Mark Faber: "I Am Convinced The Whole Derivatives Market Will Cease To Exist And Will Go To Zero"

Tyler Durden's picture

Anyone seeking joyous holiday greetings and cheerful forecasts for the new year is advised to avoid the following most recent Mark Faber interview, in which in addition to his predictions for 2012 (led with "more printing" by the dodecatupling down central planners, and far less prosperity), we get the following: "I am convinced the whole derivatives market will cease to exit. Will become zero. And when it happens I don't know: you can postpone the problems with monetary measures for a long time but you can't solve them... Greece should have defaulted - it would have sent a message that not all derivatives are equal because it depends on the counterparty." And on the long-term future: "I am ultra bearish. I think most people will be lucky if they still have 50% of their money in 5 years time. You have to have diversification - some real estate in the countryside, some gold and some equities because if you think it through, say Germany 1900 to today, we had WWI, we had hyperinflation, WWII, cash holders and bondholders they lost everything 3 times, but if you owned equities you'd be ok. In equities in general you will not lose it all, it may not be a good investment, unless you put it all in one company and it goes bankrupt." As for gold: "I am worried that one day the government will take it away." As for the one thing he hates the most? No surprise here -government bonds.

Full clip:

h/t Scrataliano

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I think I need to buy a gun's picture

its almost time to panic

Badabing's picture

Can’t we just pretend every thing is all right?

Shocker's picture

Just listen to all these people and grab bits and pieces of information/facts. Put it all together and make your own call.

They all have some good, info


DoChenRollingBearing's picture

"Pb moving at a high enough velocity is a precious metal."  I read that choice line here at ZH, but I di not remember who wrote it.

tooktheredpill's picture

Will cease to exist? So no more forwards for farmers as well?

FEDbuster's picture

Gold and silver are for optimists.

ratso's picture

If I need anesthesia for open heart surgery, I can get it easily just by reading a few paragraphs by Mark Farber.

TruthInSunshine's picture

"Deficits don't matter, bitchez."

Free documentary:


*This documentary didn't cost anywhere near the 60 to 200 trillion USD that Americans now owe, thanks to people like The Bernank and his crew of Red Shield crack pushers at The Non-Federal Reserve Fractional Fantasy Non-Bank.

ratso's picture

Lighten up - Merry Christmas

UP Forester's picture

From the look on her face at the end of the interview, she'll have nightmares trying to explain this away....

eureka's picture

Think about Faber's often stated preference for stocks.... - it indicates that stocks are the very core of the ponzi - the essential motivational device - ever FED-sponsored to entice individuals and institutions to participate in the socio-financial game called "investing"....

I love Faber - however, I don't share his "love" for equities, which, to me, are nothing but yo-yos or elevators -  at best designed for momentum gaming, i.e. not productivity or real growth.

Anyway, to each his own. I am out of equities for good. I produce goods & services, which depend on nothing or no one but myself. I like it that way. It's what I define as freedom.

Happy Christmas, all.

azusgm's picture

This time I have to be a bit uneasy about his advice re equities. He is using the performance of equities during a time before legal naked short selling. You could get a physical stock certificate with a unique number and registered in your name. Options market makers did not have the "Madoff exception" that allowed them to legally counterfeit shares and dilute your holding.

Different rules, different times, different outcomes.

Oh regional Indian's picture

Well, a man can only be right so much of the time. And I don't think there ever was a 'Clean and Clear" system for stock ownership. Even if you had your piece of paper.

Just read up on DTCC, all shall be clear. In fact, Google DTCC and Ming the MEchanic. I'm serious.



AldousHuxley's picture

well Hitler did alright in WWII....lived large and made a big name for himself


I guess the lesson here is, quit your job and work on your hate speech. It is your ticket to the top job in a depressed nation overindebted from war debts due to elite's failed ambitions.


Vietnam is America's WWI

Iraq is America's WWII


Afghanistan is lined tombs of ex-Superpowers



FritoPendejo's picture

First-time virgin post...


Does this mean Christmas has been cancelled? If not, then why should I care?

AldousHuxley's picture

Christmas has been cancelled and has been replaced with mass consumerism of plastic tree with artificial lighting + some plastic shit made in China by suicide kids + gift card by those who didn't care to get to know you enough.


For your real treat, introduce your family to ZH on Christmas and talk about Ron Paul, Gold, Fed, etc.!

Vampyroteuthis infernalis's picture

Stock in companies that survive the great shakeout will be good investments when purchased at the bottom. Which ones will survive? My guess is a corporation with low debt levels and actually produces something useful. This eliminates that vast majority on Wall Street. Good luck!

Michael's picture
Cenk from TYT cuts off and kicks Peter Schiff off his show!

This is my analysis of what happened. Tell me if I'm off base?

Schiff: "We have a centrally planned socialist economy"

Cenk: "Shut him down!" (Peter Schiff).

I see Cenk's allotted strategy for his role in his line of work, his all telling response to Schiff gives it away. Cenk is told to keep it focused on individual personalities as to whom? is to blame, and distract from the true culprit to blame.

Michael's picture

This was a response of mine to a comment on youtube;

The USA currently has a Fascist Neo-Federalist crony capitalist government, as does the rest of the world. Socialism is always a 100% failure as per the most recent example, the Eurozone experiment.

I think we'll try the Ron Paul experiment this time.

Michael's picture

Just another observation;

EXCLUSIVE: EPA Ponders Expanded Regulatory Power In Name of 'Sustainable Development'

Read more:


The 2012 Rio Agenda 21 summit mirrors the 1989 conference when they introduced Agenda 21 to the US and made us choke on it since then.

Throw out the UN and their agenda 21 bullshit from our country! There's no scientific basis for it whatsoever.

Howard_Beale's picture

Cenk said it was corporatism, not this socialist nonsense. And he is correct. Schiff is too used to being on CNBS where he always talks over whoever is interviewing him. Cenk is more on point than Peter. We are living in a corporatracy.

lynnybee's picture

*This documentary didn't cost anywhere near  the 60 to 200 trillion USD that Americans now owe   ... i don't owe anything.     this is a fraudulent, odious debt incurred by a corrupt dictatorial government without my consent.    let me repeat, let me be clear ......... I OWE NO ONE ANYTHING.    I OWE NO MONEY, neither in my personal affairs, nor on behalf of a fraudulent & criminal government .     Who will stand up beside me & repeat what I just stated ?   

SillySalesmanQuestion's picture

I will too...who else...? Let's burn it down...

merizobeach's picture

You'd better not pay any taxes to the US government/war machine or else you will OWE an apology to thousands of dead folks and their families.

floridasandy's picture

thank you for reminding everyone everywhere that we are being ROBBED by LIARS.

foxes are in the henhouse.

barbarians are at the gate.

i stand with you.

nmewn's picture

"Who will stand up beside me & repeat what I just stated ?"

You're in good company here lynnybee. You're correct we do not owe anyone anything. The government does. Now, its only recourse is to devalue our labor through currency debasement. A sort of statist death

I try not to get too worked up about it. Governments come and go...the people always remain.

Maybe next time will be different ;-)

Monedas's picture

Hogwash Democrat documentary featuring the people most responsible for the mess as if they were spectators at our side ! Narrator had semi-literate Afro/American dialect....couldn't even read his lines and sound intelligent ! You must be a Democrat operative to post this shit ! And those young Democrats pondering the mess......where's our Anders Braevik ?

Hugh G Rection's picture

Gold and silver are for optimists.

Lead and copper are for realists...

prains's picture

I am convinced that on a long enough get the drift

e_goldstein's picture

but you still own them, don't you?

bilejones's picture

All of mine wear shiny copper jackets, pretty!

Eagle1's picture

Possibly Grasshopper, just possibly. Keep your powder dry and your topnot on, pilgrim as they used to say

Seize Mars's picture

Keep your powder dry and your topnot on, pilgrim

You can't cheat the mountain pilgrim. Mountain's got its own ways.


Phuck it, just spend your savings and go on a bender.  At least you can have fun watching your savings go to zero....seems like a better strategy more and more every day. 

SWRichmond's picture
Mark Faber: "I Am Convinced The Whole Derivatives Market Will Cease To Exist And Will Go To Zero"

This would be really unfortuneate, since derivatives are in the front of the creditor line, are they not?  If they go to zero, there's nothing left.

seek's picture

It's the final wealth transfer if the counterparty fulfills their obligation, but there is something left, because the derivative holder gets the collateral (e.g. something) though it will be insufficient to cover the value of the derivative.

There is no question, though, the derivative default/collapse is the terminal event. Once it happens, it is the signal that contracts are null and void (pointless because they can't be fulfilled), and that is the point of economic lockup and separation of the paper part of the economy from the tangible good economy. Counterparty risk becomes infinite, so the only viable transactions are those with no counterparties, essentially bartering good for good with immediate delivery. Since the paper part extends to government debt, presumably the currency collapses as well.

This is why they've worked so hard to not declare the haircuts, etc at default events, to prevent the unwind. In reality, when this hits, I seriously doubt they'll let it unwind even then -- the more "stable" (ha!) way to handle it is probably a devaluation event, though I would imagine it's going to have to be coordinated between the major currencies. This probably explains why it hasn't happened yet: I suspect somewhere there are meetings taking place with each country negotiating the gang rape of the citizens, and they're getting hung up on details of who gets screwed the most and how.

Just to wrap up the thought experiment here, it plays out:

- Risk of imminent derivative default presents itself, probably triggered by a sovereign default/haircut that can't be kicked down the road. Immediately prior to this there are asset (including gold) sell-offs as derivative contracts try to deliver. This accelerates.

- It becomes obvious to the TPTB that this is indeed the big unwind event. Given what happened in 2008, this realization takes place in 48-72 hours. Like 2008, the tip off will be accelerating sell-offs and secret government meetings at the same time we're hearing everything is fine from the talking heads.

- Unlike 2008 the markets can't be calmed down with the unlimited guarantees, because the outflows have virtually nothing to do with retail investors anymore, and the banks that are responsible already have been operating on the assumption of government backstop and using that to gamble even more. The pure printing solution just accelerates the problem (hyperinflation/currency collapse) so this won't happen. The only option is a "market holiday" that will happen as a result of the secret meetings in that 72 hour window. This is the very last public event before the crisis is "solved." Best guess is the holiday runs 1-2 weeks at most.

- During this holiday obviously markets are closed. I don't think the banks will be however, but capital/withdrawl controls will be in place. There needs to be enough money available for people to buy food, etc, otherwise due to being a cashless society riots start really fast, and TPTB want the people docile so they don't realize how fucked they're about to be.

- After this 1-2 week holiday, joint announcement of most major currencies to simultaneously devalue, maybe with the announcement of a new global regulatory authority and a sovereignty grab.

Now I think some of the banking interests will know this is the "solution" ahead of the market holiday by a decent margin, so I suspect they might make some sort of move in commodities a week or two before this goes down, and also buying up favorably priced (e.g. distressed) debt knowing it'd be paid back in devalued dollars. All of this also need to be not-too-obvious, so my guess is you'd see a puzzling jump in volume and pricing in some of the most traded commodities that have a high percentage of actual deliveries (not sure what this would be, maybe foodstuffs or oil, but it won't be gold, since it's too small and too obvious., though little doubt retail investors and slow money will drive gold up during the 72 hour crisis window.) So this would be a leading indicator, subtle wierd changes in commodities with deliverables right before or during a big sell-off.

Given 2008, though, all the important things will happen in a 5-day window that happens after maybe a week of obviously high market stress.

Just wild hypothecating, but my guess is we don't have much longer. Definitely under 2 years, maybe less than a month.

VisualCSharp's picture

Awesome prediction, and right in line with what I've been thinking for quite some time. Thanks for stating it so eloquently. :)

UP Forester's picture

Steve Keen on Keiser:

The British banking system will last about five minutes after the run starts.

Oh, yeah, and MF trustee is putting everything in a basket, gold & silver contracts as well, and paying out 78%.

SoCalBusted's picture

Let me sum this up.  Recent history has shown counterparties can't be trusted.  We've built a system based on counterparty trust.  Ergo, we are screwed.

eureka's picture

SEEK - I believe you have found the near exact scenario playbook.

Since July I have stated that US collapse will be clear to everyone within nine months - that is to say I agree with your hypothesis and nearest term time frame for the greatest societal execution ever observed.

Q1 2012.

Snidley Whipsnae's picture

The (mostly) floating fiat currencies, to be devalued, must be devalued against something.

The situation today... when one fiat rises another must fall or no devaluation happens.

When countries had currencies backed by gold an individual currency could be devalued against gold.

Since that system no longer exists we have a 'POGO' arrangement, where one currency is devalued by excessive printing and that currency falls against all others. That is what floating currencies do.

Point is, as the printing continues all currencies must fall against commodities in general. For a 40% devaluation to occur in all fiats, all commodities will rise by a similar amount.

How will the worlds economies fair when food, oil, base metals, PMs, etc, rise by 40% in all currencies? ... and this happens while jobs/pay remain stagnant or are falling? Not a pretty picture.

Socratic Dog's picture

Probably a dumb question, but if all the major currencies are devaluating, what exactly are they devaluating against?  Does that not require a return to some absolute standard.?  Gold for example?  Or oil? Or buckets of soylent green?

ViewfromUndertheBridge's picture

under 2 years...Alisdair McLeod in GoldMoney recently quoted some research on the parabolic rise of USD creation...already parabolic, goes vertical FEBRUARY 2014. Make a diary note.