Roach, Faber, Roubini On Friday: It Ain't Over...

[AvidFan]

Roach:

http://www.cnbc.com/id/31938270

"75 percent of the world’s economies today are still contracting and the biggest piece on the demand side of the global economy is the American consumer, who is dead in the water," he added.

The markets' reaction to the "anemic character of the recovery" is pretty euphoric, and it actually is a manifestation of the excess liquidity poured into the system by monetary authorities, according to Roach.

"Liquidity is seeking return and right now these markets are priced for a recovery that’s going to end up disappointing," he said.

Despite better-than-expected earnings from some companies, those pricing in vigorous results "are going to be in for a rude awakening," Roach said.

"Where’s the demand? As I go around the world, especially in Asia, I don’t see any follow-through on the demand front," he added.

Talk of green shoots is a "really simplistic way of looking at the world," according to Roach.

"These green shoots are not going to go up to the sky, so my advice is pick a different metaphor," he said.

Faber:

http://www.cnbc.com/id/31958957

We haven't seen the last of the crisis despite all talk about green shoots, and the surge in markets was caused by nothing more than the excess liquidity coming from central banks, Marc Faber, author of the Gloom, Boom and Doom Report, told CNBC Friday.

"If you pump money into the system and you create large fiscal deficits, you create volatility," Faber said.

"We've seen an intermediate low in March, we'll rally for a year or so or maybe 18 months… the ultimate crisis will happen much later, and the ultimate crisis would clean the system," he added.

Asked when this would be, he said he could not forecast a precise timing: "it may be 5 years time, 10 years time, but that's not the last crisis."

There are two opposing views, those who believe deflation is the big danger, with asset prices and demand collapsing, and those who think the biggest risk is inflation and a weak dollar, Faber said.

"In general in a crisis such as we have today where there is a deficiency of demand and huge overcapacity under normal conditions you would have deflation… now comes in the government and creates these huge deficits," he added as an explanation for his belonging to the "inflationists" camp.

"Already you have money-printers Mr. Bernanke and Mervyn King… we have never had this experiment in the history of mankind, all governments throwing money at the system," Faber said.

One way of dealing with the crisis would be to fire half the government workers in the world, "because if you shift government activity to the private sector the economy becomes more dynamic," he said.

Roubini:

http://www.cnbc.com/id/31947275

"On one side, early exit from monetary and fiscal easing would tip the economy into a new recession as the recovery is anemic and deflationary pressures are dominant," Roubini said. "On the other side, maintaining large budget deficits and continued monetization of such deficits would eventually increase long term interest rates ... and thus would lead to a crowding out of private demand.

"While the recession will be over by the end of the year the recovery will be weak given the debt overhang in the household sector, the financial system and the corporate sector; and now there is also a massive re-leveraging of the public sector with unsustainable fiscal deficits and public debt accumulation."

[Bloo Loo]

Roach:

http://www.cnbc.com/id/31938270

Faber:

http://www.cnbc.com/id/31958957

Roubini:

http://www.cnbc.com/id/31947275

"Already you have money-printers Mr. Bernanke and Mervyn King… we have never had this experiment in the history of mankind, all governments throwing money at the system," Faber said.

One way of dealing with the crisis would be to fire half the government workers in the world, "because if you shift government activity to the private sector the economy becomes more dynamic," he said."

of course not....zimbabwe, germany, France, confederate dollar....never happened before.

[Timm]

"Already you have money-printers Mr. Bernanke and Mervyn King… we have never had this experiment in the history of mankind, all governments throwing money at the system," Faber said.

<snip>

of course not....zimbabwe, germany, France, confederate dollar....never happened before.

Is he referring to the co-ordination of the actions?

That is to say, when Zim prints and others don't the exchange rate explodes and imports are unaffordable. When everyone does it, it does not show up so soon or so hard in imports?

I'm guessing that is the unique bit of the experiment.

[R K]

"We've seen an intermediate low in March, we'll rally for a year or so or maybe 18 months… the ultimate crisis will happen much later, and the ultimate crisis would clean the system," he added.

Is this a change from Faber? Perhaps I've missed it but I thought he was pretty much a hyperinflationist and a few weeks ago said the March low was the bottom, with the possibility of a 10% retracement, then hyperinflation would float all boats.

Am I wrong?

[Injin]

Is he referring to the co-ordination of the actions?

That is to say, when Zim prints and others don't the exchange rate explodes and imports are unaffordable. When everyone does it, it does not show up so soon or so hard in imports?

I'm guessing that is the unique bit of the experiment.

Yep.

If they all do it - where can you go?

[mikthe20]

Yep, this is also why we can't debase our currency enough to increase exports and similarly another reason why there won't be wage inflation.

[thecrashingisles]

One way of dealing with the crisis would be to fire half the government workers in the world, "because if you shift government activity to the private sector the economy becomes more dynamic," he said.

Good idea.

[interestrateripoff]

"Already you have money-printers Mr. Bernanke and Mervyn King… we have never had this experiment in the history of mankind, all governments throwing money at the system," Faber said.

One way of dealing with the crisis would be to fire half the government workers in the world, "because if you shift government activity to the private sector the economy becomes more dynamic," he said."

of course not....zimbabwe, germany, France, confederate dollar....never happened before.

I would suggest the difference this time is several "major" economies all doing it at the same time.

This has never been tried, however I doubt it will end in success.

[interestrateripoff]

http://en.wikipedia.org/wiki/Marc_Faber

Dr. Marc Faber concluded his monthly bulletin (June 2008) with the Following:

The federal government is sending each of us a $600 rebate. If we spend that money at Wal-Mart, the money goes to China. If we spend it on gasoline it goes to the Arabs. If we buy a computer/Software it will go to India. If we purchase fruit and vegetables it will go to Mexico, Honduras and Guatemala. If we purchase a good car it will go to Germany. If we purchase useless crap it will go to Taiwan and none of it will help the American economy. The only way to keep that money here at home is to spend it on prostitutes and beer, since these are the only products still produced in US. I've been doing my part .[5]

Now this is a stimulus package I could get behind.

[MOP]

http://en.wikipedia.org/wiki/Marc_Faber

Now this is a stimulus package I could get behind.

Faber forgot to mention porn there as well. Another one of the last big industries in the US.

[interestrateripoff]

Faber forgot to mention porn there as well. Another one of the last big industries in the US.

I wonder how the American right would react if the govt gave everyone $500 to buy internet porn with, although I suspect Salt Lake would publicly be aghast whilst privately spending the money as soon as it comes through the door.

[roman holiday]

Faber forgot to mention porn there as well. Another one of the last big industries in the US.

Not to mention the revenues to be found in cannabis for California. Desperate times....

Both have been getting favorable coverage on CNBC.

Edited July 17, 2009 by roman holiday

[MOP]

Not to mention the revenues to be found in cannabis for California. Desperate times....

Both have been getting favorable coverage on CNBC.

I noticed that! Porn all over the place on the CNBC website last week. Porn-ramping!

http://www.cnbc.com/id/29960781/

Edited July 17, 2009 by MOP

[1929crash]

Good idea.

No it's not. The newly unemployed would have less to spend and that would reduce demand, so the private sector wouldn't employ them - they would be jobless.

[oracle]

One way of dealing with the crisis would be to fire half the government workers in the world, "because if you shift government activity to the private sector the economy becomes more dynamic," he said."

Fair play to faber,he's got that one nailed.

But how much of what is currently done by the public sector needs to be transferred to the private sector at all??

why not get them making stuff that other people around the world want to buy

or make stuff in-house that we currently import,with a few modifications.

like say,those GM plants about to get laid off could be tied up with some of our expertise in formula 1 for engine production(hi-spec...100mpg and 100mph from a 1 litre block type stuff designed at silverstone,built in bristol..that sort of thing )