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Marc Faber: Mirror, Mirror on the Wall

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May 31, 2010 – Comments (5)

This is a presentation by Marc Faber to the Ludwig Von Mises Institute on May 22nd. It lasts an hour and is a very good presentation. He puts US montary policy into its proper perspective. Listen to it and come up with your own conclusions.

Also, about 16 minutes into the presentation, he mentions an article written by James Galbraith regarding defecits. I posted an excerpt of that article here on May 13 - The danger posed by the deficit ‘is zero’ (LOL!) - http://caps.fool.com/Blogs/ViewPost.aspx?bpid=391430

I originally found the video on Nathan's Economic Edge, see this post: http://economicedge.blogspot.com/2010/05/marc-faber-mirror-mirror-on-wall-when.html

5 Comments – Post Your Own

#1) On May 31, 2010 at 11:13 PM, ralphmachio (26.74) wrote:

Compelling for the medium term, but I think deflation will come first. He didn't spend much time discussing the problem of people not paying their debts, and the rest of the real estate bubble that has yet to collapse. I want to put stop order in for a PHYS position in case I'm wrong though. If gold does take off, it will fly. The US dollar is a poor bet, but nothing travels in a straight line. I think it has some room to go, and short term, I'm in cash until the market shows some direction. 

I completely agree with his statement about leaving cities. Maybe paranoid, but maybe essential for survival. 

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#2) On June 01, 2010 at 12:29 AM, lquadland10 (< 20) wrote:

About half way through he talks about the imbalance in the trade defasacit with China and they don't know what went wrong. What went wrong is they did not factor in the ending of Tariffs. Now in 2005 Bush signed in Cafta.How much money did the Government loose in Tariffs with China and Canada and Latin America. Now to make up that money they will raise the taxes. Also China is going to allow Naked Shorts. Talk about volatility. The stock exchanges will make a ton of money with each trade. 

http://articles.sfgate.com/2005-08-03/business/17387750_1_cafta-free-trade-agreements-free-trade-area

http://www.caftaintelligencecenter.com/subpages/What_is_CAFTA.asp

CAFTA immediately eliminates all tariffs on 80 percent of U.S. manufactured goods, with the remainder phased out over a few years. Importantly, the agreement is not limited to manufactured goods, but covers virtually every type of trade and commercial exchange between these countries and the United States.

Within five years, 85 percent of U.S. exported goods will become duty-free, while the remaining tariffs will be phased out over 10 years.  2005 it was signed. 2010 no more income for Canada and Mexico and the USA because 85% exported goods are duty free. So I see it as more money being taken away from Governments. What do you think? 

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#3) On June 01, 2010 at 9:06 AM, binve (< 20) wrote:

ralphmachio ,

Thanks for the comment man. There is a lot about Marc Faber's position that I agree with, and a lot that I don't. I am more long term optimistic than he is (read the stuff in blue in the middle of this post): http://marketthoughtsandanalysis.blogspot.com/2010/01/dow-gold-ratio.html. And I also don't agree with a hyperinflationary assessment for the Dollar. I think debt will collaps as the Fed generates extreme monetary inflation. I think the result will be stagflation, not hyperinflation, like I lay out here:   More on Debt Saturation Equals Diminishing Growth, Employment, and Capacity Utilization… - http://caps.fool.com/Blogs/ViewPost.aspx?bpid=394221 .

I think in either of the two cases, gold will be an excellent investementment in both real and nominal terms. Gold will still outperform equties if we get honest deflation, but there are other hardcore deflationists such as David Rosenberg who are bullish on gold. The only way gold makes a bad investement at this point is if we have a nonest sustainable recovery. And the odds of that are pretty small IMO. So I stick with gold :)

Thanks for the comment!

lquadland10 ,

Those are great observations!

>>Within five years, 85 percent of U.S. exported goods will become duty-free, while the remaining tariffs will be phased out over 10 years.  2005 it was signed. 2010 no more income for Canada and Mexico and the USA because 85% exported goods are duty free. So I see it as more money being taken away from Governments. What do you think?

That is a very compelling argument. I mean, if at the same time the US was encouraging capital investment in production instead of just trying to spur consumption, this might play out a lot differently. But they didn't, so it won't. I think you are right on.

Thanks!..

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#4) On June 01, 2010 at 6:26 PM, CharlieBeLong (29.85) wrote:

Thanks.

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#5) On June 01, 2010 at 6:54 PM, binve (< 20) wrote:

CharlieBeLong , No problem!..

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