machine gun marc

[audrey_girl]

mr. faber...

fyi:



pretty gloomy

[hayekvindicated]

Re: machine gun marc

I saw that too - very scary. If this was coming from a professional doom monger who had made a fortune selling doom stories, it would be another matter. But Faber is not given to exaggeration and doesn't indulge in hyperbole (unlike, say, Schiff). So when someone who is as rational and as measured in his pronouncements as him becomes this negative, it is really scary.

[ThePythonicCow]

Re: machine gun marc

This is one of the more persuasive views of the next few years I've seen.

The real American economy is mortally wounded. It is no longer make long term capital investments, nor produce as much as we would consume, nor employ as many as would work. It's workers and businesses are basically bankrupt. The East Asian, emerging, and Australian economies are more sound, though they are taking some hits from the collapse of exports and the Australian housing market bubble. They are better capitalized and have a real economy that can produce more than they consume.

The government and FIRE industries are running on free money to the banks and repeated stimulus packages to keep from stalling out entirely. The bankers will survive for the next year or two because they are getting money free of charge.

The annual interest on the U.S. debt will be a trillion or more in a five to seven years and then the U.S. will essentially default, trying to inflate its way, then delaying interest payments. That won't work and then in five to seven (ten?) years the real crisis will break out and the whole thing collapses and we go to war. At that point one should be self sufficient with a farm and a machine gun. So jtabeb is right ... but a few years early.

In five to ten years the real crisis breaks out, the whole system collapses and that will be the end.

One part of his prediction confuses me. He sees the bankers and U.S. government getting by for "the next year or two" on repeated stimulus packages and increasing federal debt. He sees the "real crisis and collapse" in five to seven (or five to ten) years.

But what does Faber see happening in that space between two years out and five years out?

[jtabeb]

Re: machine gun marc

At that point one should be self sufficient with a farm and a machine gun. So jtabeb is right ... but a few years early.

In five to ten years the real crisis breaks out, the whole system collapses and that will be the end.
?

I only, ever, try to be correct early and often. ( as wrong or late are just not very helpful for planning purposes).

[D-Mack]

Re: machine gun marc

It was posted in the video forum, I believe

[GRG55]

Re: machine gun marc

This is one of the more persuasive views of the next few years I've seen.

The real American economy is mortally wounded. It is no longer make long term capital investments, nor produce as much as we would consume, nor employ as many as would work. It's workers and businesses are basically bankrupt. The East Asian, emerging, and Australian economies are more sound, though they are taking some hits from the collapse of exports and the Australian housing market bubble. They are better capitalized and have a real economy that can produce more than they consume...

According to Eclectica Asset Management [Hugh Hendry's firm] "Australia has one of the most financially levered private sectors in the world with private debt 238% of GDP vs. just 65% back in 1929." [thanks to Jim Nickerson for digging out the commentary from which this was extracted].

I am also mindful of EJ's arguments of a simultaneous stock and property bubble in China...

...One part of his prediction confuses me. He sees the bankers and U.S. government getting by for "the next year or two" on repeated stimulus packages and increasing federal debt. He sees the "real crisis and collapse" in five to seven (or five to ten) years.

But what does Faber see happening in that space between two years out and five years out?

Isn't his basic argument that governments will implement a series of increasingly desperate inflationary measures culminating in that ultimate of inflationary policies...war? I don't see a five year timeline for this to unfold as being unreasonable...and it may drag on longer.

[Chris]

Re: machine gun marc

I didn't know he had a pony tail. Very peculiar.

[renewable]

Re: machine gun marc

I didn't know he had a pony tail. Very peculiar.

From the book about him, Riding the Millennial Storm, he's a kind of motorbike riding hippy bankster. Having lived in Switzerland for a while, quite a few Swiss people have slightly odd tastes.

[ThePythonicCow]

Re: machine gun marc

According to Eclectica Asset Management [Hugh Hendry's firm] "Australia has one of the most financially levered private sectors in the world with private debt 238% of GDP vs. just 65% back in 1929." [thanks to Jim Nickerson for digging out the commentary from which this was extracted].

I am also mindful of EJ's arguments of a simultaneous stock and property bubble in China...

Yes, Australia, China, emerging markets and seemingly every other human on the planet except for a few lost jungle tribes are entangled with the FIRE economy.

Faber is distinguising between the financial markets and the real economy. The emerging markets, China and Australia have a real underlying economy adequate to meet their needs and (in China, especially) capital reserves adequate to stay afloat in the collapsing financial markets. America and Great Britain have a weaker real economy missing some critical resources, production and manufacturing capability and a hopelessly imbalanced financial market.

Isn't his basic argument that governments will implement a series of increasingly desperate inflationary measures culminating in that ultimate of inflationary policies...war? I don't see a five year timeline for this to unfold as being unreasonable...and it may drag on longer.

Yes, that's his basic argument.

But he kept putting the repeating stimuli in the 12 to 18 month time frame, and the final collapse in the five to ten year time frame.

I wonder what he thinks will happen in the interim, between 18 months and five years out?

He says nothing explicit as to what these "increasingly desparate inflationary measures" might look like during that interim.

[ThePythonicCow]

Re: machine gun marc

I only, ever, try to be correct early and often. ( as wrong or late are just not very helpful for planning purposes).

If you anticipate correctly what the enemy pilot will do in a dogfight, but respond too quickly, before the enemy actually does that, you're toast.

[D-Mack]

Re: machine gun marc

Yes, Australia, China, emerging markets and seemingly every other human on the planet except for a few lost jungle tribes are entangled with the FIRE economy.

Faber is distinguising between the financial markets and the real economy. The emerging markets, China and Australia have a real underlying economy adequate to meet their needs and (in China, especially) capital reserves adequate to stay afloat in the collapsing financial markets. America and Great Britain have a weaker real economy missing some critical resources, production and manufacturing capability and a hopelessly imbalanced financial market.

....

When Roubini compares China to the US he looks at how many trillions $ the GDP is

[ThePythonicCow]

Re: machine gun marc

When Roubini compares China to the US he looks at how many trillions $ the GDP is

Roubini is likely correct that China is too small to be the main growth engine for the world's economy, and certainly the Chinese GDP is a tiny fraction of the U.S. GDP. However current dollar denominated GDP is more a measure of current FIRE economy size than future real economic (commodities and production) potential.

I'm not saying that China carries the U.S. on its back. I'm saying that over the next five or ten years the U.S. GDP (in 'real' dollars) collapses substantially, and that China, Australia, eastern Asia and emerging real economies can reach a self sustaining level, no longer dominated by the U.S. financial markets, more easily than the U.S. real economy can recover from the collapse of its FIRE economy. This is consistent with what I take Faber to be saying.

In the longer term geostrategic outlook, the U.S. continues to have enormous geographic potential. It is the only major nation with excellent seaports on both major oceans. It has vast expanses of some of the finest farming land in the world. It has enormous mineral reserves. It has a vast, if aging, electrical, road, rail and river infrastructure. It has had the most robust constitutional government for the last two centuries. The British then U.S. financial markets have dominated the worlds economies for the last two centuries. The U.S. has been the wealthiest, most powerful, nation on earth for this last century.

But we've overshot our mark. We've got some dues to pay. Vast wealth and power has inevitably led to vast corruption.

[dummass]

Re: machine gun marc

If you anticipate correctly what the enemy pilot will do in a dogfight, but respond too quickly, before the enemy actually does that, you're toast.

Ok Cow, I'll bite. What do you think will happen between years 2-5, before the final collapse?

[D-Mack]

Re: machine gun marc

Roubini is likely correct that China is too small to be the main growth engine for the world's economy, and certainly the Chinese GDP is a tiny fraction of the U.S. GDP. However current dollar denominated GDP is more a measure of current FIRE economy size than future real economic (commodities and production) potential.

I'm not saying that China carries the U.S. on its back. I'm saying that over the next five or ten years the U.S. GDP (in 'real' dollars) collapses substantially, and that China, Australia, eastern Asia and emerging real economies can reach a self sustaining level, no longer dominated by the U.S. financial markets, more easily than the U.S. real economy can recover from the collapse of its FIRE economy. This is consistent with what I take Faber to be saying.

....

I agree and who knows how much a trillion will be worth in a couple of years.

[bcassill]

Re: machine gun marc

I agree with everything that Marc is saying. The only thing that irks me when I hear him speak is how well Asia is going to be doing. What a load of BS. Anyone who wants to see what the Asian miracles will look like in 20 years, just look at Japan. All of the emerging economies are up against the population time bomb (i.e. where the population ages, then declines). Can anyone possibly believe that there will be continued economic growth in these countries in the face of an ever increasing number of geriatrics who will require care and medical treatment? Or, maybe they'll just leave them in the gutters to fend for themselves. Whatever.

The problem is that the export your way to prosperity model is bust. It won't work anymore. And the myth of the "emerging middle class" is also a bunch of hogwash. When you live in a country (and I am speaking of China here) where 1% of the population controls more than 70% of the wealth, there is no middle class. And the jobs of making teddy bears and other garbage for export that kept the bottom 95% busy aren't coming back. After the government finally realizes that building another empty skyscraper isn't going to fix anything, then the real problems will begin. If you believe the "statistics" coming out of China in regards to growth and production, then I have some swamp land in Arabia to sell you. They cook the books even worse than the Bureau of Labor Statistics here. As for India, the other great hope, their growth has been largely driven by the off-shoring model. What happens when Western companies continue cutting costs on those expensive IT projects or going out of business altogether. Bye, bye workers. Besides this, they have their neighbor Pakistan to keep an eye on. As Pakistan slides into an Islamic paradise with the practice of fundamentalist sharia law that prescribes the biblical punishments of stoning and the cutting off of hands and feet for minor offenses, the world can be thankful that they do not have to worry any longer about the Iranians getting the bomb since the Pakistanis already have it.

Oh, yes. The BRIC lovefest will create a world of unicorns and rainbows for everyone. If you believe this, then go here for your daily dose of sparkly happiness. With mafia style capitalism in Russia, a military coup in China (who do you think will come to power if the communist government implodes?), continued animosity between Hindu nationalists and Islamic extremists that may turn into a full blown war with nukes, I'd say that the future looks rather bright even if it's only by the light of the nuclear inferno and mushroom clouds.