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Faber On Europe's Dilemma And China's Hard Landing

Tyler Durden's picture


Marc Faber brought his typical sense of reality and truthfulness to CNBC's Squawk Box this morning and in doing so managed to stop Jeremy Siegel saying long-term-buy-and-hold for more than 7 minutes. Siegel represented the 'new-hopers' with his insight that if the ECB would just guarantee all euro-wide deposits then all would be well in the world. Faber comes over-the-top in his gentle European accent reminding the academic that "it is hard to guarantee something you have no control over". Faber then proceeds to state his view that Europe is in a deepening recession and more importantly that China is growing at a far lower pace than official statistics would infer. Reminding viewers that about 40% of US corporate profits are from outside the US and the 'vicious spiral chain reaction' from slowing demand in China for industrial commodities has lagged effects on producing countries and then aggregate demand globally, Faber fears broad-based risk sell-offs but remains notably less sanguine on US Treasuries.



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Mon, 06/04/2012 - 11:23 | 2492060 fightthepower
fightthepower's picture

Fuck you Bernanke!

Mon, 06/04/2012 - 11:31 | 2492102 Ahmeexnal
Mon, 06/04/2012 - 11:44 | 2492133 idea_hamster
idea_hamster's picture

"It's hard to guarantee something that you have no control over."

Disagree: Insurance companies guarantee against weather all the time -- they have no control over that.

But it IS hard to guarantee something that you don't have the ability to cover -- that's why no private insurance company writes flood insurance. The actuarial data show that the damage numbers are too big, too often.

This is the same thing as the net/gross notional point in the CDS market that TD has been so on top of.

Mon, 06/04/2012 - 11:59 | 2492202 chiswickcat
chiswickcat's picture

Insurance co's know the odds of having to pay out, to the penny! 

Mon, 06/04/2012 - 12:02 | 2492215 Dr. Engali
Dr. Engali's picture

Insurance companies know how much more they need to charge one group of people to cover any payouts to another group of people.

Mon, 06/04/2012 - 12:29 | 2492312 SilverIsKing
SilverIsKing's picture

Insurance companies measure risk based on historical data.  When history doesn't repeat, they are wrong and claims may cost more than what they had projected, hence losses.

In the event of a disaster, i.e. major earthquake in NYC, where buildings are toppled, the insurance companies wouldn't have the resources available to cover the losses.

So, when everything is going according to plan, insuring things one has no control over is possible.  When events don't follow the script...

Mon, 06/04/2012 - 14:16 | 2492784 fourchan
fourchan's picture

i like how faber basically called china's offical gdp numbers bullshit. lol

Mon, 06/04/2012 - 17:30 | 2493537 Element
Element's picture

So ... if you insure your house ... it'll never blow down?


That's the point he's making, the guarantee doesn't alter the fact of collapse occurring anyway.

The guarantee has zero to do with the collapse process, its cause and dynamics, it just means you put innocent third-parties on the hook for the damage.

Doncha love freedum and demockracy?

Actually .... No.

People just like to wave low-cred 'guarantees' around as though they can solve the fact that the debts can never be repaid ... no, not by taxpayers either.

The end.

Mon, 06/04/2012 - 11:46 | 2492153 q99x2
q99x2's picture

Both videos "removed by user"

Mon, 06/04/2012 - 12:07 | 2492228 the tower
the tower's picture

Pulled because it was illegally posted. Here's the official link:

Mon, 06/04/2012 - 12:15 | 2492253 blindman
blindman's picture

the links don't work as you say and
there is malicious software associated
with the link, so you know.

Mon, 06/04/2012 - 12:45 | 2492372 slewie the pi-rat
slewie the pi-rat's picture

who runs sac's lil playpen of moronic add-ons, spying, junking, and avatar- and user-creation and backdating when he's not pretending he knows everything and is a good guy, too @ zH?

bilary?  bibi?  bambi?

Mon, 06/04/2012 - 11:32 | 2492109 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Stocks are better than bonds; stocks will fall; Japanese stocks are a good play; blah blah blah.

- Marc Faber over the last year

Mon, 06/04/2012 - 12:39 | 2492346 Spitzer
Spitzer's picture

We all know what he really thinks but then he would never get on the air. He would just say go 90% gold and fuck it.


Mon, 06/04/2012 - 12:50 | 2492391 Matt
Matt's picture

I hear Sony is selling at a major discount right now. 

Mon, 06/04/2012 - 13:22 | 2492524 lemonobrien
lemonobrien's picture

i lived in Japan, look at the stock prices back in 91, 92... etc. and compare to now. As for Sony, I worked there; company is full of retards. The South Koreans make the same shit at a better price point; and you have other major Japanese companies like Toshiba, Sharp, Matsushita, Pinoneer... etc.

Mon, 06/04/2012 - 13:14 | 2492452 slewie the pi-rat
slewie the pi-rat's picture

i don't believe faber ever has or ever will face a camera and be unwilling to say or do something totally asinine, even with his undies still on

no, the whartonProf doesn't have control over what is 2B guaranteed, but the cBanksters and pols think they do, marc;  b/c they do?  or could?  isn't that what canada is calling the bGees to discuss? 

but marc is somewhat correct despite the cheap shot, but as hendrix_lemon sez, pretending the short-term trend is the long-term trend is just bullshit, even if tyler does eat the corn outa faber's shit

but we all know more than we write or say and slewie thinks something is being unspoken here, and if i can see it, maybe lennon_H can?  

and tyler? 

>>>paying the debt back with cheaper corn, oil, OJ, coffee and cotton, wool, and synthetics which are now cheaper mean we are trying to dig out with a more valuable (as opposed to de-valued) dollar which is a smaller shovel for $-denominated debt, but a bigger shovel for the EU as the fungibility ratios change significantly here, as daCrisisDezBoyz deepens and the chairsatan's tradingPost is starting to look like he is getting some decent pelts, here

of course we'll own them when it's over, but we'll be in so deep, ourselves, that china will hafta devalue 40% just to stay in the game!

rocky!  R0CKY!   R0CKY!!!  [until the trend4hypno-conditioned traderZ based upon falsified data streams and oceans of garbage changes to risk0n again, of course...]

Mon, 06/04/2012 - 15:07 | 2492978 Red Heeler
Red Heeler's picture

"I would recommend people every month buy some gold."

- Marc Faber Two years ago

Mon, 06/04/2012 - 11:55 | 2492192 TBT or not TBT
TBT or not TBT's picture

Man, fightthepower is fast.    Maybe the harbinger of an Occupy ZH movement.

Mon, 06/04/2012 - 11:26 | 2492068 midgetrannyporn
midgetrannyporn's picture

How Much Gold Do Investors Need? Zero Should Suffice
The Wall Street Journal

Mon, 06/04/2012 - 11:30 | 2492099 DoChenRollingBearing
DoChenRollingBearing's picture

My reply to the WSJ:




Mon, 06/04/2012 - 13:25 | 2492545 Oh regional Indian
Oh regional Indian's picture

WSJ Response to DCRB:


Mon, 06/04/2012 - 11:44 | 2492145 Zero Debt
Zero Debt's picture

In other news: MarketWatch top headline for now:


More trouble than it's worth?
Making a case against gold
Gold, Jack Hough argues in the wake of the precious metal's 6% May slide, continues to defy all efforts to calculate its worth — or even to describe how it behaves as an investment. Your portfolio doesn't need it


Mon, 06/04/2012 - 11:46 | 2492150 DoChenRollingBearing
DoChenRollingBearing's picture

+ 1

Hey, Jack Hough:



Mon, 06/04/2012 - 11:53 | 2492180 Dr. Engali
Dr. Engali's picture

Let them keep selling that story and I'll laugh all the way to the to speak..... I really wouldn't go to a bank since I hate them fuckers...more like I'll laugh all the way to the gun shop.

Mon, 06/04/2012 - 12:24 | 2492289 jimmyjames
jimmyjames's picture

Investors sometimes use the cost of producing the world’s next ounce of gold as an approximate floor for its price. That cost is between $1,200 and $1,400 now,


Pure bullshit--try at tops $500/oz-


Some investors say gold is a hedge against inflation. That is true of any good or service that consumers can be counted on to want in coming years, such as oil or poultry farms. Gold’s wild swings have made it a poor proxy for the consumer-price index, a key inflation measure.

Perhaps that is because only 12% of gold’s demand comes from industrial applications, according to the World Gold Council, a trade group. The rest comes from jewelry and investment (and the divide between those two isn’t always clear).


Assbackwards--gold is not an inflation hedge and never has been-

Golds industrial and jewelry component is so small it's not even worth mentioning and we know there has been next to no consumer demand-but-

"Something" has been driving the price higher for the last 11 years-

Think smart money-

Mon, 06/04/2012 - 12:55 | 2492408 disabledvet
disabledvet's picture

Yeah, okay. "who wanted to own gold in the seventies" right? Anywho it is protection against outright default by governments. That doesn't mean the price is right however. Anyone who says or implies "prices only move in one direction" should be ignored.

Mon, 06/04/2012 - 13:39 | 2492599 jimmyjames
jimmyjames's picture
Yeah, okay. "who wanted to own gold in the seventies" right? *************** Everyone wanted to hold gold in the seventies-not so today- And then what happened? Inflation happened (credit expansion)(monetary) (not prices) interest rates hit 20% and gold crashed and fell for the next 20 years and then broke the downtrend and has been rising for 11 years-- So i suppose you could say "prices" don't only move in one direction-but- You most certainly cannot deny-they can move in one direction for a hell of a long time--no?
Mon, 06/04/2012 - 11:27 | 2492071 Its_the_economy...
Its_the_economy_stupid's picture

No tax holiday for repatraition of corporate profit. You want tax-free profit, buy foreign assets....and good luck.

Mon, 06/04/2012 - 11:37 | 2492122 DoChenRollingBearing
DoChenRollingBearing's picture

+ 1

Over the past few years, there are only two assets that have gone up in the Bearing household:

1)  Our Peruvian bearing import company

2)  Our gold

EVERYTHING else is about breakeven or down.

Mon, 06/04/2012 - 11:27 | 2492082 Conman
Conman's picture

Ddint i see a headline earlier that had Faber sayign to buy stocks and sell bonds?

Mon, 06/04/2012 - 11:28 | 2492086 zorba THE GREEK
zorba THE GREEK's picture

When Siegel began speaking and said: "and I think, honestly.....", It seems to imply he does some

dishonest thinking too.

Mon, 06/04/2012 - 11:28 | 2492088 razorthin
razorthin's picture

If these hopium fukkers would just listen to the best "gloom and doomers" (i.e., Faber, Rogers) they would make a sh!tload of money for themselves and their sheeple.  The so called doomers have consistently called the liquidity bullsh!t ramps as well.

Mon, 06/04/2012 - 11:44 | 2492092 DoChenRollingBearing
DoChenRollingBearing's picture

Europe down hard NOW.  China probably due for a hard landing soon.  LIES everywhere here in the USA.

Oh, but we're all doomers here, at the "jumped the shark" website that is ZH...

LOL!  Except it really isn't funny what they are doing to us...

Mon, 06/04/2012 - 11:35 | 2492116 l1b3rty
l1b3rty's picture

Slow Motion Doom!

Mon, 06/04/2012 - 11:36 | 2492120 FieldingMellish
FieldingMellish's picture

Treasuries. You mean those things that can be printed at will and yield next to nothing of things that can be printed at will?

Mon, 06/04/2012 - 11:46 | 2492154 Zero Debt
Zero Debt's picture

Treasuries = Ponzi scheme

Mon, 06/04/2012 - 11:39 | 2492127 Omen IV
Omen IV's picture

why isnt J&J  - with all the potential for decline in medicare/ medicaid/obamcare / union benefits and decline in national income everywhere in europe and usa  not going to have decline in revenue, margins and therefore forward P/E is potentially very high and dividends may not be sustainable ?

Mon, 06/04/2012 - 11:50 | 2492168 Conman
Conman's picture

Think there was a sucessful cancer drug trail reported over the weekend.

Mon, 06/04/2012 - 11:54 | 2492184 NotApplicable
NotApplicable's picture

I bet they'd all cause cancer in large enough doses.

Mon, 06/04/2012 - 12:17 | 2492256 francis_sawyer
francis_sawyer's picture

What? You mean to tell me they finally started doing some bong hits & stumbled on the cure?

Mon, 06/04/2012 - 11:53 | 2492181 NotApplicable
NotApplicable's picture

J&J might feel the pinch in places, but overall, they are part of the primary mechanism that will transfer the last bit of wealth from aging Boomers to Fedgov Cronies Inc.

Mon, 06/04/2012 - 11:42 | 2492139 vote_libertaria...
vote_libertarian_party's picture

Siegel sounds really stressed out.

Mon, 06/04/2012 - 11:50 | 2492169 azzhatter
azzhatter's picture

Everyone is getting stressed out. This thing is lasting longer than would have thought. Siegel and the bulltards keep thinking tomorrow will bring sunshine and everyday more bad news. The bears keep thinking the crash is tomorrow and we survive another day, slow motion death by a thousand cuts

Mon, 06/04/2012 - 11:55 | 2492190 NotApplicable
NotApplicable's picture

This would be the classic "muddle-through" scenario that was tossed about in 2008.

Mon, 06/04/2012 - 12:02 | 2492214 ArrestBobRubin
ArrestBobRubin's picture

Wifey's a yenta

Mon, 06/04/2012 - 11:47 | 2492160 q99x2
q99x2's picture

Short Elmer Fudd

Mon, 06/04/2012 - 11:52 | 2492163 dwdollar
dwdollar's picture

Wasn't Jeremy Siegel thoroughly discredited over a decade ago? The fact that man still has a job is testament to the college bubble.

Mon, 06/04/2012 - 12:00 | 2492209 Ratscam
Ratscam's picture

Wharton is overrated as long as they do not have one professor teaching Austrian School economics. Who decided that only the neo liberal Keynesian approach is the right model?

Mon, 06/04/2012 - 12:03 | 2492218 ArrestBobRubin
ArrestBobRubin's picture

I'll give ya 3 guesses.

Mon, 06/04/2012 - 11:57 | 2492197 BandGap
Mon, 06/04/2012 - 11:59 | 2492205 SmoothCoolSmoke
SmoothCoolSmoke's picture

God, can't you just feel another Big Lie getting ready to come out of Europe or the Fed this PM?

Mon, 06/04/2012 - 12:01 | 2492211 ArrestBobRubin
ArrestBobRubin's picture

Amazing how we'll think of anyone or anything instead of how f*cked the USA is...

China? Europe? Oh please. They're just the appetizers, but everyone is filling up on them.

Meanwhile the Chef's Piece de Resistance is finishing up in the Kitchen.

Mon, 06/04/2012 - 12:04 | 2492217 Bartanist
Bartanist's picture

Interesting to see Siegel reading the words off the teleprompter. Are they really his words or is he just the shill of the day, reading the words of the masters of propaganda?

Mon, 06/04/2012 - 12:05 | 2492221 Bartanist
Bartanist's picture

The stock market is a small sideshow compared to the problems we have. And, people like Siegel pump it like it is THE only issue.

Mon, 06/04/2012 - 12:12 | 2492247 waldocktrades
waldocktrades's picture

The recent Commitment of Traders Report show spec funds and small specs at RECORD short positions in the Euro. No arguing the trend is lower but a snap back rally on any kind of HOPE could be brutal.


Mon, 06/04/2012 - 12:13 | 2492248 Floodmaster
Floodmaster's picture

Jeremy Siegel, October 22, 2007,  you can't be more wrong ...

Mon, 06/04/2012 - 12:25 | 2492297 junkyardjack
junkyardjack's picture

Jeremy Siegel should be flipping burgers or driving a cab somewhere....

Mon, 06/04/2012 - 12:54 | 2492402 Confundido
Confundido's picture

Yeah, how can anyone pay to go to Wharton and have this clown as professor? He was surprised by the capital outflows in the periphery? Where the fuck was he all along? He never understood the nature of this Euro crisis and still doesn't understand it. These fucking mainstream economists....


Mon, 06/04/2012 - 13:22 | 2492499 contrarianz
contrarianz's picture

He needs to be schooled by hugh hendry like this other "professor" was.



Hugh Hendry: "I Would Recommend You Panic"

Mon, 06/04/2012 - 12:18 | 2492258 monopoly
monopoly's picture

Just reinforces our thinking on this site. And I love when I see headlines such as this from MarketWatch. Beyond words.


Making a case against gold 
Gold, Jack Hough argues in the wake of the precious metal's 6% May slide, continues to defy all efforts to calculate its worth — or even to describe how it behaves as an investment. Your portfolio doesn't need it.

Mon, 06/04/2012 - 12:32 | 2492326 FranSix
FranSix's picture

Amazing how the debate can be completely undone by pulling out of a hat any economic statistic which has since been proven not to factor into economic growth.  Economic growth has long been the financialization of economies through derivatives and anything and eveything not contributing to this economic 'wealth' has to be discarded.

Chinese hoarding of copper is well known, and a major contributer to the copper market, and considered a market on very shaky economic foundations regardless of manufacturing demand.  Similarily, concrete is used in deficit spending on infrastructure projects, not private enterprise, but this swooshes right past.

But CNBC announcers can't grasp the fact, because its all about talking points.

Mon, 06/04/2012 - 12:33 | 2492328 StockHut
StockHut's picture

I want whatever Siegel smokes.

Mon, 06/04/2012 - 12:34 | 2492329 contrarianz
contrarianz's picture


Jeremy Siegal: DOW 17,000?

Mon, 06/04/2012 - 12:48 | 2492381 Rockfish
Rockfish's picture

Yep i just watched that, thanks JSiegle = assclown. 

Mon, 06/04/2012 - 13:33 | 2492593 Colonial Intent
Colonial Intent's picture

Un-Fucking Believable, this guy is a professor at a university!!!

Fave quote from the interviewer, playing devil's advocate.....

"Wouldn't a 15,000 plus dow jones require the revival of animal spirits driving valuation back to historical levels which would be a difficult feat given economic and geo-political economics in terms of the head winds of our country's fiscal imbalances?"

Mon, 06/04/2012 - 12:36 | 2492340 junkyardjack
junkyardjack's picture

The problem with the stock market is that the price is going down, that's all you need to know...

Mon, 06/04/2012 - 12:53 | 2492400 simpleminds
simpleminds's picture

I thnk it is dangerous to buy stocks based on relative strength of dividend yields against bond yields due to the artificial level of rates.  In free market conditions, bond yields would be much higher.  Also, to say EU stocks are cheap based on PE, is dangerous because earnings will likely collapse in EU soon.

Mon, 06/04/2012 - 13:25 | 2492542 Colonial Intent
Colonial Intent's picture

"It so happened that the euro came into existence at a time when the German economy was in the doldrums.

Then the euro made investors believe that southern Europe was safe, causing a huge fall in interest rates there

This in turn led to vast inflows of capital; the flip side of these inflows was large trade deficits, and large counterpart German surpluses, which was just what the Germans needed.

Everyone was happy for a few years and then the bubble burst, leading to the crisis today."


Just sayin,

Mon, 06/04/2012 - 13:26 | 2492552 ElvisDog
ElvisDog's picture

Becky Quick is looking old. Even professional make-up artists can't hide those lines under her eyes. She might lose her access to Warren Buffett if he upgrades to a younger, hotter model.

Mon, 06/04/2012 - 14:02 | 2492709 reader2010
reader2010's picture

Hard Landing !


A yearlong U.S. Senate Armed Services Committee probe has found that vast numbers of counterfeit Chinese-made electronic parts are being used in U.S. military equipment. More than 70 percent of an estimated one million suspect counterfeit parts used in the Navy’s SH-60B helicopters, P-8A Poseidon planes, C-130Js, and C-27Js cargo planes, among others, were traced back to China, the BBC reports. Committee staff that attempted to travel to China for the investigation were not granted visas. “Rather than acknowledging the problem and moving aggressively to shut down counterfeiters the Chinese government has tried to avoid scrutiny,” according to the report. The committee also criticized China for failing to shut down counterfeit manufacturers claiming “counterfeit electronic parts are sold openly in public markets in China.” In response,the official China Daily called the accusation an “attempt to distract the U.S. public from the real problems that are plaguing the country” and noted that the U.S. has maintained a military embargo on China for 23 years and called on Washington “to find out who purchased the parts and how they passed muster.” 

[Editor’s Note: The report described the Government-Industry Data Exchange Program (GIDEP) designed to log suspected fake parts as “woefully lacking.” Between 2009 and 2010 GIDEP received 217 reports of fake counterfeit components only 13 of which came from U.S. government agencies. The National Defense Authorization Act, signed into law on December 31, aims to stop counterfeit parts from entering the U.S.] 

Israel’s Defense Force Chief of Staff, Lt. Gen Benny Gantz, has visited Beijing for talks with Vice President Xi Jinping and People’s Liberation Army chief Gen. Chen Bingde. “Both militaries should make greater efforts to cooperate and learn from each other,” Xi said. He called on “the militaries of both countries to boost cooperation and promote bilateral relations,” the official China Radio International reports. Chen said high-level military visits and exchanges among technical groups have enriched their cooperation, the official People’s Daily reports. Last August Chen became the first Chinese military chief to visit Israel, The Jerusalem Postreports

Mon, 06/04/2012 - 14:15 | 2492775 dark pools of soros
dark pools of soros's picture

actually... one can honesty guarantee soiled pants when one has lost control of their bowels

Thu, 06/07/2012 - 04:12 | 2502579 Element
Element's picture

Not necessarily, that's only the case if one can also afford to eat.

Tue, 06/05/2012 - 10:31 | 2495819 DonGenaro
DonGenaro's picture

Here's MY investment tip:
I just want to say one word to you, just one word - guillotines

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