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"I Will Never Sell My Gold," Marc Faber Warns, China's "Gigantic Credit Bubble" Unwind Is Just Beginning

Tyler Durden's picture




 

While the S&P 500 closed at record highs (and VIX near record lows), Marc Faber says the "momentum sell-off has caused serious internal damage to the market," with many of the most-loved and most-levered stocks down 30-50%. Interestingly Faber warns that if bond bears are correct and rates rise to 4% then stock prices "will really tumble." But it is China that worries him the most. Faber warns that Chinese growth figures are a fallacy and that "if one analyzes the data carefully" it is clear that "China is growing at most 4%" and given the "gigantic credit bubble" the outlook is not hopeful as the sharp deceleration in growth is likely to continue. Faber also has strong words for Western nations treatment of the rest of the world and "the US will have to back off.. because China is so important."

"Momentum Sell-off has caused internal market damage"

 

"Gigantic credit bubble in china"

 

Full Interview (well worth the price of admission):

Western nations don't realize "you can't treat other nations the way you treated them in the 19th Centrury... China is so large and so important to its neighbors that the US will have to back off"

 

"People think they know what the future holds... and what Central banks are up to.. they don't... I will never sell my gold and I buy more every month... I would not be short gold"

 

"Every asset in the world is over-inflated right now..."

 

"I like the concept of Bitcoin"

 

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Sat, 05/24/2014 - 20:54 | 4792264 old naughty
old naughty's picture

OMG, MF increasingly looks like Fu Man Chu.

Sat, 05/24/2014 - 20:56 | 4792271 fonzannoon
fonzannoon's picture

Here is a very interesting article for anyone else tired of Marc Faber calling for a 10% correction.

http://ftalphaville.ft.com/2014/05/23/1861282/goldman-sachs-on-coping-wi...

Sat, 05/24/2014 - 21:44 | 4792332 DoChenRollingBearing
DoChenRollingBearing's picture

I hope to never sell my gold either.

I would prefer to give it away.

***

With the S&P 500 at an all time high, well, buy-low-sell-high might work...

***

On the other hand (I sound like an economist, sorry), it may be just as well that virtually no one I know bought gold at my encouragement.  They would likely be very pissed-off at me...

Sat, 05/24/2014 - 23:00 | 4792518 Dickweed Wang
Dickweed Wang's picture

I hope to never sell my gold either.

I would prefer to give it away.

I'll take it off your hands if you're that stupid.

Sun, 05/25/2014 - 00:20 | 4792635 BlindMonkey
BlindMonkey's picture

You lived up to your Avatar's name there. Thanks for clarifying that for us.

Sun, 05/25/2014 - 01:28 | 4792703 DoChenRollingBearing
DoChenRollingBearing's picture

Mr. Wang,

Perhaps I should have added "to my child / grandchildren".

Sun, 05/25/2014 - 08:31 | 4792938 Snoopy the Economist
Snoopy the Economist's picture

Of course we understood - only a dickweed would misunderstand.

Sun, 05/25/2014 - 08:38 | 4792946 FranSix
FranSix's picture

When you sell your gold, then you would have to sell it for cash, riiiight?

Sun, 05/25/2014 - 09:20 | 4792985 bonderøven-farm ass
bonderøven-farm ass's picture

Think outside the box, buttercup......

Sun, 05/25/2014 - 09:53 | 4793041 Bendromeda Strain
Bendromeda Strain's picture

I'll play. If, and when you liquidate your gold... if, you decided to accept cash for it... then, you should expect magnitudes more scrip for your gold than your boss or your mother is willing to give you. Stick with your speculation, though. Just because it didn't work in Japan, you still have Weimar to fall back on.

Sun, 05/25/2014 - 10:32 | 4793115 Snoopy the Economist
Snoopy the Economist's picture

Exactly - "if you decide to accept fiat for it". It would probably be best to trade directly for necessities rather than fire starting paper.

Sun, 05/25/2014 - 15:49 | 4793740 NickVegas
NickVegas's picture

No, you shouldn't of added it. Your children and grandchildren received your wisdom and have no need for charity.

Sun, 05/25/2014 - 09:10 | 4792972 sessinpo
sessinpo's picture

 DoChenRollingBearing    I hope to never sell my gold either.

I would prefer to give it away.

----

I would gladly sell my PM's in exchange for something I find of more value. I am not married to my PMs.

I would never give my PMs away. It dilutes the value of it, to me and the receiver.

Sun, 05/25/2014 - 10:18 | 4793083 TruthHunter
TruthHunter's picture

DCRB..."I would never give my PMs away. It dilutes the value of it, to me and the receiver."

If your grandchildren study and work hard enough to appreciate them, it wouldn't be a give away.

Sun, 05/25/2014 - 16:29 | 4793835 Spumoni
Spumoni's picture

Well, DCRB, you've got as many suggestions as there are commentarios on your remark. Hat's off to you from here anyway-as if anyone owns a damned thing. We are but stewards - some as arrogant as the last steward of Gondor. SOMEBODY, be it relatives, my children, grandchildren, the IRS, some unknown, will just fight over it all when I leave. Might as well do something you enjoy with it. I like to just stare at mine...I appreciate all the imagination my otherwise befuddles species-mates have put into making that stuff look nice.

Sat, 05/24/2014 - 23:03 | 4792522 Al Huxley
Al Huxley's picture

Oh Lord - "Goldman agree there isn’t anything conceptually special about negative rates because bond math works with negative numbers (as it’s focused on real returns)".  Any time a system gets to the point of justifying what any common sense inspection would point out to be insanity, it is on its last legs.  Remember the last time an obviously crazy idea was accepted whole-hog by the mainstream?  Subprime lending and CDS. The math worked there too, on paper, and in 2006 the people pointing out the obvious unsustainability of the system were being derided as idiot naysayers who didn't understand the secrets of wealth in the new economy.

 

But a ponzi is a ponzi, and the part of the math that gets ignored is that the ponzi goes until nobody is willing to be the next greater fool, and then it collapses in spectacular fashion.  And where was Goldman the last time 'the math worked'?  Betting against the very 'math worky' products they were so earnestly selling to their eager, and unforgivably, mind-boggling credulous and unsuspicious customer base.

 

I've facetiously pointed out a number of times that the bond market has a constant bid under it, regardless of the low rate of return because nobody buys for yield anymore, they buy for capital gains.  But it must be obvious to everybody who just puts the math aside for a few minutes and thinks about the underlying dynamic that a debt-financing market that's been converted from a risk-return, yield-based financing mechanism to a purely speculative 'sell to the next greater fool' money machine is doomed to fail, and when that market is the global sovereign debt market, how can its failure result in anything other than a complete collapse and reset of the entire global financial system.

 

Finally, the super-wealthy of the world have historically, repeatedly demonstrated two very relevant characteristics in regards to these types of systems

- a propensity for accumulating wealth in the form of real and tangible assets

- a willingness to capitalize repeatedly on the public's propensity to believe fairytales that promise free money without risk or consequence as a means of increasing their wealth and power.

 

I know this probably sounds like hard-core ZH reader party line stuff, but seriously, ignore the math temporarily and think about the real implications of negative interest rates. 

Sun, 05/25/2014 - 10:25 | 4793038 Doña K
Doña K's picture

Krugman had written  extensively about Japan's liquidity trap several years ago arguing that even if they went to negative interest rates it will still not work and was warning them of a potential collapse. I wonder what he may say now.

Edit: I found the article. His writings then contradict what he has been saying now about monetary expansion

http://web.mit.edu/krugman/www/japtrap.html

Very intersting article. Comments please

Here is a gem in the last page:

"The way to make monetary policy effective, then, is for the central bank to credibly promise to be irresponsible - to make a persuasive case that it will permit inflation to occur, thereby producing the negative real interest rates the economy needs. This sounds funny as well as perverse."

 And...According  to this the FED is a one trick pony:

"Fiscal policy: The classic Keynesian view of the liquidity trap is, of course, that it demonstrates that under some circumstances monetary policy is impotent, and that in such cases fiscal pump-priming is the only answer." Krugman 1998

 

 

Sat, 05/24/2014 - 22:15 | 4792438 rubiconsolutions
rubiconsolutions's picture

"I like the concept of Bitcoin"

Translation: "I like the concept of Bitcoin...but I won't be buying anytime soon."


Sun, 05/25/2014 - 07:00 | 4792880 what's that smell
what's that smell's picture

bitcoin?

you mean the fat kid on the exercise ball and magic the gathering online exchange?

that bitcoin?

Sun, 05/25/2014 - 09:16 | 4792979 TheHound73
TheHound73's picture

Shhh, up 66% in 6 six weeks, not complaining.

Sun, 05/25/2014 - 09:22 | 4792989 q99x2
q99x2's picture

Bitcoin goes up when people have to move money.

Last Price: 566.8000

And Climbing.


Sun, 05/25/2014 - 12:51 | 4793431 dark pools of soros
dark pools of soros's picture

the sheep missed the part where concern is rising on banks using btc to move funds behind the scenes

 

 

Sat, 05/24/2014 - 21:03 | 4792267 Yen Cross
Yen Cross's picture

    xau or au Mr.Faber?

   Hey Fonz, My best to you and your Mrs. Have a wonderful weekend.

Sat, 05/24/2014 - 21:11 | 4792291 fonzannoon
fonzannoon's picture

Thanks my man. All the best to you as well. I will be playing around on here for a bit. That article was very interesting Yen. Here is a clip from it.

"In short, paper cash would begin to behave like a scarce commodity, with a forward curve that depreciates over time because of warehousing costs, meaning money’s only worth holding physically if the rate at the central bank is even more erosive.

None of which would necessarily encourage more liquidity or spending in the system itself."

 

Sat, 05/24/2014 - 21:22 | 4792320 NoDebt
NoDebt's picture

"None of which would necessarily encourage more liquidity or spending in the system itself."

Sorta like.... um..... Japan.

Sat, 05/24/2014 - 21:37 | 4792342 DoChenRollingBearing
DoChenRollingBearing's picture

Yen, fonz, NoDebt, nice to see you guys here this weekend.  With civil conversation, smile.  

Fishez!

Sat, 05/24/2014 - 21:40 | 4792351 NoDebt
NoDebt's picture

I like it around here on sleepy weekend nights.  All the kids in bed.  Throw around a few ideas that would likely get you bombed out of the thread on an average Tuesday afternoon.

Sat, 05/24/2014 - 21:42 | 4792359 DoChenRollingBearing
DoChenRollingBearing's picture

My wife is running around Mass. with our daughter doing the Boston thing, the Cape Cod thing, the Tea at the Chatham thing...

I'm OK with that, OK with being here rather than there.  Ever traveled with women before (as the only guy)?

Sat, 05/24/2014 - 21:54 | 4792382 NoDebt
NoDebt's picture

"Ever travel with women before (as the only guy)?"

Is that a trick question?  

Before I was married that was called "a good weekend".  After I was married that was called.... oh, nevermind, I'm not going there.  

No, I've never traveled with multiple women as the only guy.  That's my story and I'm sticking to it.

 

Sat, 05/24/2014 - 22:20 | 4792443 DoChenRollingBearing
DoChenRollingBearing's picture

That story is probably the smart one to stick to...  

+ 1

 

EDIT: I see our serial junker is out now!  Yay!  I wonder whose team he's on?

Sat, 05/24/2014 - 22:27 | 4792452 NoDebt
NoDebt's picture

Not my guy.  This is the "junk the whole thread" guy.  Look down the page.  Everyone's getting hit.

MY junker has a hard-on only for me.  I wish I knew who he was, I'd shake his hand.  He's my most loyal reader and he keeps me honest.

Sat, 05/24/2014 - 22:31 | 4792459 fonzannoon
fonzannoon's picture

I went down the line and junked everyone once I saw the serial junker come out. Then 4 mins later I came back and up arrowed everyone. Even James Cole. It was my version of a stop hunt followed by some quote stuffing and momentum ignition. That's how mentally fucking gone I am.

Sun, 05/25/2014 - 01:30 | 4792708 DoChenRollingBearing
DoChenRollingBearing's picture

High Frequency Junker, LOL!  Needed the laugh, fonz, thanks!

Sun, 05/25/2014 - 12:57 | 4793438 dracos_ghost
dracos_ghost's picture

Ok, that comment made my day. Spewed coffee all over the place, but it was worth the laugh.

Sat, 05/24/2014 - 21:28 | 4792329 Yen Cross
Yen Cross's picture

     In all honesty Fonz, NO one really knows. The most valuable commodity in my life is family and close friends.

  I get junked everytime usd/jpy bounces. I like you for your honesty/integrity Fonz. I'm pretty simple Fonz.

    I'll give everyone a trade if the stars align.

    Even if the yield curve steepens over the next few months (elections) , It's a "kings" world!

Sat, 05/24/2014 - 21:31 | 4792331 fonzannoon
fonzannoon's picture

Here is another good one. I gotta call a spade a spade here and say that I am finding on this site what I used to crave over here.

http://ftalphaville.ft.com/2012/07/31/1102191/negative-rates-as-a-precur...

Sat, 05/24/2014 - 21:44 | 4792358 Yen Cross
Yen Cross's picture

  Thanks for the link Fonz.

  It's a "holiday weekend" fonz! You spend time with your family for (3) days .

  You come to Z/H because you're venting, and sharing ideas. (not looking for new meatballs)

  P.S. Fonz I'd take anything From the "Financial Times" with a "grain of salt".

Sat, 05/24/2014 - 21:48 | 4792368 fonzannoon
fonzannoon's picture

It is thought provoking stuff is all I mean. We get Faber on here 4 days a week. At this point I more than take Faber with a grain of salt as well.

I was with my wife at a park near the beach today Yen while this was going on overhead

http://newyork.cbslocal.com/2014/05/22/blue-angels-arrive-on-long-island...

It happens every year over here. It really is interesting to see these things flying low overhead and the booming sound they make. My wife hates it. Says it gives her the chills. I revert back to my 8 year old G,I Joe days and stare at it in awe for a few mins. Then it sorta makes me sick too.

Sat, 05/24/2014 - 21:44 | 4792360 James_Cole
James_Cole's picture

FT? So, you've officially come to the darkside then Fonz?

Also, anyone notice a striking similarity between faber and this guy?

http://www.rounds.com/blog/wp-content/uploads/2010/11/a-blob-fish.png

Infact, if it could speak English I'd imagine it sounding exactly like the man.

Sat, 05/24/2014 - 21:45 | 4792361 Yen Cross
Yen Cross's picture

 James _Pole smoking instigator?

Sat, 05/24/2014 - 21:52 | 4792374 fonzannoon
fonzannoon's picture

James, the articles I referenced are interesting. Kiss Tylers ass all you want. I hope it gets you somewhere. I'm sick of Faber and Snyder. I am however interested in if Draghi goes Nirp over in Europe and the ramifications on the banking system because it is very possible that we follow that path over here. I am willing to explore anyone's angle on it and use it as a basis for conversation. 

Sun, 05/25/2014 - 13:38 | 4793522 dracos_ghost
dracos_ghost's picture

I think Draghi has already been given the NIRP go ahead -- that's why the premature ejaculation of the markets. We've been hearing this "bail-in" talk for months now. It seems like NIRP is a surrepticious way to socialize "bail-ins".

Sat, 05/24/2014 - 21:53 | 4792379 James_Cole
James_Cole's picture

I used to get so much shit for posting ft articles (articles which were correct btw) while the folks on here were lapping up everything sprott and his group of conmen were on about.

The less sprott the more ft the better.

Sat, 05/24/2014 - 21:56 | 4792386 Yen Cross
Yen Cross's picture

   I'm suprised Tyler puts up with you. I'm guessing your FT links were your "saving  grace?"

Sat, 05/24/2014 - 22:00 | 4792398 fonzannoon
fonzannoon's picture

How do you know these articles are not correct? I don't know if they are, or are not, I am just using them as a basis for discussion. I am absolutely threadjacking a Marc Faber thread to do so. I am fine with getting junked for it. I have heard enough out of Faber. 

Sat, 05/24/2014 - 22:09 | 4792411 Yen Cross
Yen Cross's picture

  I like AEP Fonz. I won't mention what British financial he comes from. The man has balls and about 40 years in the currency trading business.

  It's different this time Fonz. (soft luguage)

Sat, 05/24/2014 - 22:12 | 4792426 James_Cole
James_Cole's picture

I'm suprised Tyler puts up with you. I'm guessing your FT links were your "saving  grace?"

I've been surprised too, I'm one of the very very few people on here who have called those guys on their lies / nonsense. On a lot of sites the advertisers are sacrosanct - fuck with them and you're out. I'd say it's a credit to zh that they haven't booted me.

So few dissenting voices left on here to begin with. Not that I'm even dissenting much.

Sat, 05/24/2014 - 22:15 | 4792437 fonzannoon
fonzannoon's picture

you are a legend in your own mind. I hear you calling bullshit on all the PM pumpers, which is all well and good. Although it certainly has gone mainstream that PM's have been purposefully pushed down. Are you on seeking alpha calling BS on all the stock pumpers yet? The same stawks that are purposefully pushed up? 

Sat, 05/24/2014 - 22:25 | 4792450 Bay of Pigs
Bay of Pigs's picture

He is completely full of shit on PM's. The cat is out of the bag now. Question is why he ignores that.

Sat, 05/24/2014 - 22:35 | 4792464 James_Cole
James_Cole's picture

He is completely full of shit on PM's. The cat is out of the bag now.

Yes, my track record of being entirely right aside..

Sat, 05/24/2014 - 22:41 | 4792475 fonzannoon
fonzannoon's picture

right about what? The PM guys are still pumping pm's and the banks are still doing everything they can to illegally push prices down. what exactly were you right about?

Sat, 05/24/2014 - 22:49 | 4792490 James_Cole
James_Cole's picture

what exactly were you right about?

Gold price movements, with a decent amount of luck thrown in my thesis was proved entirely correct. Wasn't particularly clever either, just obvious. Not here to say told you so - could've easily gone the other way. But BOP likes to live in a fantasy world and Im trying to interject a bit of reality.

Sat, 05/24/2014 - 23:15 | 4792538 Bay of Pigs
Bay of Pigs's picture

Fantasy world? WTF are you talking about?

Sat, 05/24/2014 - 23:58 | 4792591 James_Cole
James_Cole's picture

Those guys have been pump & dumping the same shit stocks for years, yet the fanclub (of which you are one) refuses to acknowledge this extremely obvious fact. Question.. why does Rule like junior miners on the tsx-v so much? Could it be because bay street stock promotors have such an easy time pump and dumping them??

http://blog.cambridgehouse.com/2011/10/27/recapping-eric-sprott-at-the-2...

^ lolz lolz lolz

Look at this interview in 2011:

http://www.investmentu.com/article/detail/23774/why-gold-mining-stocks-w...

But Rick Rule has good news. While the competition with gold and silver ETFs will continue, mining companies are now inexpensive relative to bullion and investors will be rewarded accordingly.

His picks there (2011):

http://finance.yahoo.com/echarts?s=PRU.TO+Interactive#symbol=PRU.TO;rang...

http://finance.yahoo.com/echarts?s=LYD.TO+Interactive#symbol=LYD.TO;rang...

http://www.stockhouse.com/companies/quote/v.epz/esperanza-resources-corp

Pump and dump that shit bitchez!

Some other favourites of days gone by:

http://finance.yahoo.com/q?s=SPA.V

http://finance.yahoo.com/q?s=GIX.TO

^ another top pick at the end of 2011!

Sun, 05/25/2014 - 00:13 | 4792628 Bay of Pigs
Bay of Pigs's picture

Who said anything about Rick Rule or mining stocks? I was talking about owning gold/silver and the manipulation of the price.

Sat, 05/24/2014 - 22:40 | 4792473 James_Cole
James_Cole's picture

you are a legend in your own mind. I hear you calling bullshit on all the PM pumpers, which is all well and good.

Yes, well no one has ever given two shits on my opinion of these guys. But I bet it irks them seeing someone on here calling them for exactly what they are - bullshit artists. These guys literally scam grandmas into buying stocks they know are garbage, yet people on here admire them becuase emotionally it connects to their investment decisions / worldview....

That said, almost all of the commentators who know this stuff have been driven off zh.

Are you on seeking alpha calling BS on all the stock pumpers yet? The same stawks that are purposefully pushed up?

Yeah, that'd look real smart. Don't buy stocks, they're going straight up!!

I do rant about nflx elsewhere and people give me a lot of shit for it, and sadly they are right.

Sat, 05/24/2014 - 22:46 | 4792484 fonzannoon
fonzannoon's picture

Gold went straight up for 12 years. by your own (stocks going straight up)  logic you would not have been calling bullshit on it then. only now. That makes everything you say kinda pathetic and useless, no?

Sat, 05/24/2014 - 22:51 | 4792497 James_Cole
James_Cole's picture

by your own (stocks going straight up)  logic you would not have been calling bullshit on it then. only now. That makes everything you say kinda pathetic and useless, no?

Have you seen my going on about it lately? No? I brought it up when the tide had shifted but people were still claiming it would be going to 2000+ (conservatively) very soon.

You've probably also seen the occasional comments on here from people who were wiped out because they bought into the (false) narrative. People in the industry knew it had shifted drastically.

Sat, 05/24/2014 - 22:58 | 4792511 fonzannoon
fonzannoon's picture

so after gold went down you jumped on the gold is going down bandwagon. much like you are hesitant to go against stocks because they are going up. It just means that you go with wherever the wind blows.

i'm not denying the price of gold is going down, and that paper drives the price of phyz. I am wondering how banks admitting they are manipulating gold down makes the gold narrative false.If anyting it seems to validate the narrative, although that does not have change the direction of the price in the short term.

Sat, 05/24/2014 - 23:15 | 4792536 James_Cole
James_Cole's picture

so after gold went down you jumped on the gold is going down bandwagon. much like you are hesitant to go against stocks because they are going up. It just means that you go with wherever the wind blows.

Right, easy to reflect on it in hindsight. At the time the prevailing wind was that gold would continue going to strength, the primary voice (hated on by goldbugs) against this was the WGC report at the end of 2012 which didn't say gold was in for rough waters but clearly outlined a case for that. I explained the case for a sharp correction and people went fucking bananas on me. Sinclair + other charlatans held to BTFD and almost everyone on here went along.

Remember all the "high premiums = huge demand"? Buy any silver / gold you can get your hands on regardless of price? No? Easy to block out the past hey!

If i had bought at a ~30% premium based on the commentary of those assholes I'd be pretty pissed. People on here are apparently much more forgiving. I had expected a major backlash against those guys, but so far it has been quite minor.

Sat, 05/24/2014 - 23:30 | 4792563 fonzannoon
fonzannoon's picture

It is easy to reflect on it in hindsight. that is what u do. I am giving u a chance to call bullshit on the S&P and your argument is "no way i'd do that, it's going straight up" so whether it is gold or the S&P, you only call it like you see it on the way down. 

whatever with all that. it is now completely public knowlegdge that stocks are being manipulated up and gold is manipulated down. for the reasons we all know. the reasons that completely validate the gold narrative. yet you are on the stock bandwagon. that says it all about you.

Sat, 05/24/2014 - 23:53 | 4792598 James_Cole
James_Cole's picture

yet you are on the stock bandwagon. that says it all about you.

Did I say that? No.

Sun, 05/25/2014 - 00:09 | 4792621 NoDebt
NoDebt's picture

God damn.  Aren't you guys drunk yet?  I am.  Let it go.  We'll all fight in the morning if you're still up for it.  Only manic-depressives fight over dumb shit like this at midnight on a Saturday.

Sun, 05/25/2014 - 01:52 | 4792727 Spitzer
Spitzer's picture

90% of the mainstream boiler rooms like Goldman Sachs were calling for the S&P to go up to where it is now in 2013. Just like they all said gold would go to 2000. Stocks did go up, gold didn't.

Take a bow for your monkey meet dart board gold call, but it means nothing.

Sat, 05/24/2014 - 22:53 | 4792500 Yen Cross
Yen Cross's picture

 James _Coal> Really? Using an universal commodity name(coal) to prove a point?

  Your comment referring to Grandmas buying equities is "rich".?

  You should rename yourself > Alaskan Crab Inc.<

Sat, 05/24/2014 - 21:59 | 4792392 NoDebt
NoDebt's picture

It's different around here on the weekends, especially at night, James.  Especially in the slow threads.  A higher ratio of people willing to discuss and think while ignoring the up and down arrows.

Sat, 05/24/2014 - 22:01 | 4792401 fonzannoon
fonzannoon's picture

exactly

Sat, 05/24/2014 - 22:12 | 4792430 Bay of Pigs
Bay of Pigs's picture

Sprott a conman? LOL, I guess you missed the gold threads on ZH from yesterday?

You really are a clueless fuck.

Sat, 05/24/2014 - 22:44 | 4792479 James_Cole
James_Cole's picture

Yes, I generally don't bother interacting on here on that subject anymore. Especially as tangentially I agree with the sprott-approved narrative on the subject which puts me at an awkward position comment-wise.

Sat, 05/24/2014 - 21:48 | 4792369 NoDebt
NoDebt's picture

Do you subscribe to the Financial Times (online)?  I'm getting the same list of articles with drop-downs no matter what link you post up.  I can find the individual articles in in the list in any case, but it's all linking to the same list.  Meh... my explanation is about as clear as mud!

Sat, 05/24/2014 - 23:18 | 4792543 Al Huxley
Al Huxley's picture

'For example, the larger the outstanding debt, the healthier the structure of the bond curve and the greater the influence of the central bank. On the contrary, the smaller the debt market the more inverted and confused the bond curve — with real rates ever more unhinged from central bank policy.'

 

Yesterday I'd commented facetiousy in reply to Ham-bone's post illustrating the increase in treasury holdings across Europe and Asia that it illustrated the importance and value of running an ever increasing deficit, to meet the endless demand for paper.  And here's the same point, straight from that article.

 

'I feel like I'm taking crazy pills'....

Sun, 05/25/2014 - 00:03 | 4792610 NoDebt
NoDebt's picture

You should just say "thank God for debt" and move on.  Debt is the only thing that squares the books at this point.

Debt is better than the alternative.  "Sure beats doing something".

Sun, 05/25/2014 - 00:10 | 4792622 Al Huxley
Al Huxley's picture

I was talking with a friend about this yesterday.  The nature of technology means that fewer and fewer people are required to do the work necessary to support society (and of course the top end of the pyramid) so you have to wonder what the next step is.  He was figuring maybe the perpetual EBT cards, Oculus glasses and VR, coupled with GMOs, vaccinations and bad food would be enough to wind the population down over time without the mess associated with some sort of large scale crash.  Maybe this is the end-game - after all, the top .01% are getting everything they want, and it doesn't cost much to keep the cattle happy in the way just described as the population gradually declines,  Shitty as it is, it does beat most of the darker alternatives.

Sun, 05/25/2014 - 01:49 | 4792720 RiotActing
RiotActing's picture

Come on... Oculus and VR for EVERYONE in the country? No way, this shit is going to end badly. It wont be overnight, it may take a few years but shit is going to pop off in this country... and all over the world. 

Sun, 05/25/2014 - 02:43 | 4792769 Al Huxley
Al Huxley's picture

Cheap way to keep the proles happy and occupied while they die off of obesity, type 2 diabetes, etc....

Sun, 05/25/2014 - 05:59 | 4792864 Winston Churchill
Winston Churchill's picture

The planet would be resourcelss at that point.
They will not let that happen.

Mon, 06/02/2014 - 08:01 | 4816328 MeelionDollerBogus
MeelionDollerBogus's picture

It's an evolutionary process. Those who die off simply aren't good slaves but many more take their place & keep working, even if in prison on false charges.

Sun, 05/25/2014 - 04:51 | 4792843 kurt
kurt's picture

Please don't give the NeoMalthusians any more rope to hang us with, please.

Sun, 05/25/2014 - 17:11 | 4793905 TradingTroll
TradingTroll's picture

"the top .01% are getting everything they want"

 

Not unless they want cancer, autism and other childhood diseases

http://www.theatlantic.com/health/archive/2013/10/us-women-are-dying-you...

 

But dont mention Fukushima

Sat, 05/24/2014 - 21:15 | 4792306 Death By Cold S...
Death By Cold Steel Report's picture

This explains why they have a Trillion in US Bonds and been amasing Gold; they are going to need it and with the population they have all hell could very well break loose. 

Sat, 05/24/2014 - 21:20 | 4792315 Bay of Pigs
Bay of Pigs's picture

Bear Bonds? WTF? Those guys are at the bottom of the ocean. And 4% rates? Seriously?

What a bunch of crap that is. Sorry Marc, but no way that plays out.

Sat, 05/24/2014 - 21:24 | 4792322 RevRex
RevRex's picture

So what happens then instead?

Sat, 05/24/2014 - 21:36 | 4792340 Bay of Pigs
Bay of Pigs's picture

ZIRP, thats what. Rates arent going anywhere near 4%.

Sat, 05/24/2014 - 21:34 | 4792335 fonzannoon
fonzannoon's picture

BOP here is a quote from the comment section from the link below and it summarizes why you and nodebt are right. No way we see 4%.

""Ah yes, and who is short vols? Essentially all financial markets from the Fed put, which is, as I've pointed out elsewhere, actually a risk reversal when the Fed starts to "call" rates higher.

It never really last long though because there is huge negative gamma not far above. This time probably above 3.2% on US 10-years. Investors are going to be whiplashed if we ever get up there again and debt is first repriced and then growth is smashed again because of that, dragging yields down to new lows, ala Japan."

http://ftalphaville.ft.com/2014/05/23/1860982/yes-rates-will-rise-do-con...

Sat, 05/24/2014 - 21:45 | 4792350 DoChenRollingBearing
DoChenRollingBearing's picture

Rickards thinks it's ZIRP 4EVA until it crashes as well.

Sun, 05/25/2014 - 02:03 | 4792734 seek
seek's picture

I agree, just with the debt outstanding they can't really afford for rates to go up too much without kicking off a spiral they can't get out of. It's been a while since I did the math, but I think it's around 7% that it's literally game over. 4% is way too close to that.

ZIPR and negative real rates until the reset, and the game has always been to push the reset out as far as possible. But without better rates there's no way they can ever "earn" their way out of this mess, so reset is inevitable.

Sat, 05/24/2014 - 21:37 | 4792333 q99x2
q99x2's picture

Wish I could take the summer off and go gold prospecting in California. Good places just down the street and Freeway from me. But I can't. Have to go to bum fuck Pittsburgh and try to make money trading the bumbacoin.

Wonder if the Thai army is doing any prospecting today in Faber's yard.

Sat, 05/24/2014 - 21:37 | 4792345 Yen Cross
Yen Cross's picture

     Buck up little camper! Pack your shit and go abroad for a few years...

Sat, 05/24/2014 - 21:40 | 4792354 DoChenRollingBearing
DoChenRollingBearing's picture

Even a few months for those who are young, and not having spent time overseas.  Wise advice!

Sat, 05/24/2014 - 21:47 | 4792365 Yen Cross
Yen Cross's picture

  Well Spoken "DoChen".  International travel = learning curve!

Sat, 05/24/2014 - 22:15 | 4792429 DoChenRollingBearing
DoChenRollingBearing's picture

10-4, amigo, rgr that!

I might not have ever married had I not traveled while young. *

 

 

* Else likely gotten a divorce...  

Sun, 05/25/2014 - 01:38 | 4792713 bunnyswanson
bunnyswanson's picture

q99x2 - I am in Cali...where is this "good place?"  I will go for you.  Hopefully the drought will allow me to get to areas not accessed in 50 years (or since they built the dam).  I am in San Joaquin Valley, south of Furnace...errr Fresno and north of Baked Beans....er Bakersfield. 

Sat, 05/24/2014 - 21:59 | 4792394 Hindenburg...Oh Man
Hindenburg...Oh Man's picture

People are waking up after last week's insanity. Between that ridiculous and blatant last day of Friday manipulation on record low volumes and absurdly low VIX, at the same time we are digesting the reports of Bernanke letting it slip at 250K-paid speaking engagement after parties that interest rates are never going up, everyone is re-thinking things a little bit. I think that we are all even more skeptical of the system, but also tired of the gloom-and-dooming Fabers of the world who keep missing the target. I'm sorry, but timing does have some relevance in many of life's endeavors. 

 

Mon, 06/02/2014 - 07:59 | 4816324 MeelionDollerBogus
MeelionDollerBogus's picture

Multi-year timing only.

Multi-day requires insider-trading. Nothing else.

Sat, 05/24/2014 - 22:30 | 4792458 10mm
10mm's picture

He is out of his fuckin tits.

Sun, 05/25/2014 - 06:00 | 4792865 dojufitz
dojufitz's picture

I will never sell my ass......my Gold.....?

Sun, 05/25/2014 - 09:04 | 4792967 ghostzapper
ghostzapper's picture

I respect Faber for consistently having the balls to make bold calls and everyone knows nobody can be correct all the time.  So now he likes the concept of Bitcoin?  or he's been buying it all along as a hedge but waiting for the best price action to make him look good when he endorses it?  Either way point being good chance all the bashers gonna get a bunch of Bitcoin rammed straight up their ass whether they like it or not. 

Couple weeks ago right here I said low 440's excellent entry point to add/initiate and that 530ish and 728ish keys to watch.  Got the volume bounce out of the 440's and the volume bounce through 530ish but admittedly I would like to see even more volume.  Not sure how much is potentially up for offer though if one considers whomever held through all of the attacks and BS since the fall of 2013 might be set on holding for quite some time.  Need both sides to crank up the volume. 

On a weekly, logarithmic chart this things looks pretty damn good.  Of course to see that you have to allow yourself to acknowledge that you are not smarter than the market or what the chart is telling you (rigged markets notwithstanding). 

Sun, 05/25/2014 - 09:15 | 4792977 sessinpo
sessinpo's picture

ghostzapper    So now he likes the concept of Bitcoin?

----

On the topic of bitcoin, Has anyone noticed how many websites (bitcoin mining) use referrals to get bitcoins? In other words, MLM or pyramid scheme. Get bitcoins free if you can, but don't buy them.

Sun, 05/25/2014 - 11:50 | 4793311 ReactionToClose...
ReactionToClosedMinds's picture

seems memories are weak, selective or non-existent..............

Fall 2008 just did not 'happen'.    The various issues in the various markets were clear as early as end of 2005.   But it took another three years to set the table for Fall 2008 money market seizure via Prime Money Market near collapse due to Lehman.  Of course, Goldman was on both sides of everything and engineered their survival in a close call for capital markets.  Faber was early on that case .......as many were Felx Zulauf et al ........ but where was FTAlphaville .....playing/reporting 'status quo'.

The 'cynics' are losing their patience..............Faber is another clock that predicts time twice a day .......

not that anoyone cares...... in my very humble (who knows what is fully going on) opinion, the present capital markets system is even more potentially unstable now than it was in Summer 2008 ............

Sun, 05/25/2014 - 14:12 | 4793603 Frostype
Frostype's picture

Faber didn't give a f**k while that man was taklking
Faber is thinking: where did I put my paperclips&

Sun, 05/25/2014 - 14:20 | 4793618 withglee
withglee's picture

"I like the concept of BitCoin"

I know quite a lot about BitCoin. But I'm not sure what is the "concept" he likes.

Knowing "a" concept of BitCoin, that things in short supply make good Media of Exchange ... also attributed to gold ... is misguided on its face. Also the concept of "nobody controls" BitCoin is also misguided.

Something that has "no" controller, but behaves improperly for its use is "not" better than something that "has" a controller and "is" properly controlled for its use. The former is probably not even better than the latter when the latter is "not" properly controlled. Such is true of FRNs vs BitCoins and Gold.

FRNs are managed very badly (except from the managers' perspective ... the managers benefiting handsomely from their mismanagement). Even so, they perform better for short term barter than either gold or BitCoins. Gold has proved to be a better store of value due to the FRN's (designed in) 4%/year leak. BitCoin appreciation (built in deflation), is a leak in the other direction but equally destructive.

Sun, 05/25/2014 - 18:59 | 4794128 AdvancingTime
AdvancingTime's picture

What bothers me about Bitcoin and any online currency is cyber-crime. If cyber warfare and cyber-attacks are not on your list of modern worries, it is time you put them on. Either could make your life much more difficult or in a worse case scenario end it.

A series of high-profile events since 2010 has highlighted the increasing and multifaceted threat of cyber-attacks. U.S. cyber-security policy continues to evolve to meet these challenges, but critical gaps remain, including the incomplete protection of digital infrastructure vital to national security, such as power grids and financial networks. On a personal level having your accounts hacked, or having someone steal your identity can turn your life upside down. More on this subject in the article below.

http://brucewilds.blogspot.com/2013/05/cyber-warfare-and-attacks.html

Sun, 05/25/2014 - 18:33 | 4794014 Youri Carma
Youri Carma's picture

Following Marc Faber’s reasoning he says: “My view is if the bears on bonds are right and say the 10-year note yield indeed goes to 4%, I think the stock-market would really tumble”

“Well I own 10-year treasury notes but I don’t hold them with a great deal of confidence. I bought them when they where yielding 3%, so sofar so good.”

“So in a diversified portfolio I think that treasury notes and treasury bonds would rally if stocks fell sharp. So this is a way of having a put on the stock-market”

What is not mentioned by Marc Faber here but what he of course also knows is that both the treasury bonds and the stock-market are in heavy QE-FED manipulation mode beside the other heavy manipulated markets like for example the silver and gold market.

Therefore Marc Faber must think that the manipulation on the stock market fails in which case the FED probably will allow the bond market rally because they favour low rates before the signal this rally in treasuries send to the world namely that all is not well and that the treasury bond ‘save haven’ is in demand.

Question remains if the FED would allow a big or a small stock-market correction or a significant correction at all at this moment?

Because this is the double think, S&P 500 Rises for Week to Record Amid Optimism on Economy http://www.bloomberg.com/news/2014-05-23/s-p-500-rises-for-week-to-recor... while the US Generic Govt 10-Year Yield 2.53% Now!??? http://www.bloomberg.com/quote/USGG10YR:IND

Both can't be right. Either the economy is doing well which produces higher bond rates in a no 'save haven' bid or the economy is not doing well at all and treasury yields stay low in the 'save haven' bid.

We know the FED favours low rates above anything else since they've said this so many times themselves. But low rates are not a sign of an healthy economy as low bond yields show.

Maybe it's indeed now the market using the bonds as a put as Marc Faber describes doing FED's work pushing the bond yields lower while the FED may decide to let them creep higher for a while, if they want to point at it as a 'better doing economy' signal. They surely could use this new created cheap money to prop up the S&P some more.

But even if that fails they like it more to still see rates low because it's there only 'tool' for preventing debt payments accelerating and providing an endless stream of cheap money for their very dangerous manipulation games on the bond, stock and precious metal markets.

Mon, 06/02/2014 - 07:57 | 4816313 MeelionDollerBogus
MeelionDollerBogus's picture

Every big market crash happened deliberately to rob people of their assets. The next will be no different & the Fed & Bankster Minions / Overlords (relative to the Fed) will all be in on it. Be ready. UVXY, HVU, both 11x inverse to the market. 219 / SPY = HVU 1/11

Sun, 05/25/2014 - 18:54 | 4794112 AdvancingTime
AdvancingTime's picture

 Much of the recent growth in China after 2008 came from a massive 6.6 trillion dollar stimulus program that expanded credit and poured massive amounts of money into the system. This money encouraged expansion and construction with little regard as to real demand or need. Like a plane on autopilot China continued in the direction it had been on.

Now China finds itself in a credit trap. For years the people of China have had the habit of saving much of what they earn but the low interest rates paid at banks has not rewarded savers. With few investment options much of this money has drifted towards housing and driven housing prices sky high. The economic efficiency of credit is beginning to collapse in China and the unwinding of China’s giant credit spree could be very painful. More in the article below.

http://brucewilds.blogspot.com/2014/03/china-and-great-credit-trap.html

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