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Marc Faber Resumes Bloodfeud With Treasurys, Still Sees Entire Financial System Imploding
The only thing that is as consistent as Marc Faber's message to get out of government bonds ahead of a bout of global hyperinflation which will arrive once the vicious cycle of printing to pay interest finally dawns (which in turn would happen once central planners lose control of an artificially created situation, which by definition, always eventually happens), is the passion with which he repeats it over... and over... and over, like a man possessed, if ultimately 100% correct. In an interview with Bloomberg's Sara Eisen and Erik Schatzker this morning, he does what he does best - cuts to the chase: "if you think it through and you are as bearish as I am, and you think the whole financial system will one day collapse, we don't know if in 3 years, or 5 years, or 10 years, but one day there will be a reset, and everything will be essentially started anew, then you are better off in equities than in government bonds, because a lot of government bonds will either default or they will have to print so much money that the purchasing power of money will depreciate very rapidly." When asked if he feels uncomfortable predicting a calamity in bonds again, as he did back 2009, Faber is laconically empathic: "it is true that last year the 30 year bond returned 30%, and i owe David Rosenberg a bottle of whiskey" but analogizes: "from August 1999 to March 2000, the Nasdaq doubled, but at no time in that timeframe was it a good buy. And after it people lost a lot of money. We have now a symptom of monetary inflation and this is record corporate profits, and the second symptoms is essentially a bubble in high quality bonds: people seem so insecure and so much worried, they would rather be in a US bond with no yield, than in bonds that may not repay me, or in equities that may drop 30%. But it does not make them a good buy longer term." Yep: only Faber can get away with calling the bond market the second coming of the Nasdaq bubble and look cool doing it.
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I can't take anyone seriously in that outfit.
I disagree with Faber's take on equities. When the whole enchilada comes down, no asset class will be safe except for what you can store in your house. Equities will for the most part make for fancy wallpaper that is if your paper is at home and not with the DTC.
The blonde is using the new catch phrase "muddle through" and Ron Paul kicked ass last night.
http://www.welt.de/finanzen/article13825424/Immobilien-sind-keine-Rettun... Nice article in German in Die Welt about how the German State plunders private savings. How in 90 years Germans have had 5 currencies. How the D-Mark was printed in the USA in 1947 but introduced in Germany in 1949 in ratio 1:10 against Reichsmarks. How Levin Holle, as Schauble's new adviser from Boston Consulting Group floats the idea of a One-Off Tax on Savings Accounts. How real-estate owners lost 90% after 1948 in a One-Off Tax to fund West Germany. So, I guess they are busy working on expropriation again !
http://www.ftd.de/karriere-management/management/:abgeworbener-finanzfac...
Thar she blows! Embrace your fear and conquer. No shit. Thank you ZH for this massively sinister truthteller. http://thecivillibertarian.blogspot.com/2012/01/manipulating-people-with...
Battle at Kruger
http://www.youtube.com/watch?v=LU8DDYz68kM
"Faber is laconically empathic..."
+5 for "laconically empathic" Tyler.
We get inflation when Walmart says we do.
Not before
During the German Hyperinflation stocks actually retained their relative purchasing power vis a vis the currency, as well as gold. Everything else went into the trash heap. Volker was a product if that environment. His mother fed their family for two year by trading 2 small gold coins with a local farmer for provisions for that two year period.
One of the bellboys of a very high classed hotel in Berlin, Germany saved the gold coins he was given as tips before the hyperinflation and when the hotel was put up for sale be bought it, basicly for a song (and a few gold coins). Of course, one wonders if he sold it later and moved out of Germany prior to the insanity that eventually engulf that nation in the 30's-40's.
I will also add that US T's and Bills have a contractual clause attached that gives the US government the right to convert any and all Bills and Ts into 30 year bonds at a fixed interest rate if need be.
Talk about being trapped in a burning theater...
Had not heard that before......can you provide some support regarding that clause. Thanks.
Faber mentions a bubble in earnings and corporate profits, this is a good chart illustrating it from "Chart of the Day":
http://www.chartoftheday.com/20120120.htm?A
Desert island:
Faber
or
Berneke
...lol, exactly, ...so why do we not END THE FED???
I'll telll you why, cuzzzz ...that's what Punks do in prison. ...Bitchez
...what's that? a fire under your ass? http://www.youtube.com/watch?v=ToceoE9DHWY
Even Kansas City pimps wouldn't be caught dead in that tie.
Faber is kind of a kook in my opinion. Everyone knows treasuries are a bad long term investment. Thanks for the brilliant insight Faber. They have been a great trade and they may well be again at some point in the future. Faber also is a China honk. He claims to believe in free markets yet he always dogs on the US and sings China's praises. He may be changing his tune about China now, but I will always remember him as the suppossed austrian economist that loved the command economy of China.
Reset, bitchez!
I don't expect Weimar or Zimbabwe style hyperflation in the US. There is really no need for it because a strong dose of ordinary inflation (e.g. purchasing power decreasing by 2X to 4X over the course of a decade) does the job well enough.
So I think there will eventually be a reset, but not a complete reset to zero.
The problem is predicting when the reset will occur. My guess is somewhere around 2020 when most of the baby boomers have retired and are selling their stocks, bonds, and real estate and at the same time putting maximum stress on the US government by collecting SS and Medicare.
But I really don't know. It could be tomorrow. Or it might be 2030. I really wish I knew!