Monday, August 9, 2010

Dr Marc Faber quashed the deflationists in his Abu Dhabi lecture

Marc Faber lectures Abu Dhabi on asset allocation and tips gold

''Dr Faber explains why extreme deflation scenarios are extremely unlikely under the Bernanke Fed... with the US so deep in debt the Fed thinks it cannot allow asset prices to drop below a certain point because that would devastate the balance sheets of the banks with debt deflation''

Posted by hpwatcher @ 11:15 AM (2572 views)
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65 thoughts on “Dr Marc Faber quashed the deflationists in his Abu Dhabi lecture

  • it is all well and good buying gold, but it is priced in US$ and would be useless if the dollar hit $3 to the pound, correct me if I am wrong. It is much like buying and selling currency and you really need nerves of steel to get it right, you always know it is too late when joe public have started piling into a certain asset.

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  • Yep the time to buy Gold was when S2R1 regularly included it as part of his predictions.

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  • America’s jobs-generating engine is stalled. Just outsourcing, offshoring and tax-dodging by the rich.

    Flight-to-safety is pushing Treasuries and other bond yields down even while equities rise. Bondholders know how to read the data on spending (down), credit (tight), unemployment (higher), banks (hiding losses) manufacturing (inventory accumulation accounting for recent small rise), housing markets (down), M3 money supply (down). When Proctor & Gamble missed analysts estimates a couple of weeks ago those analysts said that its product prices would be slashed in an effort to retain market share. The outlook is for falling product prices, reduced inventories and laid-off workers and/or reduced wages. Sounds like deflation.

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  • Quashed?…… did he?

    An hour interview with Mr. P. where Faber’s opinion is discussed:

    http://www.financialsensenewshour.com/broadcast/fsn2010-0619-2.mp3
    ———————————————-
    Here is an extract:

    Jim Puplava:I want to take two well-known investors who would take the opposing view of a declining market. One is Dr. Marc Faber, who believes the S&P low of 666 will stand and that the government will simply inflate, because its debt is denominated in its own currency [and it] will simply print, print, print. To add to Marc’s views I want to take famed investor Felix Zulauf. In a recent interview in Barron’s, he also said one day the world’s financial system will reach a financial reckoning day where the Fed’s balance sheet will expand not by just a trillion or two, but by multiples of that, five, six, seven trillion, which would negate the deflation scenario. How would you argue against Faber and Zulauf’s views?

    Robert Prechter: I don’t think I have to. These are political predictions that may or may not come true. In other words, why does it have to go that way? Someone else could say just as easily, “Well, it’s also possible that the voters will all become Tea Partiers, they’ll throw all these people out, and they’ll elect conservative guys who will balance the budget and eliminate the Fed.” How would you argue against that? You can’t. It’s just a scenario. It’s not an argument, just a possible scenario. Still, I don’t think it’s likely because of what I already said.
    ——————————————————————————
    To see some of that interview transcript – for context of “what i already said”:

    http://www.elliottwave.com/freeupdates/archives/2010/08/06/A-One-Way-Road-to-a-Near-Complete-Collapse-of-Outstanding-Credit.aspx

    Personally i like this quote:

    “Nobody’s going to be able to bail out the world, because we’re the only people in it.”

    so you pays yr money and takes yr choice.

    ————————————————

    As he says its a political argument as to what they will do, and moreover the politicians are a self interest bunch, they realise people are very apprehensive about them pressing down the “print” button until their finger nails go white.

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  • “it is priced in US$ and would be useless if the dollar hit $3 to the pound”

    If the dollar devalues, the dollar price of gold will rise accordingly – otherwise there would be a huge arbitrage opportunity. Have a look at http://www.kitco.com/gold_currency/charts.htm?USD
    For all practical effects, gold is a (rather volatile) currency.

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  • Yep the time to buy Gold was when S2R1 regularly included it as part of his predictions.

    Well Faber, isn’t actually saying it is a good time to buy gold – if you read the article.

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  • so unless gold goes up either more or at the same pace of the dollar devaluing you are either even or in profit, but if it does not keep pace then you will lose money.

    very risky..

    funnily enough i was talking to a woman the other week, she was a bit of a poser or wag wannabe, she said she had been investing in gold, she is actually a school cook, she acts like she is worth millions, these are the sort of people who will lose money..

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  • yes he says ” although the timing to do so may not be exactly right now”……. which is of course pretty meaningless. A 10 year call is not exactly helpful. 950 S&P lows, no threat to the mark of the beast. Lets see.

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  • HPW – my comment was mainly a follow on to that of Mark @ 1 and just to follow on again from his latest posting sounds like his school cook tale is akin to that of “you know it is time to sell when the shoe-shine boy tries to give you stock tips”

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  • yes he says ” although the timing to do so may not be exactly right now”……. which is of course pretty meaningless.

    Not really, he is just saying that the price isn’t right.

    i was talking to a woman the other week, she was a bit of a poser or wag wannabe, she said she had been investing in gold, she is actually a school cook, she acts like she is worth millions, these are the sort of people who will lose money..

    Aside from me, I don’t know anyone who has bought any gold – and I speak to quite a lot of people. There will be a bubble in gold, but not just yet I think; partly because so many people aren’t investing because they have been told it is a bubble.

    Any feeding frenzy, like what we have seen with property, is a long way off I think; but if everyone on this board was buying…..now that would be something different.

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  • HPW she didnt say how she was investing, for all we know she might have joined a club or using a bank/broker or even selling her rings thinking she was investing..

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  • yes he says ” although the timing to do so may not be exactly right now”……. which is of course pretty meaningless.

    Not really, he is just saying that the price isn’t right.”

    and that is also meaningless cause he doesnt say either WHEN the price will be right or WHAT that price will be….or do you want to have another go?

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  • yes he says ” although the timing to do so may not be exactly right now”……. which is of course pretty meaningless.

    Not really, he is just saying that the price isn’t right.”

    and that is also meaningless cause he doesnt say either WHEN the price will be right or WHAT that price will be….or do you want to have another go?

    Anyone who has been watching gold would have an idea of particulars like that. Moreover, one has to do their own homework – he isn’t going to do it for us.

    (Have you got your handbag out again?)

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  • These people can say meaningless things and then prove they were right (anytime within 10 years) all along….. and yes that annoys me. Of course they may be wrong in those 10 years as well and no one will ever remember.

    But if you want to be sucked in then thats really up to you.

    So what is your homework telling you? – I could do with a laugh.

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  • So what is your homework telling you? – I could do with a laugh.

    You really have got your handbag out again haven’t you?

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  • 🙂 I see you have put your elephant size balls on the line again…. price and time… i am afraid that IS what its all about. So you cant rise to the challenge, without a bit of name calling?

    Go on have a go…. who knows you might even be right! You might even feel more of a man for doing it.

    Faber is about as much use as a chocolate teapot in terms of his timing…. you have been warned. He has been promoting the gold stocks for as long as i can remember and all they have done is gone down. So now he says “oh the time may not be exactly right now”. OK fine – if thats the case when will the time be right and what will the price be.

    He said it not me if the time might not be right now then he must know when it will be otherwise how would he know it might not be. What are you his PR man or something….. your not his…. no you cant be!

    Simple question innit?

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  • 🙂 I see you have put your elephant size balls on the line again…. price and time… i am afraid that IS what its all about. So you cant rise to the challenge, without a bit of name calling?

    Go on have a go…. who knows you might even be right! You might even feel more of a man for doing it.

    Faber is about as much use as a chocolate teapot in terms of his timing…. you have been warned. He has been promoting the gold stocks for as long as i can remember and all they have done is gone down. So now he says “oh the time may not be exactly right now”. OK fine – if thats the case when will the time be right and what will the price be.

    He said it not me if the time might not be right now then he must know when it will be otherwise how would he know it might not be. What are you his PR man or something….. your not his…. no you cant be!

    Simple question innit?

    Look, I know you have had a bad weekend, seeing that your deflation argument is pretty much going to end up in the gutter, but it isn’t my fault. I think you need to try and not get so emotional and annoyed about things. You need to try and respect other posters on this board – and even try to understand them. I am certainly not going to answer such any questions from people who frame their questions in the following way: ”So what is your homework telling you? – I could do with a laugh.”

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  • Bad weekend? :-)… nah dont think so…the opposite actually, anyway. Im actually very relaxed about things not emotional or annoyed at all. Just see people for what they are.

    As for the deflation / inflation thing…in the gutter eh? look at Icarus – listen to the Mr. P argument open your mind, even TC when p1ssed makes more sense than you.

    I am not wedded to any position so i dont get emotionally attached to one. If think you protest too much …. unless of course you are Marc’s bitch after all! Tell you what i will post one by Rick too. For the last time when you have a contraction in M3 THATS deflation. How does that leave my position in the gutter – have you been drinking some of TC’s leftover absinthe?

    “I am certainly not going to answer such any questions from people who frame their questions in the following way: ”So what is your homework telling you? – I could do with a laugh.”

    Er why not – and you can say that in one breath and the next tell me I’m sensitive???? If i were you i would post some levels and time frames (as i often do) cause i would love to prove myself right if i were you, and i honestly was after the benefit of your self proclaimed knowledge in this area (well not just this area, actually all areas know to man – and even some that are unknown).

    What kind of logic is that anyway? Logic of the school playground. Still takes all sorts i suppose.

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  • And on the subject of the school playground:-

    So what is your homework telling you? – I could do with a laugh.

    even TC when p1ssed makes more sense than you

    have you been drinking some of TC’s leftover absinthe?

    …. unless of course you are Marc’s bitch after all

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  • America’s jobs-generating engine is stalled. Just outsourcing, offshoring and tax-dodging by the rich.

    Flight-to-safety is pushing Treasuries and other bond yields down even while equities rise. Bondholders know how to read the data on spending (down), credit (tight), unemployment (higher), banks (hiding losses) manufacturing (inventory accumulation accounting for recent small rise), housing markets (down), M3 money supply (down). When Proctor & Gamble missed analysts estimates a couple of weeks ago those analysts said that its product prices would be slashed in an effort to retain market share. The outlook is for falling product prices, reduced inventories and laid-off workers and/or reduced wages. Sounds like deflation.

    Expect to see the Fed trying multitudes of methods to prevent this QE 100?. I get the impression that asset prices won’t be left to drop too much.

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  • so no denial @ 20…. aha ! it all makes perfect sense now….

    Icarus v HPW…. hmm thats a really tough call!

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  • at HPW… You could always tell people to read the article “properly” if you’d like to have a laugh yourself 😉
    “Well Faber, isn’t actually saying it is a good time to buy gold – if you read the article.”
    as per the poster in comment 6 here.

    I think forecasting is a great business to be in. As Clint Eastwood once said in a film, “opinions are like …… , everyone has one”

    Timing is the critical bit.

    Exporting your way out of recession is great if someone else wants or is able to buy. QE2 will cause issues noone has thought of, the least of which is inflation. If China is going to do the pulling and the dollar hits the deck – what is that going to do with holders of US debt.

    I also happen to think deflation is what we will end up with. It might be a poor hunch – and I have really no clue – but I think that currencies in QE2,3,4 will likely end up with emergency interest rate hikes to help their currencies survive. I only wish I knew exactly when.

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  • “And on the subject of the school playground:-” well Miss he started it!! Ok i have had enough now – youll be pleased to know.

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  • at HPW… You could always tell people to read the article “properly” if you’d like to have a laugh yourself 😉

    No, you got that one wrong. There was an implication in the original statement that Faber was saying that now was a good time to buy – which isn’t true.

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  • Icarus v HPW…. hmm thats a really tough call!

    And yet more bigoted remarks…..

    So are you going to tell us how much money you have ”pocketed” today then?

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  • jack – sadly (and probably that applies equally to me – except i have a fair bit of time on my hands at the moment) this is NOT the first time. No doubt it wont be the last. I do find some of it amusing though (but dont tell hpw).

    The funny thing was i was just seeking clarity from Mr Faber… and all of a sudden HPW gets all upset. Who can explain it? Personally i’m at a bit of a loss.

    But i suppose everyone else is always wrong and HPW is always right. To be fair he might be right as well, but his position on gold cant be right since no one knows what it is and he cant be bothered to share his analysis with us plebs. Why? Well maybe there will be an international outcry or will he be accused of insider trading?

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  • fight fight fight fight fight oh they were the days in the school yard.

    has anyone noticed how the captcha is getting more complex with chinese lettering

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  • So are you going to tell us how much money you have ”pocketed” today then?

    oh and growler you are wrong as well!!! ok so far it s growler, icarus, Jack, TC oh and me.. any advance?

    please stop now my sides are hurting….

    here’s one for you.

    as i keep telling you its not what the Fed WANTs to do its what it will be ALLOWED to do. btw you may be a pig in sh1t later this week.. 😉

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  • techie – hpw stated on here not so long ago that he likes annoying you !

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  • btw you may be a pig in sh1t later this week.. 😉

    Just carry on….

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  • Mark please i started with the school playground bit…. dont use my lines or i will “srcweam and srcweam”. Yes these recaptcha are getting a bit silly. i have one now with that german umlaut.

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  • “btw you may be a pig in sh1t later this week.. ;-)” – actually that means they may announce some form of QE2 – which was discussed over the weekend.. See you read bad things into things when you really shouldnt… didums !

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  • “btw you may be a pig in sh1t later this week.. ;-)” – actually that means they may announce some form of QE2 – which was discussed over the weekend.. See you read bad things into things when you really shouldnt… didums !

    When you have calmed down a bit, I think it would be a good idea if you go back and read some of the things you have written above. To me, it looks like the work of someone on the edge of a nervous breakdown.

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  • does it? funny how you always say that when you have no sensible answer. Im still waiting for some market calls…. in your own time.

    Btw – you have no idea what i am thinking and whether or not i am wound up or find this very very amusing. clue its not the first one. Didnt someone say that communication is only 7% of what you say… the rest is to do with how you say it.

    But of course you can think whatever you want. Its really of no consequence whatever. Your opinion has zero value.

    Does this ring a bell? http://www.urbandictionary.com/define.php?term=Only%20Child%20Syndrome

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  • actually it describes you very well :

    “Only children sometimes exhibit characteristics resembling women who have their periods. This can occasionally lead to flashes of intense anger when they don’t get their way or someone insults them even the slightest bit. Also, when there is dissent in the friendship ranks which they are a part of, they lash out and try to make the other friends seem more culpable and especially more gay than they are. They have an overwhelming feeling that the world is against them and they tend to ruminate a lot as well. When you factor girls into the picture with an only child, it is never a pretty sight….. and they often accuse someone that disagrees with them and points out their failings as being on the edge of a nervous breakdown..”

    [ok i made the last bit up but if the cap fits…]

    recaptcha 28 recnant 🙂

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  • handbags at dawn…lol

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  • general congreve says:

    It would seem to me that there’s a pretty circular argument about gold that goes on and on, with gold bulls and gold bears trotting out the same reasoning whatever happens in the gold market.

    Therefore it might be better to look at the facts.

    Cast your minds back to the end of 2009, there was much heated debate, both here and in the press, as to whether gold would break out above $1000 (OMG!!! $1000!!! Can it really happen?!?!?!). Well here we are a out 8-9 months later and despite getting a little ahead of itself and slipping back a bit this last month (to my eyes it appears the gold price generally ratchets up in a two steps forward, one back trajectory) it is sitting at $1202 as I write this.

    If I’d have told you 9 months ago that within a year gold was not only going to break and hold the $1000 level, but produce 20% returns (going on spot price) they’d probably have been howls of derision from many and disbelieve from others.

    We are far from a bull market in gold however, aside from this site I only know one friend who is invested aside from myself, although I have persuaded a couple of relatives with a lot to lose if they just hold sterling to diversify too, but they would be none the wiser had I not presented the arguments for gold to them.

    Anyway, the way I see it, if we continue along the path we are on, we will steadily head towards sovereign debt default in the UK, US and Eurozone and the attendant collapse of the dollar, euro and pound. The smart money will steadily continue to trickle into gold, raising the price consistently, until we have a return to sound monetary policy. Such a return is unlikely to happen soon, as the West has painted itself into a corner with it’s moribund economies and debt burden. We will slide into poverty (relative at least) in the West. It might be gradual, but I think it’s very likely that they’ll be some big shocks to the financial system (just like what happened to Iceland) that will make some excellent returns for gold investors in a short time frame when they happen.

    Hold your gold.

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  • jack c @24 – my half hour is up!

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  • Btw – you have no idea what i am thinking and whether or not i am wound up or find this very very amusing.

    It’s actually quite easy if you read between the lines; it’s like you are desparate or something to make your point and are unable to do it, without throwing something colourful in. You have provided lots of examples above.

    Do you find that sometimes your head resembles a big red tomato that looks like it’s going to burst?

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  • hpwatcher – as per the monty Python sketch I’m afraid techiemans time is up ! – if you want anymore I’m afraid you’ll have to pay (only Krugerrands accepted)

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  • actually i look like a cross between daniel craig and harrison ford…. but hey we all have our crosses to bear.

    i think the point has been made – as i said before a few posters have made it – but you just aint listening. I think its fair to say you dont think there will be deflation – thats an opinion – CURRENTLY a wrong one as i have told you many many times M3 is contracting. So to say that the deflationists have been quashed [when even Faber didnt say that], or that “my” argument is in the gutter, is just really really dumb.

    But if you cant see that, then thats up to you.

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  • jack c – sorry!!! hes just too scrummy to let go!

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  • @TM – there was a thread a little while back (search facility on here is poor) where you stated hpw was annoying and he replied he liked annoying you !! and today it shows

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  • 39 GC – well you are a bit behind the curve this was discussed loads of times in 2007/2008, so i think its unfair to say to some that they havent realised that it was a good place to put your money. i think the main gains have gone – because as jack says the time to buy was when S2R1 was talking about it (although personally i already had a reasonable sized holding luckily from quite some time back – most of which i seold in March 2008 – and referenced here).

    Gold will probably end up being very very good – if and when the hyperinflation kicks in.. its just that there may very well be some pain in the interim. I have no real interest in it (i still have some left for “insurance”), but i was interested in what HPW thought. But he is – for whatever reason – reluctant.

    Ok so overall what level are you looking for and when?

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  • jack – yes you are right – i find it all a bit amusing now though.. I was just annoyed that someone could express an opinion as fact and then imply that people should subscribe to that a la SS [bit colourful i spose]. We are all right sometimes and we are all wrong sometimes.

    But to not be able to even see the other side of an argument and debate it sensibly , just seems strange to me. Of course i can see the inflationist argument, and maybe he is right, but he just cant accept that the view that septics have monitised a couple of trillion, and because it hasnt really worked, they are just going to carry on and keep doing the same, until they create hyperinflation, may not be right.

    His point is they can and will and mine is its very very unlikely that they will be able to pass that through, for reasons why listen to Mr. P. Eventually though they may do that, but not (IMO) after some deflation first.

    I actually thought he knew more than he does until he posted the chart of the monetary base to “prove” inflation [the measure of the money supply is broad money or M3].

    Really its political rather than economic, the “tea parties” is a clue.

    Pass the PG!

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  • @Techieman,

    “Ok so overall what level are you looking for and when?”

    There are a couple of problems with that seemingly simple question:
    – The ‘level’ is a measure of fiat currency destruction – not a rise in gold. The level will be determined by how badly fiat currencies fail which is a real crystal ball question.
    – You are framing the question in terms of a trading prediction but that is not always the reason for holding gold. Gold may offer some protection from global macroeconimc issues that are inherently difficult to predict i.e. a sort of insurance policy.

    The ‘when?’ question makes more sense to me. I’ll offer you one perspective that is relatively bold:
    ‘Williams also predicted 2 years ago we would have a “hyperinflationary depression” within 10 years. Then, about a year ago, he revised his prediction and narrowed the window to “five years.” The day before last Friday’s dismal jobs report, Williams said, “. . . the timing of the looming U.S. financial Armageddon is coming into better focus, with increasingly high risk of it breaking within the next six months to a year.”’
    When Will Financial Armageddon Begin?
    I’m not saying that I agree with Willaims but I think he’s a fair representation of the worst case economic scenario. Do you want a little insurance against Williams predictions? Of course, if we start a war with Iran or something, then all hell could let loose anyway.

    I’m sure you will be dissatisfied with my answer but please try to remember that not everybody is a trader. One of the best known gold bulls, Jim Sinclair, has repeatedly warned against trying to trade precious metals.

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  • @Mark

    ‘very risky..’

    Yes, there is risk. Some hardcore goldbugs would argue that cash is the biggest risk of all! Even discounting armageddon scenarios, it seems that holding cash is a virtually guaranteed small loss due to the terrible returns for savers. Gold can be very volatile so trying to trade it short term (not recommended) is only for experts.

    ‘I was talking to a woman the other week, she was a bit of a poser or wag wannabe, she said she had been investing in gold, she is actually a school cook’

    What have you got against school cooks? 🙂 One handy property of gold is that you can buy it is very small quantities if you want to e.g. half sovereign. Even people of modest means can buy a little if they want to.

    ‘she acts like she is worth millions, these are the sort of people who will lose money..’

    Not a pretty picture. Do you think that gold investors get cocky or something? Since I’ve never met another gold investor in person, I cannot coment any further.

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  • quiet guy @49

    nope and nope

    this woman came over all wrong when she was talking she was cocky and acted like posh becks, i was making a point she did not have the money to have the attitude, this seems to be a common occurrence in society today wannabeessssss

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  • WOW.

    Just had a read of the thread. I’m firmly on techieman’s side here., all he did was question the “Quashed” reference in the HPC title given by HPW and all hell broke loose. The article says
    “””
    If Marc Faber had to choose one asset class for the next 10 years it woud be gold.

    Therefore he advises long-term investors – and he is still talking well within his own lifetime and he is 63 years old – to buy gold and equities, and particularly gold and resource stocks, although the timing to do so may not be exactly right now, and to do so on a globally diversified basis.
    “”””,
    which I read as, “accumulate gold, whilst maintaining diversification – there may be some short term loss, but you’ll rake in excess profits over the next 10 years if my predictions are correct”
    A macro investor (like the U.A.E. soverign fund must be) could take this on board, but techieman would be perfectly correct to ask for some more concrete predictions if he were a participant in the lecture hall. Personally I’d be asking for more details to the methodology too, anyone can wave their arms about and reason relatively logically to produce some scenarios, but it is not going to make them much money unless they happen to be lucky too.

    This, of course, says nothing of gold’s value now or in the future 🙂

    I for one would not have believed GC’s predictions had he made them, but I tend to steer well clear of the gold market, I leave that to much more experienced investors, it’s got a ridiculous vol, and IMO could easily take you for more than you thought possible.

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  • Quiet Guy – not at all. I dont agree with Williams – even though shadow stats is where to go for the monetary aggregate measures. I think 5 years may well be the right time period for some HInflation to kick in- if thats going to happen.

    I dont actually disagree with the Hinflation scenario, just the timing. I dont think six months but of course i have no crystal ball, and nor does anyone else i know of. So effectively its probabilities. And yes they can change.

    As for prices, well i cant believe anyone can recommend anything with no target and a 10 year time frame. To me thats daft… but that is probably as you say because i am prejudiced.

    ——————————

    666 – by the way did i cant remember if you picked that after the S&P low – pretty impressive if before..

    yes i really did start of by asking “difficult” questions of Faber.. Honestly i would have hoped for example him saying “next years high being in excess of $1,800” – i dont think that would have been too much to ask. Its just a stupid call IMO – “in ten years!!”. And then someone tries to defend it? unfathomable.

    and no i dont spend my weekends worried about inflation or deflation…. so i dont know how hpw gets to “knowing” i had a bad weekend since the deflation argument is in the gutter. I find it all a bit weird myself. i carried it on as i did find it amusing. I suppose that puts me on the “at risk” list. Aw well if i suddenly disappear at least you know where i am!!

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  • all he did was question the “Quashed” reference in the HPC title given by HPW and all hell broke loose. The article says

    Aside from all of the froth, this is a very simple thread, all it’s about is the determination of the FED to support asset prices. Faber makes a good point that the FED can’t really allow asset prices to drop as it will devastate the balance sheets of the banks.

    Now, that may not suite certain persons on here, because they may have invested so much in the deflation scenario, but the point still stands – and it’s a reasonable & plausible point.

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  • The point is: Where is the logical end of continuous QE? Is the natural break found in inflation, or is it a currency crisis?

    Will holders of US debt sit back and watch endless QE in a currency that they hold a lot of debt in? Both would need interest rate rises to help combat. This will also cause companies and overstretched homeowners grief (not that some of them don’t deserve it).

    The US will try and get everyone to go QE2 to avoid too many notable safe havens emerging.

    I believe that another huge dose of QE will start to enter danger territory. Some will get the jitters. Eventually, as QE works less and less for the effort expended, someone will break ranks and pull out of further QE. That will be start of a currency crisis and a lot of chaos in finacial market as people look to reprice.

    I’m no expert – not at all – but for me, logical national market self-interest will eventually force through an unwind of some sort or other.

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  • The point is: Where is the logical end of continuous QE? Is the natural break found in inflation, or is it a currency crisis?

    I think the ideal scenario, for the FED and US government would be a kind of balance between [some kind of] recovery and [some] inflation. I just can’t see the FED just walking away and leave the US to the fate of deflation but, as I said, this will need to be a delicate balance; due to last weeks jobless figures some kind of action will probably happen sooner rather than later. I fully expect the UK to follow with some kind of QE extension too, as the phoney recovery begins to falter.

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  • “Now, that may not suite certain persons on here, because they may have invested so much in the deflation scenario, but the point still stands – and it’s a reasonable & plausible point.”

    Not invested anything in the deflation scenario at all – usual drivel, and if and once we see evidence of the Fed being able to underpin M3, then i may very well switch sides. I have to be in tune with the market, as its what i do. The evidence is that is a certain insomniac who is out of tune. Will they be ALLOWED to reflate beyond here, perhaps a bit but probably not as much as they would like. Would that tip the thing over to inflation? Well probably not but i have said before i have no pride in position whatever. Having that is the quick way to the poor house.

    Can they “print” ad-infinitum – doubtful at best.

    The clue will be what the Fed do this week at their meeting and MUCH more importantly the markets reaction to it. It might not be too pretty!

    Course i am still waiting will you think a contraction in M3 isnt deflation….. i need an early morning laugh :). I enjoyed the froth by the way!

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  • Basically it all boils down to how are the fed going to “print”. That is political. They dont (and wont for quite some time) “print” money whatever Ben tells you – thats all bluster and rhetoric. The fed buy assets. Of course they dont want to buy rubbish, so if they do that will be a Quantum Leap away from what they are currently doing, and the markets are unlikely to see that as anything but a loss of control by the Fed. The Fed themselves dont want to expand their balance sheet by doing that – they are probably a bit queasy about that.

    Of course they dont want to stand idly by but they will be forced to. Just give it some thought – if they start buying non performing assets in any great amount, then that just means that there will be a flood of ious granted, safe in the knowledge that should these not perform the fed will soak them up. THAT is part 1 of the doomsday scenario.

    They wont throw them dice until they perceive their hand is forced. As for Zim / Weimar republic type Real printing (i.e. massive increases in money supply) they might do that but that would be once the kitchen sink has been thrown and that will IMO take years. Eventually Faber might very well be right, and THAT is the point.

    IN the meantime asset deflation remains the most likely play. Getit? Nope? Thought not. Really subject closed.

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  • Can they “print” ad-infinitum – doubtful at best.

    No one is talking about ”ad-infinitum”.

    Not invested anything in the deflation scenario at all – usual drivel

    You have previously boasted about how much money you have made through shorting stocks. And, you have always put the case for deflation, and the nature of your replies can only mean that you do hold pride in your position.

    It’s so typical that you are simply unable to answer without throwing in the usual insults – obviously some form of deep insecurity on your part. At the moment, though, the only inflation I see is your massive ego.

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  • I put the case for deflation cause thats what the evidence tells you. I have repeatedly said in the UK the inflationists currently have a case, but in the US they clearly dont.

    I really cant take someone seriously when they think that M3 is a motorway that ends at Southampton. Nor their analysis of my personality. At the end of the day do i care if you think i am insecure or not?

    nope – I dont actually give a flying f*ck. Thats someone thats very secure in their feelings and beliefs. Your think your opinion about me matters? Only to you. Of course i have flaws to err is human , but i will take the speck out of my eye after you have taken the brazilian rain forest out of your own.

    “It’s so typical that you are simply unable to answer without throwing in the usual insultsI” What and you are not insulting me? :). At least my last 2 points provide analysis, albeit interlaced with some quite clever insults. Whereas yours doesnt provide anything or answer the main question. Now that i am afraid is typical. When challenged you revert to type.

    I can – and have recently – just as easily take long positions rather than shorts. You can make or lose on both sides. As i said its you that have the personality flaws – in spades. You have demonstrated here that everyone who raises a different point of you to your own is to be cast aside shouted down, and belittled by you, and you cant even see it or accept a different opinion that may have credibility. [and no im not even tailkng about me].

    I dont really know what is the matter with you but i really dont care. Even when i say Icarus has more credibility than you and a more persuasive argument you call ME a bigot! Go look it up – there is only one bigot here.

    What a tw8t!

    Really i am fed up with this – i am sure everyone else is too. I will look at your response (you will make one because you cant help yourself) but no i really cant be arsed to reply.. unless of course i can think up something both amusing and insulting. No i wouldnt put that past me.

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  • Oh dear, angry aren’t we?

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  • not at all….. mildly amused and quite happy actually. As i said “When challenged you revert to type”. You manage to prove this point over and over…. ad infinitum.

    I have no clue why but there seems to be some kind of jealousy / resentment. If someone tells me of someone’s success i say – great good luck to them, it strikes me that (even if you wont admit it publicly or even to yourself) that you will take the view that they dont deserve it or they have done it through some kind of illegitimate means. Strange outlook on life – riddled by angst.

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  • Strange outlook on life – riddled by angst.

    We don’t see things as they are, we see them as we are! You have found yourself.

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  • 🙂 of course!

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  • 65. This comment has been removed as it was found to be in breach of our Blog Policies.

    Did you throw in another comment techieman?

    Although, after the FED announcement on Wednedsay Faber is looking more right that wrong – and gold is up too. But I do see some small falls for gold going into October, after that, I think things will start hotting up again.

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  • 🙂 – no i didnt – i thought you did – thats quite funny! I wonder what it was?

    “Faber is looking more right that wrong” – if i knew exactly what he was saying i might even agree with you… but i dont even think he knows! Its up to you what you believe.

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