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Mish And Faber Discuss Why The Fed Will Never Allow Another Fair Value Market Correction
We start off today's audiovisual segment with an insightful analysis of market dynamics by the duo of Mike Shedlock (Mish) and Marc Faber. Mish who runs the deflation-friendly blog Mish's Global Economic Trend Analysis, observes that the rally is not based on fundamentals, and believes that not only is it time to take profits, the probability of a retest of 666 is "50-50." Faber, always the pragmatist, points out that since the entire US economy is now based on the ponzi principle of money bringing in new money as every offer is chased higher, thinks we will never "see 666 on the S&P 500 ever again. If we go down by
say 10-20% on the S&P 500, our money printer in the US, Mr. Ben Bernanke will flood
the market with liquidity, weakening the dollar, supporting equities and other assets." In other words, as the race to the currency bottom and the attempt to force inflation inevitably picks up, the one true non-dilutable alternative to fiat one-ply, is and remains gold. As Faber cautiously says "I think an individual should take responsibility and be his own central bank, and buy gold every single month." As to where money can be invested in this time, both seem to agree that Japan, which is already 20 years down the money printing experiment, and there is little marginal fiat dilution remaining, is a good target to invest. This is further reinforced by Dylan Grice's recent observations about numerous Japanese stocks trading at or below liquidation value.
Full video via Yahoo's Tech Ticker after the jump.
h/t VanKirk
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All so very true...
And damn horrifying ..
How do you comment on two diametrically opposed viewpoints as "All so very true..."? This isn't quantum physics. Only one can be true.
I live wholly in Mish's camp, and tend to find inflationists to be both mathematically challenged, and only dimly aware of where money comes from.
There is no "printing press". There is only debt creation. Any other attempts at monetary expansion will receive a quick kick to the nuts from the bond market -- and we all know who runs the show. (Hint to inflationists: It isn't the Fed). When rates are forced into the stratosphere I cannot fathom where inflation will come from.
I do not doubt that the government will *try* to create stimulus, but future efforts will have as much success as current efforts.
We have had a gigantic (and dangerous) boom in monetary expansion over the past decade. To imagine that it's solution lies in it's re-creation, is to believe that there is such thing as action without reaction.
Von Mises had it right: "There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as the result of voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved."
Inflationists believe that politics will demand the latter.
Deflationists believe that politics and policy cannot defeat debt markets. And if they could -- the world would be an entirely different place today.
Ultimately this may be a religious argument. In which case I am devout. Inflation has already happened. Credit at every level of our economy -- individual to institutional -- is at it's maximum threshold. We will and must contract.
I know the Yahoo forums are filled with trolls, but it's interesting to see all the posts from retail investors that essentially state that the market is rigged and can never go down again.
http://messages.finance.yahoo.com/mb/SPY
On a sidenote in reference to SPY. Has anyone seen the advertisement on Bloomberg regarding the SPY ETF?
The background music for the SPY advertisement is an old patriotic song.Unreal.
Spin baby!
Remeber: buy SPY, pay your taxes, and complete your census form. Because the terrorists hate our freedom.
If you have nothing planned for the weekend, watch the news continuously and make a note of how many times you hear the word "terror" or "terrorist(s)"
I didn't know that Cheney was in the news all that often anymore.
I agree. What investors need are analyses and logic, not opinions from broker trolls posting anonymous or using pseudonyms—generally selling stocks. Mish, Faber and ZH express what they think will happen and why—with charts, data, history, and probabilities to back them up--such as Faber’s caveat that the US has a money printer, and if the market goes to 666 then in all probability Bernanke’ll be there, jumping in with his money machine.
At this juncture, I suspect that politics and panic would likely swamp the usefulness of our money printer and lead to a re-ordering of the financial industry. I believe we’re dealing with extremely large sums of money here, really big lies and no one really knows what the Fed is facing and covering. We make a mistake, IMO, to listen to Larry Summers telling us where we are and where we’re likely to be. The chances are he’s not telling you what you need to know. After a while you get a feel for it, i.e., that they’re lying. Health care cost projections come to mind. I’m looking at markets based on politics and what I see happening. I listen to contrarianism points to find out some truth. That’s why ZH is getting jammed this week with hits. Anyone can dismisses Mish and Faber as idiots, but not to listen means you may not be getting the whole story.
Serious people are worried and they want to find out what’s happening as accurately as possible. Is a serious investor gonna sit there with Bloomberg on his screen and pick out stocks? I don’t think so.
If by "trolls" you mean that the Yahoo forum is filled with a bunch of brainless shills then I agree. I was stunned by the comments people were leaving over there attacking Mish and Faber. The idiots there ignored the fact that Faber called a bottom in March of last year and Mish caught most of the rally as well. The comments the viewers were leaving made my bullsh#t meter go off the scale.
Today's headline you won't see:
"Gold lower on weaker dollar."
You won't see the headline, but you will see the gold lower!
It must be the snow
It must be the snow
The belief that the bearded one controls the market is ludicrous, Its a few Trillion mkt cap. The market wout any deep correction I think has led them to this erroneous view.
If it were true the market would be dead as we know it for every buyer needs a seller..
it is only ludicrous if you do not understand
the tools used to control and the network doing
the controlling.....naive-on dude....
It would also be the first self-sustaining Ponzi scheme in human history.
Faber is an idiot.
No, Mish and Denninger are the idiots. Faber has been correct since SPX 666. It's not self-sustaining; it's being fueled by the Fed via QE 1 and MBS 1. Soon, we will have QE 2 and MBS 2. You're an idiot by making a statement that has been factually incorrect for the last 18 months.
You haven't got a clue as to what self sustaining means.
And you probably believe in perpetual motion machines too.
Yeah, grab a completely general and broad-based terminology and expect anyone to know exactly what you mean. You haven't got a clue where this market is going; I could care less what your definition of "self-sustaining" means. At least I haven't been short since 666.
The market is being sustained by QE. And soon to be QE 2. That's all I need to know. You can go back to being cryptic and pretend you are somehow important.
(I am not the anon in this thread, but I'll jump in)
Uh huh.. but it's *super secret QE* that isn't being reported.
Ok. Fine.
Let's look at the total outstanding debt (not just national, but across all bank balance sheets) and give you the benefit of the doubt. The Fed will QE the whole damn thing.
Now riddle me this: Is it possible that this historically unprecedented level (by a large exponent) of QE can remain secret?
If yes: Then we disagree completely. This would require some kind of divine intervention for the rest of the world to 'not see' the largest economic force on the planet.
If no: Then the bond market will and must react. Effectively ending the QE.
So what we're looking at in terms of "the market being sustained by QE" is by definition a short-term, and unsustainable phenomenon. Which goes to show that the powers-that-be have no plan. They are desperately trying to keep the bus from going off the road, and they are doing a decent job for the time being. But the bus is accelerating and the road is getting curvier. There is no possible way for this to last.
Per my original response, it matters not if it's sustainable. However, it CAN and WILL go on indefinitely. Zimbabwe is a glaring example.
Nothing in life is self sustaining; it's a basic premise of physics. But, it will last much longer than anyone thinks possible. And if you're going to go up against Bernanke and the Fed, then you'll need lots of luck and liquidity. Liquidity that I guarantee no single individual or entity has access to.
The entire argument about this ponzi scheme being self sustaining is pure semantics. It's pointless and arbitrary, much like the anon's original post. Who cares? The only things that count are the facts presented in the video, which point to Mish, and men like him (Denninger), being completely wrong for the last year, and Faber, and men like him (Schiff), being completely correct for the same period of time. And with this info staring them in the face, they continue to blather on about how the market is completely wrong and how it SHOULD react, instead accepting the tale of the tape.
You know, I WANT to believe you virgil, and I really am on the fence about this. It is hard to not be skeptical because:
- We have the big algo players (GS/JPM) that could well be in on Ben's plan
- We no doubt have the blessing of the Govt. and Treasury to do whatever it takes to get "stocks back up" to play in-line with their confidence game
- There is no longer any volume in the market, which makes it easier to push/pull it around
- Ben has not been audited, they COULD be monetizing equities and we wouldn't know
In some way, shape, or form, this fucker is manipulated. It is no longer a true market. What that means exactly remains to be seen however.....
Well, we've PRINTED a few trillion since this crap began, so I don't see where the difficulty is.
This market is the star of "Weekend and Bernie's III".
I'm guessing Uncle Ben will allow prices to deflate for a period of time before the next QE/reflationary effort kicks in... so, in a sense, Faber seems to be more right in my thinking.
It could be, though, that Bernanke will allow the SPX to go below 666, as he knows he needs to deflate asset values in stair-step fashion.
There is certainly more room to monetize debt, but servicing any new debt gets a lot more dangerous from here. If/when Bernanke initiates the next round of reflation, investors need to be wary on whether the DXY maintains a controlled fall. By far the biggest danger is if the Fed loses control of the dollar... I think they will send asset prices to zero before they allow the dollar to collapse and lose its reserve currency status.
I spend a lot of time thinking about this - just what could drive a hyperinflationary collapse of the world's reserve currency?
Will it be an internal or external event?
I never worry about China, they are too tied to the dollar to collapse it.
I always wonder about Russia, though.
Or would an internal event, like say another oil shock, put the nail in the head of the USD?
Something has to trigger it, it won't happen gradually.
After all, the US crashed Russia through it's economy.
A trick right out of the ol banker play book.
Don't write off China. They are working around the clock behind the scenes doing SOMETHING. My guess is that they are getting rid of dollars as fast as they can, but there is no way to know for sure. Even a nasty rumor about China could cause others to start dumping.
My personal expectation is that Britain will find itself in Greece's shoes fairly soon, and some bit of pertinent information will slip out from their CYA efforts which will expose some nasty shenanigans the US has been pulling. That is what will trigger it, in my opinion. I think we've got between 1 and 3 years. That is IF the money we have been printing doesn't hit mainstream prices before then. If that happens, or if the COMEX busts, all bets are off. This could happen at anytime. Be prepared.
I think our central bankers have much more time to print before they have to worry about people fleeing the dollar and treasuries. In the next 1-3 years we could see the popping of the huge bubbles that have been inflated in China, as well as more turmoil in the EU, which will keep investors showing up for our auctions and keep demand for our treasuries and the US dollar high near term. In the meantime, the Chopper knows he can print all he wants. The problem comes when things start to look safer outside of the US than inside. In short, as long as risk aversion keeps the dollar index high, inflation stays low and they can keep printing all they want. Who knows how long this could take or how much money creation will have occured by the time this plays out.
I think you hit it on the head with the COMEX. This will come to a head with two words: "Delivery, please."
What do you mean prepare?
Likewise on time spent. All this BS about new lows or BB keeping things no worst than 15-20% is complete and utter bullshit.
There will be QE II after health care passes. Markets will not like this a second time around. Oil is in abundant supply. Specs may take a run at $100 but we crap out by then or by HC pact.
Really, this is insane stuff. You can't just keep printing cash. We will see devaluation to escape deficit crunch and we will see hyperinflation because BB is only a student of the game with an attitude of TBTF and no deflation.
I promise you this, that one day in the "not too distant future", we'll wake up and there's no market bids for anything, including cody's. Then you carefully devise your plan to load up on hyper assets but not stocks, no not stocks.
You are thinking inside the status quo anti. think outside it.
There will be a sudden collapse, almost certainly, but it will be caused by an event outside the "control" of the Fed or the other manipulative instrumentality.
The fundametals are guastly, so they will prevail. Right now, the market manipulation is the equivalent of the thermometer reader putting his cigarette lighter under the bulb and saying 'it is getting warmer'.
My guess is that unemployment is fast becoming the unfixable perameter. Thus at some point there will be so much unpaid everything, and such a huge consequent "unmultiplyer" effect, with states and countries getting in such deficit positions with collapsing revenues, that money printing will become pointless because people will not belive it has value.
Yeh, I agree, the big lie only works if you have a certain amount of control. Once you lose that its over - and they aint no going back. But I suspect they will panic first and start fires in other countries - as many as they think they need. When that doesnt work anymore they will start them here. Shoot isnt this already happening?
believe me - they aint gonna wait around to lose control
I try to channel my inner squid and think like Goldman on this one.
The USD is a horrible currency except for all the others.
A game plan where the Euro is destroyed -- the Eurozone is broken-up -- would favor the Fed/USD over the long term.
If the de facto USD block (currently US, AsiaPAC, gulf-states) can be broadened, why worry so much about the USD printing? Expand the USD's reserve status along with expanding the monetary base.
The Greece bailout has the feel of the all clear after the Bear Stearns collapse. I can't wait until the summer/fail when one of the STUPIDs rolls over without a bailout.
Who benefited from the Lehman, AIG, Citi, BoA, Merril bailouts/collapse? Goldman. Who can benefit from the break-up of the Eurozone? US.
Never let a crisis go to waste.
Don't worry about Russia. Russia ended in 1917. Russia has no elite which is interested in development. Compradores ruling in Russia are only interested in robbing it and preserving their wealth in other contries. Putin is nothing more than empty posturing.
These are the kind of oligarchs Putin is dealing with in Russia and doing, IMO, a better job than the US. This from Bloomberg in 2009:
Oleg Deripaska, the Russian billionaire who once joked he’d hand over his smelters should the state ask for them, is finding his loyalty tested amid the country’s worst economic crisis in a decade.
Prime Minister Vladimir Putin publicly rebuked him in June 2009, according to Bloomberg, for wage arrears and said the state will take over factories when owners fail to keep them open. The threat came to curb Deripaska’s plans to idle unprofitable operations and cut jobs at aluminum producer United Co. Rusal and automaker OAO GAZ just as his companies were trying to renegotiate more than $20 billion of debt with lenders including Barclays Plc and BNP Paribas SA.
With unemployment at the time the highest since 2001, Putin had stepped up pressure on businesses to share the social burden. Russia has given more than $11 billion in bailouts to companies with foreign creditors, with Rusal receiving $4.5 billion. About one in every 100 Russians is economically reliant on Deripaska’s interests, which also span pulp, cement and power generation.
“You made thousands of people hostages of your ambitions, lack of professionalism and perhaps simply greed,” Putin was shown by state television telling the owners.
Deripaska’s GAZ is one of Magna International Inc.’s partners in its acquisition of General Motor Corp.’s German Opel unit. The deal is part of Russia’s strategy to move to more high-value manufacturing and reduce its reliance on natural resources, said Douglas Busvine, director of Russian research for New York-based Medley Global Advisors LLC, which consults for hedge funds and banks.
More than 1.5 million Russians may depend on Deripaska’s businesses for their income, according to the Levada Center, a Russian research organization, and the Independent Institute for Social Policy in Moscow.
Russia’s wealthiest businessmen have been called on before to make additional economic contributions. Roman Abramovich, the billionaire Chelsea Football Club owner and a former partner of Deripaska in the aluminum business, agreed to take over in 2000 as governor of the far-eastern Chukotka region and pay tax there to bolster the local economy. He stepped down in 2008.
When you google Deripaska’s background you get his connections with other other billionaire bankers: Blavatnik, Goodwin, Rothschild… This from aangirfan.blogspot.com posted January 25, 2009:
_______________________________________________
Leonid Valentinovich Blavatnik is a Russian-American-Jewish billionaire.
After the fall of communism he was able to buy up companies in Russia very cheaply.
In 2007, the Forbes 400 reckoned he was worth $7.2 billion.
In 1986 he founded Access Industries, a New York-based international industrial group.
Access Industries formed LyondellBasell Industries.
On 6 January 2009, the U.S. operations of LyondellBasell Industries filed for bankruptcy.
Royal Bank of Scotland (RBS) is owed $3.47 billion by LyondellBasell Industries.
(RBS to write off £1bn loan to Russian oligarch )
Of the £2.5 billion loaned to Leonid Blavatnik, the bank has suggested that it may write-off as much as £1 billion.
Blavatnik originally borrowed the money from the Dutch bank ABN Amro. The Royal Bank of Scotland led a consortium takeover of ABN Amro, in 2007.
2. Another who got money from the Royal Bank of Scotland is the Jewish billionaire Oleg Deripaska.
Where did the banks' money go?
"Among the highest-profile deals was a £2.8 billion loan offered by a group of Western banks - including RBS - to a company owned by Oleg Deripaska, the Russian tycoon, which was used to buy the Russian metals firm Norilsk Nickel.
"Mr Deripaska recently hit the headlines in the so-called 'Yachtgate' controversy over his links with both Lord Mandelson, the Business Secretary, and George Osborne, the shadow Chancellor." - 80 per cent of bank lending 'went overseas'
3. Fred Goodwin was chief executive of the Royal Bank of Scotland. He is a multi-millionaire.
Fred Goodwin's mother was German Jewish. (Fred Goodwin - Wikipedia, the free encyclopedia)
Shares in the Royal bank of Scotland have just collapsed in value.
Back in 1990, while working for Touche Ross, Goodwin was chief operating officer of the worldwide liquidation of Bank of Credit and Commerce International, said to be the bank used by the CIA and its friends for various criminal activities .
According to an article at Wikipedia: "RBS has been involved in an increasing number of environmental and human rights controversies since Sir Fred Goodwin took the helm in 2001.
"RBS is heavily involved in financing large oil, gas and mining projects world-wide that environmental organizations like BankTrack, PLATFORM , Pacific Environment, The Cornerhouse, and Rainforest Action Network call 'dodgy deals' that they say severely damage the environment and local communities, and that contribute significantly to climate change.
"A profile by BankTrack tracks RBS financing of corporations involved in the production of uranium weapons, as well as the controversial Baku-T’blisi-Ceyhan oil pipeline transecting Azerbaijan, Georgia and Turkey, the Sakhalin II oil and gas scheme in eastern Russia, the Freeport McMoRan mine in Indonesia, Sinopec oil and gas in Burma, the Dynegy coal fired power plant and mountaintop removal coal mining in the US." - Fred Goodwin - Wikipedia, the free encyclopedia
Montenegro and its Prime Minister Milo ?ukanovi? allegedly have links to various Mafias.
Nat Rothschild, UK government minister Lord Mandelson and Russian billionaire Mr Deripaska reportedly have links to Montenegro.
1. Wikipedia (Cached) tells us:
According to a 1997 report by the Guardia di Finanza, Montenegro is part of a smuggling group divided among various crime families connected to the Sicilian mafia, Camorra and Sacra corona unita. [5]
Various reports implicate ?ukanovi? in doing business with different Mafia bosses like Neapolitan Camorra's Ciro Mazzarella who was arrested in 1993 in Lugano.[6]
Since then, other mafia figures like Francesco Prudentino, Gerardo Cuomo, Filippo Messina operated out of Montenegro closely tied to ?ukanovi?'s government.[7]
In 1996, Italy's Anti-mafia Investigative Agency taped a telephone conversation between Cuomo and Santo Vantaggiato, a fugitive from Italian law hiding in Montenegro. The two men were discussing the election in Montenegro, and Cuomo boasted that he was close to senior Montenegrin politicians. [8]
In July 2003, the prosecutor's office in Naples named ?ukanovi? as a linchpin in the illicit trade which used Montenegro as a transit point for smuggling millions of cigarettes across the Adriatic sea into Italy and into the hands of the Italian mafia for distribution across the EU.[7]
2. The Daily Mail, 24 October 2008, tells us:
"Lord Mandelson is facing scrutiny of his championing of the tiny Adriatic nation of Montenegro as a world trading partner. Aluminium tycoon Mr Deripaska has invested heavily in the country...
"Financier Nat Rothschild... also has interests there.
"Mr Rothschild, Mr Deripaska and other investors want to turn a bay in Montenegro into a £5billion haven for the super-rich...
"It emerged that Lord Mandelson had been seen with Mr Deripaska at a Moscow restaurant in 2004, after being appointed EU trade commissioner - but before taking up the post...
"In December 2005 Lord Mandelson signed off a decision to remove punitive EU aluminium tariffs that benefited the Russian's business." Link - Mandelson to face questions over links to Russian tycoon and plans for a £5bn super-rich haven in Montenegro
3. Richard Littlejohn, in the Daily Mail, 24 October 2008, writes:
"You were living in the Rue des Jeunes Garcons...
"Does the name Dr David Kelly mean anything to you?...
"You came to lower import tariffs on aluminium while at the same time enjoying the hospitality most extensive at the expense of our host, who par coincidence just happens to be the biggest aluminium baron in Russia. ...
"Your two bons amis, Monsieur Rothschild here et Monsieur Deripaska - on whose magnificent yacht you are currently staying - are both investing heavily in Montenegro..." Link - RICHARD LITTLEJOHN: The cast list of The Corfu Connection reads like an Agatha Christie novel
1. Oleg Deripaska, who controls the company UC Rusal, is 'one the world's 10 richest people', with assets of $28 billion.
His name has been linked to organised crime and to various top people. (Russia's Deripaska Faces Western Investigations / Oleg Deripaska - Wikipedia, the free encyclopedia)
2. In 2006, at the World Economic Summit in Davos, Deripaska met John McCain.
3. In the 1990s, there was 'gang warfare' for control of aluminium smelters in Siberia.
Deripaska seems to have won.
4. Deripaska married into the family of Boris Yeltsin, the former Russian president.
Roman Abramovich, the owner of Chelsea football club, was one of Deripaska's partners.
5. Authorities in the U.S. have accused Deripaska of having ties to organized crime. (Russia's Deripaska Faces Western Investigations)
According to The Wall Street Journal, 10 October 2008, US authorities are investigating a wire transfer of funds originating with UC Rusal and passing through Barclays PLC offices in New York and London.
Some of the funds ended up with Deripaska consultants in Washington who are being investigated for possible money laundering or other crimes.
6. According to The Sunday Times, 12 October 2008, UK government minister Peter Mandelson gave trade concessions worth up to £50m a year to Russian aluminium tycoon Oleg Deripaska while Mandelson was European Union trade commissioner. (Mandelson joins richest Russian on superyacht)
In a 2005 document signed by Mandelson, it was agreed the European commission would scrap measures against Deripaska’s company, Rusal Sayanal, to prevent it 'dumping' cheap aluminium foil in Europe.
The document meant the import duty for Rusal Sayanal was set at zero. All other Russian companies exporting the same product were charged at 14.9%.
One of Deripaska’s top financial advisers is Nat Rothschild, who is co-chairman of a New York hedge fund and a friend of Mandelson’s.
Nat Rothschild’s father, Lord Rothschild, owns a villa in Corfu where Mandelson has stayed as a guest. (Mandelson joins richest Russian on superyacht)
7. Since the troubles over Georgia, Russians have become less popular with certain powerful people in the USA.
8. The Israel News Agency (Israel Police: Oleg Deripaska Wiretapped Chernoy, Lieberman) reported on 20 November 2007 :
"On November 5, Israel police announced that they had arrested two private investigators in Israel, Rafi Pridan and Aviv Mor, on suspicion of illegally wiretapping several people in an effort to gather information about Israel Strategic Affairs Minister Avigdor Lieberman and businessman Michael Chernoy (Mikhail Chernoy, Michael Cherney).
"The police also arrested right-wing extremist Avigdor Eskin on suspicion of serving as a liaison between the private eyes and their employer. Israel Police believe the employer is Oleg Deripaska, the richest oligarch in Russia (his fortune is estimated at $22 billion), a business rival of Michael Chernoy who has been waging a public smear campaign against him."
http://aangirfan.blogspot.com/2009/01/jewish-billionaires-and-jewish-bankers.html
http://www.bloomberg.com/apps/news?pid=20601109&sid=aeegOCad7JNQ
Some of the wealthiest men in the world are Russian. Oilgarchs, miners, etc.
I tend to think Mish is right. Wish both men would take better care of themselves though with exercize and diet. What is it about economists that they all look so doughy?
Sorry, is that a serious question?
I'm hoping Mish is right... allowing asset prices to clear, despite the consequences to the equity markets near term, might be the best thing for the system in the long run.
I'm afraid that Faber is right, though. The Fed has gone a very long way towards manipulating this market... and no one really knows to what extent Bernanke will allow the pilfering to continue. If Bernanke had any sense (and that's certainly debatable) he would allow asset prices to clear below the March 2009 SPX floor, make the banks take significant balance sheet hits-- before he re-starts the reflation follies.
While I don't think that aloowing 15%-20% corrections actually solves anything, it doesn't mean that the Fed won't try to manipulate things in the way Faber envisions.
What is it about economists that they all look so doughy?
They're Americans?
None
I'm sorry but if they have to keep it going up to keep people in. If it goes nowhere, people will get out. Certainly that have kept it going up so far. It will be interesting to see what happens toward the end of the year.
Agree with Faber. Stocks will not be permitted more than a 10-15% pullback. But the relative value of stocks will be dubious. Headwinds include disappointing dividends, persistent deflation and risk aversion favoring bonds for longer term investors and attractive overseas investments for shorter term investors. Critically, the tidal wave of secondaries that have hit the market will multiply as companies will increasingly rely on these for capital with which to roll their old debt and maintain operations. This has been the secret secondary gain of the Fed's relentless stock market drive: an alternative to frozen credit markets for corporate America, and thereby a grand under the table giveaway.
Didn't they just change the definition of "fair" to "please see fraud?"
Jesus Christ it's Mish's Economic Trend not 'trand'. Lets talk about decepetion you bastards!
This thesis is absolute rubbish as it is based on a badly flawed premise namely that the U.S. lives in a closed system, and/or one that, even if not closed, is somehow immune to being adversely effected (where shares are concerned) by exogenous factors. This is hardly the case as we will all find out in the fullness of time.
Reggie Middleton is right, "2+2 never did equal 46." It's fraud. Here’s the summation, laid out by Damon Vrabel, debuting today as a new, regulator contributor to Swarm USA. It was hard to cut…but here are excerpts:
Russia, Greece, Chiles and the Narcissim of Harvard Debt Lords by Damon Vrabel 03/12/10
Today marks the beginning of a new administration in Chile as Harvard economist and billionaire Sebastián Piñera eked out a narrow victory in January. Interestingly this is related to the rest of the world as we also see today Greek police, dressed in the Darth Vader costumes used in every country, cracking down hard on their poor countrymen. They have been robbed by the elite financier/politician tag-teams that roam the world attacking whichever country and currency they choose.
Since almost every currency is just a debt-based instrument, the tag-teams are quite successful. Despite the claims of neoclassical economics and the theories of Harvard Business School, having a debt-based currency means that governments are not in charge of their countries. We are living in a world governed by the bond market, billionaires, and elite financial institutions, not governments. The future is grim if this isn’t changed.
People who dismiss this will learn the painful lesson in due course. Most countries, especially the United States, are now stuck under incomprehensible levels of debt just waiting for financiers to attack. National foreclosure is coming. Those who paid attention when it happened to southeast Asian countries, Russia, Argentina, Mexico, and others know what is coming. People who are paying attention now to Greece can see what is coming—the end of cash transactions, the loss of sovereign land, the privatization of resources, massive taxation, the end of support for the lower classes, and an active police state…
In every situation other than Iceland, the politicians submit to the financiers, put their citizens in austerity, and sick the storm troopers on the poor like a pack of pit bulls.
The reason they submit is primarily because mega banking institutions control money (see previous article on Wall Street).
http://canadafreepress.com/index.php/article/20368).
But politicians also submit because they are willing accomplices. They increase deficits and participate in the game that builds up the leverage in the first place, which makes a few people very rich. Then when debt deflation or a currency attack occurs, they continue playing the game. We have seen this in the United States over the last several years as presidents let the near-billionaire Harvard boys Robert Rubin and Hank Paulson setup the game, not to mention the not as rich Ivy Leaguers like Larry Summers and Tim Geithner. So far trillions have been stripped from the American people. But we are only at half time. You will know when the 2nd half has started when you look outside your front window and see the picture from Greece above…
A useful indicator for whether someone is part of the select few or not is narcissism. Are they ruthless overachievers for a paycheck? Is class status important to them? Do they have contempt for the average person? Do they strive to become part of the oligarchic elite in clubs like the Council on Foreign Relations? The answer is yes to all of those questions for some very key names we have seen over the last several years:
Robert Rubin – CFR, Harvard, Goldman, Treasury, Citi
Hank Paulson – CFR, Harvard, Goldman, Treasury
Larry Summers – CFR, Harvard, Treasury, World Bank
Tim Geithner – CFR, Dartmouth, Treasury, Fed, IMF
Jamie Dimon – CFR, Harvard, Chase, Fed
The list could go on for a while. It includes both the private sector folks getting fabulously rich from our monetary, fiscal, and regulatory policy over the last 30 years, and the government officials who are making the policy. In fact the officials making the policy ARE the rich private sector few who benefit from it—the definition of plutocracy and oligarchy.
You will not see people on this list who would be true public servants:
Brooksley Born – tried to stop the Harvard boys under Clinton
William Black – defended the country in the S&L scandal
Janet Tavakoli – explains the public-private fraud better than almost anyone
Eliot Spitzer – could be the modern Teddy Roosevelt going after the plutocrats…
http://www.swarmusa.com/vb4/entry.php/12-Hello!-A-new-article-taking-the-fight-directly-to-the-Harvard-Debt-Lords-gutting-the-country
Hey! Watch that Ivy bashing! I went there. I was the Seal at the real Animal House and it was my pledge paper that got the Deltas put on double secret probation. My fraternity bro wrote the screenplay. Those least qualified for public office are those who most seek it – Plato and vice versa as Casey Stengel would say
As fellow Harvard Business School alum, Damon Vrabel, says, “guys like Jamie Dimon and Hank Paulson embarrass and disgust me by furthering the financial empire system beyond reasonable means to keep lining their wallets while impoverishing the American Republic and conquering other nations. There are more just like them in the select club. But even worse than these MBAs chasing paychecks is the Harvard economist Larry Summers who creates the economic structure within which the MBAs operate. He tore down Glass-Steagall and led the free market jihad against any and all regulation in derivatives, which setup the Wall Street structure that brought us to the crash of 2008. plutocratic regime there in the peso crisis of 1994."
But whereas the US long ago acquiesced its economic and politcal freedoms to these unelecteds fronting for the shadow government, “something has changed in Chile,” says Vrabel, “where for decades they voted for public servants who have worked to eliminate poverty but have now put a Harvard economist and billionaire in office.”
Asks Vrabel: "How did Sebastián Piñera become a billionaire? The same way the most powerful people in the world make money—by using debt to suck wealth from the population creating all the value. He founded credit card company Bancard and helped put the Chilean people in debt to the Anglo banking model. Will someone like this serve the public interest?"
I do believe that might make us brothers.
"2+2 never did equal 46."
true... however 1=0
x = y
x2 = xy
x2 - y2 = xy - y2
Divide by (x-y)
x + y = y
2 y = y.
2 = 1
Subtract 1 from both sides
1 = 0
"Divide by (x-y)"
uh, I didn't know that division by zero was possible?
That's the "new normal" math.
Of course it isn't, which is the point of the above exercise. This is an old math geek joke.
For extra credit determine the true value of "full faith and credit." Please show your work.
I don't know what this means, but it looks like my bank account. Do you work at Citi?
John Law Bernanke can type faster than you can spend. Even back in the USSR we learned that inflation is a monetary phenomenon. So HTF can we end up with deflation?
CCCP
the paper mark totally collapsed in value against foreign currencies and gold, which encouraged wild speculation on the foreign exchange and stock markets, during which smart operators and large industrial groups accumulated large fortunes at the expense of small savers and the working class. ….In the meantime, an index of German share prices (1913 = 100) rose from 126 in January 1918 to 531,300,000 in September 1923, and to 23,680,000 million in November 1923 amidst extremely high volatility. (In dollar terms, because of the currency depreciation, the same index (1913 = 100) fell from 101.55 in January 1918 to 2.72 in October 1922, before recovering to 39.36 in November 1923.) The extremely high volatility of the stock market is a typical feature of hyperinflating economies. Professor Bresciani- Turroni in The Economics of Inflation (first published in 1931 and reprinted by Augustus M. Kelley, London, in 1968). by Marc Faber, REFLATION, 2004
Shedlock is obsessed with being right about deflation. I wish he was right, because that's what we need. Unfortunately, Ben Bernanke has a different point of view. He has spent his life studying the evils of deflation and can't fathom that anything could be worse. Politicians will use that bias to their advantage and we'll continue merrily along the same course as the last 25 years. I'll give it 10 years at the outside before the entire system collapses.
My reading of Shedlock's face was that he was thinking "oops, maybe Faber is right".
Shedlock would be right if Bernanke, Paulson, Geithner, Summers et al were actually looking after the interests of the average person, but as we've seen they are just looking after the interests of the average billionaire.
On Mish, I wouldn't say he was obsessed.
His blog has an excellent record of being correct, a tad early on the correction, but at least everything that he writes is recorded and I am sure he will take the debate up with you. On deflation ... facts speak. On inflation, try getting the money out there to spend.. more QE? Main Street gets s.f.a. All the Banks can do is hoard.
Another couple of years and house prices will reach the bottom. Everything will revalue.
I'd debate with Mish, but he requires registration on his site and I'm not interested in doing that. As for your deflation point, I've never found that particular argument compelling. Sure, the banks are hoarding now, but excess money has been created, is being created. It will not be taken back.
If you look at the last 30 years, we've had a continuous trend toward easier monetary policy. The reason for that is to cover up the functional decline in the American economy. We make very little that the world needs, at least not at competitive prices. So, we run twin deficits. We buy from them, they lend us money, we spend more than we earn. If not for that process, we'd have much higher inflation already. We've simply off shored to much cheaper markets. Now we have no savings with which to rebuild our economy, because we've used those massive borrowings for short term consumption.
The point is, there is no way for Bernanke to tighten monetary policy in a significant way, not even from our current state of basically free money being tossed from his helicopter. If he tightens, we repeat the same cycle all over again, only this time both the government and the private sector get a debt hangover. The economy slows, the budget deficit gets even larger, debt service becomes unbearable. So the excess money created for this bailout is permanent (on top of the massive excess money and credit already created during previous bubbles). If it can't be destroyed through tightening, it will eventually be deployed. When it is we will have inflation, protectionism, trade wars, ballooning interest rates, higher debt service, more printing, etc.
This was our last chance to get off the roller coaster, even though it would have caused a depression. Next time it will cause a crash of our economic system and probably our government.
This brief assumes that nothing changes in the TPTB roster and agenda, and that Ben and Tim continue to get the same instructions.
I don't think such will be the case.
Something is about to happen, something that similar to 2008..."no one saw coming".
The last thing that I believe is that TPTB have this all under control. You cannot squeeze and control jello at the same time.
So far Bernanke's scheme has 'worked' as the market is up and the massive accumulating of debt is getting rolled into low % interest. That said, unemployment is still hanging around and doesn't look to be going donw.. oil is at 80/barrel and if supply shortfalls start to take permanence then all growth will quickly shut down.. deficit spending will continue and will have to make up more and more shortfalls, and the dollar will start to get pounded again, and attacking other countries like greece and Japan to forment risk aversion to treasuries won't work anymore.. then kaboom
Not all of the egos in this algo driven market are on the same side of the trade.
There are plenty of funds that would love to prove to Benny & Turbo that they can't control the markets.
....and nomura tells u where u should put your money to work:
http://www.cnbc.com/id/35834029
love ur stuff zh but when it comes to investing things are just different, have to ride the liquidity bubble until it finally bursts!
and cos my portfolio is so small i ll find the exit :)
keep on your work though, reading your site is first and last thing of the day.
best greetz from berlin, germany
jakub
"Marc and I agree - never trust your money to a schlepper."
Mike (Mish) Schlepperchik
Apropos of nothing, since we are referencing/deifying/ linking to Blodget, he must be the paragon of fiduciary duty, a beacon in these dark times. Truly a role model for the evil GS et. al of out day. Ah, when bankers were bankers .
Dems had 60 in the Senate until Kennedy died. The best-laid plans of mice and men . . .
Mish now claiming he went long on the S&P at 700. He was bashing the S&P and going lower and lower the entire year of 2009.
Mish was recommending treasuries when the S&P was at 700. He's lying now when he says he went long the S&P at 700. In fact, his fund lost money in 2009. How the hell did he manage that one?
"Marc Faber: Don't Expect Another Crash ... Bernanke Won't Allow it"
Total BS!
Yes, Ben is printing money. But, things don't last forever. This will all blow up.
Total BS is right!
1045 Emperor Go-Reizei ascends the throne of Japan.
Marc knows more than he lets onto....Mish is the best economist in the world? Steve Keen top contender. Keiser says 'come get some!' Pharoahe monch also knows a thing or two.....
7 years later, it's the year of the Gods
Welcome to the Terror Dome-Pharoahe Monch ("I see it all like The Wizard of OZ"):United States government is just the facade
The Catholic church got ties with the Mob
I see it all like "The Wizard of Oz"
Now there's a yellowbrick road, the fame which is yours
If you only had a brain, you would know who you are
Poison your ventilation, cut your education
Secret information, world domination
Take over reservations
Trigger the energies in the oceans for tsunmais to control the population
Eyes of the sky, hit an observation
if your over 65 we'll take over your medication
Like give me that (give me that), form a line (form a line)
Go to war (go to war), press rewind
http://www.youtube.com/watch?v=Zw7t3kxiheo
I think Mish is right short term.
That being a couple of years at most.
But to really grasp the big picture, let's go to Bob Chapman, the man that knows.
Bob says that after a short spell of Mish being correct about deflation, the current big setup will come to fruition.
Then it's a purely monetary event in which the currency dies, Wiemar deluxe. Mish ought to try looking 5 years
into the future.
Not to sound racist, but the black president is sort of your cue that Zimbabwe is the prototype, not Venezuela.
They should have a skit on SNL, 'Blame a black man'
where every week a black man gets elected to take
the blame.
Oh but that might not be politically correct, unlike the
recent skit in which we laughed at screwing the chinese.
-MB
Uh.. That was completely racist, Billy Bob.
One thing's for sure - we're going to get a lot of 'flation
People are confusing price inflation with deflationary credit cycle.
A deflation is a contraction of money supply and private and public CREDIT. Credit is money and credit is 15x bigger than public government spending if not more. Steve Keen, Australian economist, speaks about that.
Overall, there is LESS money in the system for private spenders and lender. When money supply stops growing, it's antimatter for capitalism. That's deflation.
When taxes go up, or your groceries get more expensive that's called PRICE inflation. It's a symptom of both supply inflation and deflation. Why both? Because when you sell staples, you have a captive audience and you have to raise prices to compensate for loss of volume.
If you sell non-staples like cars, travel tickets, SUVs,clothes, luxury items,homes you have price DEFLATION across the board. Everything is cheaper if it's not a necessity.
The government is going to tax the shit out of us, but just because they are asking for more doesn't mean inflation.
Deflations are secular events that have some price deflation, a lot of consumer spending changes and a lack of BUYING and a lower GDP.
The government can't print enough cash to keep up with assert deflation and loss of private credit period. Doesn't mean your dollar will buy more gas, food,gold or anything. It means everyone has less because of high debt loads
Sorry, but Faber is full of shit!
Food for thought -
What happens if Bernanke, Geithner & Summers all end up getting their heads deservedly blown off? And yes, I DO mean literally. What kind of security details do those guys have? I mean, lets face it, these guys are the worst criminals the world has EVER known!
yes they are the worst criminals
I hope someone DOES do them in
Who to believe though
We have Faber saying that the FED can control the market
and he is usually accurate
However Prechter is also accurate and he says that
the FED CANNOT CONTROL LONG TERM
and the market eventually wins
so who to believe?
Also Robert Mchugh also agrees with Prechter
but so far at least Faber is proving correct
This really is the trillion dollar question though
you could remain in cash and be wiped out by low intrest rates and
high to hyperinflation and saved in equities or we have a deflationary collapse
in equities and cash is the saviour.
By manipulating the market and potentially wiping out the wealth of everyone
he should be crucified.
Faber is flat out wrong and needs to put the pipe down. I lost respect for him a while ago. Same with Bill Fleckenstein, James Grant and a bunch of others who used to make sense.
Question - If Bernanke controlled the market, then why did it fall over 60% in 16 months?
Besides, he can't control where all the money flows anyway. The fact is, we're in a massive rally because Wall Street clowns have very short memories, but this next time down will be a wipe out unlike any other. When it goes down again, it won't come back. History has too many examples and that should NEVER be ignored.......
Answer- because he wanted it to fall.
Remember the day TARP failed to pass on the first vote, they took the market down over 700 points that day.
They are keeping the market above 10K so the illusion of recovery continues (they don't want to spook the sheeple again). I think Faber agrees that the market would collapse without the PPT (banksters and FED) propping it up.
They have failed to prop real estate up, so it continues to fall despite their best efforts (low interest rates, tax credits, FED buying all the MBS, etc..).
A low volume stock market is being kept afloat, to keep the myth of recovery alive. Most of the media is on board to keep the hype of recovery going. How long they can continue to do it remains to be seen. Faber seems to think they will go "Zimbabwe" before letting the stock and bond markets crash like the real estate market has.
BTW, I wish Goldman's black box would signal a buy 20,000 foreclosed homes in Arizona at market. That would certainly help our real estate market here.
As warned about earlier, the bullish basing has resulted in a EURO and EUROYEN rally.
http://www.zerohedge.com/forum/market-outlook-0
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