Grub?

scatterbrains's picture

can we squeeze a G for girls in there too ?

Eric The Red's picture

God won't save you (since it doesn't exist), but the others look to have some utility.

MayIMommaDogFace2theBananaPatch's picture

Long Ron Jeremy videos!

Sorry.  Compulsion demanded that I say that.