The World Economic Forum Global Risks 2012 report

Global Risks Report 2012 - Launch of the World Economic Forum Global Risks 2012 report on 11 January 2012 in London.Economic imbalances and social inequality risk reversing the gains of globalization, warns the World Economic Forum in its report Global Risks 2012.

El-Erian : Joseph Stiglitz is right on Europe

Mohamed El-Erian : He (Joseph Stiglitz) is right in the sense that the muddled middle which is where Europe has been is no longer sustainable. The crisis that started in the outer periphery - Greece - not only has shifted to the inner periphery and the outer core - Spain and Italy - but it has also impacted FRANCE. Which is the inner core. Europe has to make a choice if it wants to save the euro. One choice is full fiscal union and the other is a smaller Eurozone. That is a political decision Germany must take.

Mohamed El-Erian : Chairman Bernanke has said there are benefits and costs and risks. That balance is shifting from benefits to potential costs and risks. If they did QE3 there would get some benefits but also quite a few distortions and collateral damage put into the system that could take us years to overcome. You will see pressure on the currency and the functioning of the markets. More and more non-commercial forces will be determining market outcomes [Amazing]

The best is not to intervene into a Free Market

Marc Faber: China, coming back to China, I am not saying that it is necessarily his fault that this has happened but then you should not claim that with monetary policies, you can influence economic expansions and avoid recessions. In other words, what’s the case he’s always maintained: through our interventions, we can smoothen out the business cycle. But actually if you look at the record, you have higher booms and busts and you have higher financial volatility. This year we never, ever had before a year when you had so many nine to one advance days and nine to one decline days. In other words, volatility has been incredibly high the end result is that the S&P is basically unchanged. I mean I just argue the best is not to intervene into a free market. One intervention leads to another one. And at the end, you have a socially communist system like we had in the Soviet Union and in China. And we all know what the economic results were of those experiences.

Buying opportunity

Marc Faber : ... what we had in 2008 was the outperformance of the US and emerging economies’ stock markets and commodity markets got hit very hard but it lead to a major low in emerging stock markets that bottomed out between October 2008 and March 2009 and after that emerging stock markets outperformed the US until say the end of 2010. So I think we may get a similar picture. That’s why when I read all the strategies that say - I think we should invest in the US, I say maybe that’s correct for the next three months or so but I would rather be looking at an entry point in emerging markets over the next six to nine months... - in MoneyControl

US vs. Emerging Markets

Marc Faber : We have to clarify ... how bad it was for equities worldwide because the US market was flat and it significantly outperformed most other markets in the world in particular emerging economies stock markets. This resembles the underperformance we had in 2008 that made the major buying opportunity. What we will have in 2012 is initially maybe some maybe further weakness in emerging economies against the US market and then a major low in emerging stock markets, including, India... we are getting there slowly. - in Moneycontrol

If the S&P drops another 10% more QE

Marc Faber : If the S&P drops another 10% you can be sure that there will be more QE in the US. So the markets would be supported by additional liquidity injections. - in Moneycontrol

Marc Faber : The Government could confiscate your gold

Marc Faber : I have one concern about gold, I was recently in Taiwan and South Korea at two large conferences. Nobody owns any gold. Gold is owned by a minority, even in the U.S. Most people in the U.S. have no clue what an ounce of gold is or looks like in the vault. The same in Europe. And in a democracy, it is very popular to take away from a minority. Like in Switzerland we now have a new state law that is being voted about in a few months that anyone who has assets of over $2,000,000, who dies and passes on these assets to his children, he will have an estate duty of 20%. Now most people in Switzerland, they do not have assets of $2,000,000 or $2,000,000 Swiss Francs, so they say yeah, good idea, we tax the rich. Then next year, I can come and introduce the referendum that says, everyone who has assets of say over $50,000,000 we tax him 50%. I know people who will say who has $50,000,000 dollars in assets, very few, the people will accept and vote for it. Now next year I can come back and have another referendum, everybody who has assets of over $900,000,000, we tax them 90%. And this is what the tyranny of the masses can do. You can make it appetizing to the masses, by just taking away from a few people. But I am worried most about, in the case of gold—not the price, that I am not worried—but I am about government taking it away.

If America attacks Iran , China will take counter measures

Marc Faber : Well who knows and it is very difficult to invest according to world conflict, but the fact is simply that the Middle East is going up in flames, that tensions have increased very substantially as well as in the states. And I think the Chinese must have scratched their heads when they stalled the invasion of Libya. And they would not be as stupid as to believe that if the Western World controls the Middle East, it would be very helpful to them, because if the Western World including the U.S. and Britain, France, Germany controlled the Middle East, then the Western World can switch on the tap of oil or switch it off. And this must really be very unsettling for the Chinese. And therefore, I think instead the Western World attacked Iran today, I think some counter measures would be taken and believe me, the recent trip of Hillary Clinton to Asia, to essentially reassert the American influence in the Pacific, would be viewed by the Chinese as a hostile move. There is no question about this. Like if the Chinese went to the Caribbean and essentially tried to reassert their power over the Caribbean or establish bases in Mexico or in Canada or in Venezuela, it would be looked upon as an aggression by the U.S. and you have to look at the world from different perspectives: from the perspective of the U.S., the perspective of Western Europe, from Russia, China, and of course also from Latin America.

No Deflation in the system at the present time

Marc Faber : Yes, I am aware of that because they focus say on one sector of the economy, which is the housing market or so, or they focus on the debt deflation that we have at the present time to some extent because the household sector has been reducing its debt on credit cards, and we have also some de-leveraging in other sectors of the economy. But that is offset by the government fiscal deficit and at the same time also by monetization on a massive scale. So I do not really see any deflation in the system at the present time.

Joseph Stiglitz : Of the 1%, by the 1%, for the 1%

Joseph Stiglitz : "Americans have been watching protests against oppressive regimes that concentrate massive wealth in the hands of an elite few. Yet in our own democracy, 1 percent of the people take nearly a quarter of the nation’s income—an inequality even the wealthy will come to regret." Joseph Stiglitz wrote in an article in Vanity Fair , what's interesting is the timing of the piece, as the issue of Obama's complete incompetence on economic matters has driven his approval numbers to the lowest levels which could be a sign that Obama may not be re-elected for a second term

El-Erian on The Market Reaction to the Jobs Report

The Market Reaction to Jobs Report was Muted , The jobs report was good, but we need better data than we are getting right now, says Mohamed El-Erian Pimco CEO, co-CIO: "it's interesting to see the market reaction. the numbers are good not only in terms of overall numbers but in terms of hours and the action is very muted and i think the three underlying that we are benefiting from household savings and it's not clear how long that is going to continue. two, Europe. things are getting worse in Europe. David earlier spoke about it Spanish deficit. we have factory numbers out of Germany today. and then there is general deleveraging. we continue to see the demand curve for European securities in particular shift inward. so it's not enough to get a good number. we need a really good number and we didn't get that today." Mohamed El-Erian said

I do not really see any Deflation in the system at the present time

Marc Faber : Yes, ... because they focus say on one sector of the economy, which is the housing market or so, or they focus on the debt deflation that we have at the present time to some extent because the household sector has been reducing its debt on credit cards, and we have also some de-leveraging in other sectors of the economy. But that is offset by the government fiscal deficit and at the same time also by monetization on a massive scale. So I do not really see any deflation in the system at the present time. - in FSN

Gold : the correction phase is not completely over

Marc Faber : ....In the case of gold, as you know we had a ten-year bull market and we peaked out in dollar terms on September 6 at $1,921 per ounce, at which stage the gold price had somewhat overshot on the upside and we are in a correction phase. I happen to think that the correction phase is not completely over, but recently sentiment on both silver and gold have turned very negative. We may have a trading rebound rally, and then some further weakness into possibly February or March, and then probably a major low. Then the question will be whether the precious metals rally again, and will they exceed the peak of 2011 or not. - in CNBC TV 18

It is not all bad in America

Marc Faber: ...... And it’s very important to laugh a lot in life. And I have to say, in Southern California, I was with a few friends and we just giggled the whole time. We had a great time. And this is also the good, you know, in America you can’t say all is bad. The good part of America, some people are very nice. Whenever I go, I was recently actually is very funny. I was in America, I had to take four flights. All the four flights were delayed and as a result, I missed two connections. I had to sleep at the airport in Chicago, to sleep to the airport in Kennedy, in Jamaica. There you go. And these are places that airlines, they give you a hotel — of course, not the luxurious Four Seasons type of hotel. But then you go to these local bars and to where it’s very funny. You meet a lot of people and you see the true America. All the people are very friendly and conversant. It has many, many good sides, America. It’s the government that is horrible and, in particular, the present one. - in FSN

Marc Faber on the US vs. The BRIC

Marc Faber : You right way but what we had in 2008 was the outperformance of the US and emerging economies’ stock markets and commodity markets got hit very hard but it lead to a major low in emerging stock markets that bottomed out between October 2008 and March 2009 and after that emerging stock markets outperformed the US until say the end of 2010.
So I think we may get a similar picture. That’s why when I read all the strategies that say - I think we should invest in the US, I say maybe that’s correct for the next three months or so but I would rather be looking at an entry point in markets like India over the next six to nine months. - in CNBC TV 18

The fundamental problems of the Western world is an over indebted society

Marc Faber :......essentially what you could get in the world is worsening geopolitical and economic conditions. Let’s say Israel attacks Iran. It’s a negative event basically but it could be counted by monetisation everywhere in the world in other words liquidity injections. So stocks could go up while conditions worsen. This usually happens when you massively inflate the quantity of money but from the mentally sound market in my opinion will only come about when the system has been cleaned and moved down after the financial crises of 2008 is essentially just painting the building with fresh paint but we haven’t addressed the fundamental problems of the Western world which is an over indebted society. - in CNBC TV18

The Correction phase in Gold is not completely over

Marc Faber : We have to distinguish between precious metals and industrial commodities. My concern is that the Chinese economy is going to be weaker than is expected and that the demand for industrial commodities will probably disappoint. So I am not particularly keen on buying industrial commodities at this stage. In the case of gold, as you know we had a 10-year bull market and we peaked out in dollar terms on September 6. 2011 at USD 1,921 per ounce at which stage the gold price had somewhat overshot on the upside and we are in a correction phase. I happen to think that the correction phase is not completely over but recently sentiment on both silver and gold have turned very negative. We may have a trading rebound year -trading rally and then some further weakness into possibly February-March and then probably a major low. Then the question will be whether the precious metals rally again and will they exceed the peak of 2011 or not - in CNBC TV18

Interest Rates and Fiscal Policies determine the price of money

Marc Faber : To make forecasts about free markets is very difficult. The free market and that perfectly functioning market is a market where no market participant has dominated the market but today you have a manipulated market. It is the governments which intervene continuously to influence the price of money in other words interest rates and fiscal policies so to make any predictions of political issues we can know exactly how far the ECB in Europe will monetize and at what stage QE3 will come about in the US but if the S&P drops another 10% you can be sure that there will be more QE in the US. So the markets would be supported by additional liquidity injections. - in CNBC-TV18

Marc Faber - CNBC TV 18 Interview - 02 Jan 2012

Marc Faber : We have to clarify the statement about how bad it was for equities worldwide because the US market was flat and it significantly outperformed most other markets in the world in particular emerging economies stock markets. This resembles the underperformance we had in 2008 that made the major buying opportunity. What we will have in 2012 is initially maybe some maybe further weakness in emerging economies against the US market and then a major low in emerging stock markets, including, India. I was looking for India to bottom out the Sensex between 12,000 and 15,000 and we are getting there slowly.

Do not buy Gold on leverage, buy it as an insurance

Marc Faber : Let me put it this way, of course it is a concern to me, if an asset class like gold and silver has been the best asset class over the last ten years, maybe copper was even better or a Warhol Painting and so forth. That concerns me. But I can turn around and say look, if I consider the price of gold, an average price in the mid 1980’s, say we take $400 or $450 or whatever it is, and we take the monetary base at that time, we take the international reserve. We take into consideration that China has not really in earnest begun to open up, and we happen to have the wealth expansion in emerging economies and so forth and so on. I can maintain, well actually the gold prices is not up, it is just a price of money or the value of money that has declined so much against the stable anchor. And so I do not think that we are in a bubble stage. But I mean I tell everyone, unless you buy gold it can easily go down 20% - 30%. This is not a prediction of mine, I am just telling people do not buy it on leverage, buy it as an insurance. If have health insurance, you also hope not to get sick, but just in case you get sick you have something. In the case of gold, as I said, my only concern with the gold insurance is the government will take it away. That is my only concern. I am not concerned about the price. - in FSN

The US, and Europe have become police state

Marc Faber : Well, first of all, I grew up in the fifties and sixties. I was born in ’46 so in the late fifties, I was, say, twelve to fourteen years old. And I have to say, in general, we were much more free than we are today. We had much more freedom to do things and to do stupid things. Today, everything is controlled — not only in the US, but also in Europe — they have become police state where everything is controlled and checked upon either by the police or the IRS or by the PSA or whatever it is. But you are restricted in every movement you make, basically. Secondly, at the time I grew up, we still had fixed exchange rates. We had Bretton Woods — in other words, a quasi gold standard, which no longer exists today. And the ability to print money today and to run huge trade and current account deficits is much higher today than it was at that time. In ’71 under President Nixon on August 26th, the US went off the gold standard and that led then to the inflation of the seventies and the gold price rising from thirty dollars to eight hundred fifty dollars- in FSN

Marc Faber : Big business is dirty

Marc Faber : ......And by the way, I think the inflation in the US is already much higher than what is being published by the media. And we know now about the media since Mr. Murdock is the largest media machinate. And since he, for sure, because I know some people who used to be in leading positions at News Corp in Asia — he calls them every day. He checks everything that they do. He knew about the hacking in Britain for sure. And he sanctioned it. But this big business. Big business is dirty. But why is it dirty? Because it’s been made dirty by the government. - in FSN

The supply of Gold is actually contracting

Marc Faber : ....I was at the Resource Conference. This is one of the largest Resource Conferences run by Standard Charter Bank in Hong Kong. All the miners are there and all the bigshots in the commodity space. And investors that are interested in commodities are there. Ask the audience and you would think that these people have an exposure to gold. Only about five people in an audience of like four hundred had more than five percent of their assets in gold. I find this amazing. I was already at two hedge fund conferences. These are relatively intelligent people. You’d think, but none of them had any exposure to gold personally. I said to them, “You’re all intelligent people. How can you not have any gold at all? Don’t you see what is happening with the money printing in the world?” Where people, they look at gold, okay, it was two hundred fifty two dollars in 1999. It’s not fifteen eighty. They think it’s expensive at this level. What they don’t consider is by how much credit has increased over the last ten years, by how much the world’s population has increased over the last ten years, by how much the supply of gold has increased. It’s not increasing, it’s actually contracting. In the next five to ten years, the total gold supply in the world will go up by three times at three point eight percent. No more. You know, you mine something, it’s gone. It’s no longer there. And so the supplies that is no longer there is like oil. You burn it, it’s no longer there. So every oil well around is dry over time.- in FSN

Gold is the best asset class for wealth preservation

Marc Faber : Well, basically, I mean, I would say we look at different asset classes. So we have cash, we have government bonds, we have corporate bonds, we have real estate, we have equities and we have commodities and precious metals. And so the question is, you know, where do you put your money if you and I go away to an island or to jail for ten years and we can’t make any transactions and we come back in ten years’ time? I think if the objective is the maintenance of purchasing power, in other words, you just don’t want to wake up in ten years’ time when you come out of jail and what you have is worthless, then I would say that probably gold is the best alternative. If the question is how do you maximize profit, probably there may be more profit in equities because, you know, we have abysmal performance of equities in the last ten years. And particularly in the US, as a result of the decline in the value of the US dollar, equities would seem to me to be not particularly expensive. I think what would be dangerous for you and me would be to put all our money in US dollar cash and in US government bonds for ten years and then come back and maybe find out that we can buy with a hundred thousand dollars just a cup of coffee — or not even that. - in FSN

Marc Faber : Always Follow what the Jews are doing

Marc Faber : ..... in the course of my life, I think that if I followed what the Jews are doing, you’re usually on the side of the winners in terms of money. They’re very smart at making money. And I have numerous Jewish friends that have either like eighty or a hundred percent of their money in gold, silver, or gold/silver mines and so forth. And I have other Jewish friends that have between thirty and fifty percent of their money in gold and silver. So I personally have less. I have like now maybe twenty percent of my money in gold and silver and in mining stock. But on any meaningful decline, say if gold, and we can’t rule that out and I’m saying that in every newsletter I write — a correction can occur that is meaningful. Like gold started its bull market in 1971. And it reached a peak in ’74 of a hundred ninety seven dollars an ounce. And then between December ’74 and August ’76, at the time the Dow Jones went up very strongly because Dow Jones bottomed out in the bear market of ’73, ’74, in December ’74. But during that time of stocks going up, ’74 to ’76, gold went down by more than forty percent — from hundred ninety seven dollars an ounce to hundred four dollars an ounce. There’s a big, big correction. But then gold went up eight times. And I’m saying, you know, you buy gold today — I don’t know, maybe it goes down a hundred dollars. Maybe it goes down two hundred dollars. But looking at all the factors we discussed, I don’t believe that we are in a bubble stage. Because I lived through the last bubble in the late seventies. I can tell you, the whole world followed the gold market day and night and traded gold twenty four hours a day like the whole world traded NASDAQ stock twenty four hours a day in ’99 and 2000. That hasn’t happened yet. We don’t have a heavy waiting. We don’t have a heavy kind of euphoria about gold at all. I know so many people, they bought gold, they paid three, four hundred dollars. Where was that thousand, they sold it? They sold it at twelve hundred. And that price has never really corrected, it never goes back. It never goes back. They’re sitting there empty. All I can say, the risk today as an investor is not to own gold, but it’s not to own any gold. If you have no gold at all, I think you’re taking a risk. And my advice is simply every month you put some money aside and you buy a little bit of gold. Depending if you’re very rich, you buy every month a ton. If you’re very poor, you buy every month an ounce or whatever it is, or a gram. But every month, you accumulate. You don’t worry about the price. Look to it and you just buy every month a little bit. And your grandchildren will be very happy about that unless the US government takes it away. That is a possibility with Mr. Bernanke. You just look at him. He’s basically not a particularly honest character. - in FSN

Easy Monetary policies create greed and bubbles

Marc Faber : Well, basically, easy monetary policies create greed and bubbles. And one of the symptoms of bubbles and investment manias is always the proliferation of fraud, embezzlement and dishonest practices. And we had also, in the US, I mean, basically, I would say Fannie Mae and Freddie Mac were a complete fraud. But of course, the government will never admit that. I think the US government is a complete fraud, with the exception of some decent people. But by and large, it’s a fraud. It’s a Ponzi scheme. And in China, obviously, we have a country that is growing very rapidly. And it’s caught the attention of the world and of relatively unsophisticated people — dentists, doctors, whatever it is, professional. They think we have to buy some Chinese companies because China is growing very rapidly. And so where there is demand, the supply comes in. A lot of fraud companies are listed in the US and elsewhere. And then they basically are revealed as being fraudulent. This is only natural. But I would say when people discuss China — is a bubble or not a bubble — the fact that there are so many fraud companies in China would point out to me or show me that there is a bubble, very clearly. Latest money printing by Bernanke has basically produced not necessarily a bubble in the US, but it’s produced a weak US dollar, which is a symptom of inflation. And it’s produced bubbles elsewhere in the world. - in FSN

In America I still can criticize the Leaders , not in Asia

Marc Faber: Well, I mean, we have in the East not true democracies. But for some funny reason, we have a lot of economic freedom. It’s just that you have to be careful not to step on the government’s toes in terms of criticizing them too much. I mean, the way I criticize Mr. Bernanke and the way I criticize Mr. Obama, for sure, I couldn’t do in China. For sure. And it would be viewed very negatively. Say I live in Thailand and I’m not here frequently. Or if I went really after the government here, I think I would have to be somewhat careful. This is still a great quality of the US. No matter what you say against American leaders, whether it was Mr. Bush or Mr. Obama, criticism is still accepted. - in FSN

Southern California is a gold mine

Marc Faber : [Southern California] It’s a gold mine. The girls are very friendly. In general, people are very friendly. I mean, everybody talks to each other. And I have to say, this is still a great quality of the US. If you go to the Midwest or you go to the South or you go to Southern California, people talk to each other in a pub and they enjoy each other’s company and it’s a very nice atmosphere. And that you don’t find in many other countries to the same extent. - in FSN

The US grossly neglected its infrastructure for the last twenty years

Marc Faber : ....when I started to travel the world in the seventies and I went to, say, Latin American countries, to Eastern Europe countries, to Asian countries — all these countries were way behind the US, way behind the US in every respect. And today, the infrastructure in most of these countries is actually better than in New York, Los Angeles, San Francisco. Also, it’s natural because these countries put their infrastructure in in the last ten, twenty years whereas the US — and that is another problem that nobody, or very few people, talk about — the problem of the US is that they grossly neglected their infrastructure for the last twenty years. In other words, they have the same trains, they have to run on the same rail track and that hasn’t been modernized by and large. They have the same subways that they had fifty years ago and so forth. And much too little as the percent of the economy has been invested. It’s all been spent. Consumption. And that doesn’t create wealth. What you consume, what you eat is gone. What you use in gasoline and burn is gone unless it’s used for running factories that produce something. - in FSN

The market keeps going up at the present time because of easing measures

Marc Faber : Yes, I mean the market keeps going up at the present time because of easing measures and today because of the rumors or the statements that the ECB is one way or the other, in one form or the other would essentially bailout Europe. So this has not really to do with economic fundamentals, which are not particularly good, but it has to do with money printing. - in FSN

Mish Shedlock & Max Keiser on 2012 Economic Outlook

Mike "Mish" Shedlock from Sitka Pacific Capital is interviewed by Max Keiser this 23rd December 2011 . Mish gives his perspective on the state of the global economy (Bonds , housing inthe US Australia and Canada ,the US Dollar ,the European debt crisis ,Gold and Silver , the stock market, commodities,China etc.) He addresses the potential for another deflationary-type event like the kind we saw in 2008, the state of both household, as well as corporate/bank balance sheets, and outlooks for the larger economy. Mish also announces that he is a Ron Paul supporter and that he thinks that Ron Paul has a good chance of wining

The limit of the Keynesian Monetary actions has been reached

Marc Faber : "The paradox of the situation is we got into trouble because of too much borrowing and too much spending but we have to spend more and borrow more to get out of it , I disagree but this is the view of the Keynesian economists" . Dr. Marc Faber added "The limit of these [Keynesian monetary] actions has been reached in the sense that You can increase debt but it doesn't increase prosperity or economic growth, because there is a point where the excessive debt growth doesn't stimulate economic activity any more, what it does it create bubbles in different sectors of the economy. And we have a global economy so the problem may not even happen in the US , If you look at the monetary policy of Mr. Bernanke it was designed to lift the housing market. The only asset that didn't go up since 2008 is housing." - in Reuters Interview
Click Here to watch the full interview>>>>>>

Outcome in China Uncertain

Marc Faber : Coming back to China, look nobody knows precisely what the outcome in China will be. But all I can tell you is from living in Asia there has been a slow down in the growth in Asia. And in most countries, corporations have begun to report disappointing earnings. There is a reason why stocks in the world are down between 20% and 30%. The S&P this year as I expected, has out preformed the emerging economies. But there is a reason why stocks went down this much, and I think for monetary reasons they will rebound now, the way the S&P is rebounding, but it does not change the fact that something is not quite right. - in FSN

The US market is likely to outperform the Emerging Markets in the foreseeable future

Marc Faber : Foreigners have been selling Indian shares, so there is a negative view about India at the present. In the world, the consensus amongst fund managers is that India is not perfect and the US market is relatively more attractive than other markets. So, the money flows into the US markets. Markets like India and China have grossly underperformed, but the other markets are down 20 per cent. In the case of India, the rupee is down at the same time, so we have a terrific underperformance here. Although it is true that the US market is likely to outperform the emerging markets in the foreseeable future, it doesn’t mean the US market would go up much. Secondly, I would rather wait for a buying opportunity in India and other emerging economies that may arise in 2012. - in NDTV

The Chinese Tourists like Casinos

Marc Faber : "Eighty per cent of Chinese traveling outside the country for the first time head for a casino and 90 per cent of Chinese who travel to the US visit Las Vegas."

The whole derivatives market will cease to exit

Marc Faber : “I am convinced the whole derivatives market will cease to exit. Will become zero. And when it happens I don’t know: you can postpone the problems with monetary measures for a long time but you can’t solve them… Greece should have defaulted – it would have sent a message that not all derivatives are equal because it depends on the counter-party.” - in Reuters interview

Marc Faber on China Slowdown

Marc Faber : ....Coming back to China, look nobody knows precisely what the outcome in China will be. But all I can tell you is from living in Asia there has been a slow down in the growth in Asia. And in most countries, corporations have begun to report disappointing earnings. There is a reason why stocks in the world are down between 20% and 30%. The S&P this year as I expected, has out preformed the emerging economies. But there is a reason why stocks went down this much, and I think for monetary reasons they will rebound now, the way the S&P is rebounding, but it does not change the fact that something is not quite right.

India should let its currency decline further

Marc Faber : The RBI [The Central Bank of India] can defend the rupee by increasing interest rate significantly, which may help. However, it would be more desirable for India to get the currency to decline somewhat further. - in NDTV

Gold is owned by a minority

Marc Faber : .....But I have to find out, I have one concern about gold, I was recently in Taiwan and South Korea at two large conferences. Nobody owns any gold. Gold is owned by a minority, even in the U.S. Most people in the U.S. have no clue what an ounce of gold is or looks like in the vault. The same in Europe. And in a democracy, it is very popular to take away from a minority. Like in Switzerland we now have a new state law that is being voted about in a few months that anyone who has assets of over $2,000,000, who dies and passes on these assets to his children, he will have an estate duty of 20%. Now most people in Switzerland, they do not have assets of $2,000,000 or $2,000,000 Swiss Francs, so they say yeah, good idea, we tax the rich. Then next year, I can come and introduce the referendum that says, everyone who has assets of say over $50,000,000 we tax him 50%. I know people who will say who has $50,000,000 dollars in assets, very few, the people will accept and vote for it. Now next year I can come back and have another referendum, everybody who has assets of over $900,000,000, we tax them 90%. And this is what the tyranny of the masses can do. You can make it appetizing to the masses, by just taking away from a few people. But I am worried most about, in the case of gold—not the price, that I am not worried—but I am about government taking it away.

Marc Faber : NDAA bill is a very dangerous legislation

Marc Faber : Well my main concern is that the world, especially the Western World, Europe and the U.S. is far less free than when we were children. I mean I talk to my friends all the time about this. When I grew up in the 50’s and 60’s, we had enormous freedom. Now, everything is controlled, every move you make is controlled. And the recent legislation in the U.S., whereby Americans can be detained by the military and put in jail without trial, is a very dangerous legislation. And my view is that the cold war was good at the time, you had super powered that opposed each other, and they were very careful what they did. Now you have fragmented world and most dangerously, you have a superpower that is from a secular point of view, long-term point of view in a relative decline compared to the rest of the world. And that superpower, has elements in the military and the conservatives, that are rather aggressive. At the same time, you have China rising, you have India rising, there is a rivalry between the two countries, and you have essentially in Russia a system where this is how far the Western World will go and not beyond. And so yes, to some extent, the tensions have increased dramatically. And what has also changed is when I grew up, China was oil self-sufficient. Now they import nine million barrels of oil a day. They are dependent on Middle Eastern oil. And believe me, this is the number one concern of the Chinese leadership: how do we get access to resources without interruption? - in FSN
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Gold can easily go down 20% - 30%

Marc Faber: Let me put it this way, of course it is a concern to me, if an asset class like gold and silver has been the best asset class over the last ten years, maybe copper was even better or a Warhol Painting and so forth. That concerns me. But I can turn around and say look, if I consider the price of gold, an average price in the mid 1980’s, say we take $400 or $450 or whatever it is, and we take the monetary base at that time, we take the international reserve. We take into consideration that China has not really in earnest begun to open up, and we happen to have the wealth expansion in emerging economies and so forth and so on. I can maintain, well actually the gold prices is not up, it is just a price of money or the value of money that has declined so much against the stable anchor. And so I do not think that we are in a bubble stage. But I mean I tell everyone, unless you buy gold it can easily go down 20% - 30%. This is not a prediction of mine, I am just telling people do not buy it on leverage, buy it as an insurance. If have health insurance, you also hope not to get sick, but just in case you get sick you have something. In the case of gold, as I said, my only concern with the gold insurance is the government will take it away. That is my only concern. I am not concerned about the price. - in FSN
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Real Estate in America is now a Good Investment

Marc Faber : my advice is to have say 25% in gold, 25% in cash and bonds, 25% in equity, and 25% in real estate. Now when I tell people in America that real estate is now relatively inexpensive, relatively compared to other asset classes, they look at me as if I am coming from the moon. But four years ago they were buying real estate like crazy and if you told them that real estate is in a bubble, they would not have believed it. I think now that time is coming to allocate some money to real estate and with the 25% cash you just wait until there is a great big break either in stock or in gold. And then you add to positions. - in FSN
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Zero Interest Rate forces Investors to Speculate

Marc Faber: Well basically we have unprecedented intervention in the free market. So fiscal measures, in other words, fiscal deficits and regulatory intervention, and we have unprecedented monetary intervention with artificial low interest rates that created an environment of negative real interest rates. Every citizen in the world has to realize that if he deposits money with the bank, after one year, the money has lost purchasing power; because the cost of living has increased, and the return on each deposit is basically 0% after paying the deposit fee to the bank and all the other fees, he has got a negative interest rate. And in this environment, you force people to speculate. And they speculate, they will go into one asset class for a while, and then into the next one and then most people will lose money by speculating. But it creates enormous volatility. And my advice is look, you and I, we do not know how the world will look in five years time if we are realistic. Okay we may get paid as financial commentator and so forth, but we do not know how the world will look like and we have to kind of invest in such a way that we do not lose everything. And so my advice is to have say 25% in gold, 25% in cash and bonds, 25% in equity, and 25% in real estate. Now when I tell people in America that real estate is now relatively inexpensive, relatively compared to other asset classes, they look at me as if I am coming from the moon. But four years ago they were buying real estate like crazy and if you told them that real estate is in a bubble, they would not have believed it. I think now that time is coming to allocate some money to real estate and with the 25% cash you just wait until there is a great big break either in stock or in gold. And then you add to positions. And I am also recommending to have allocations to income producing investments in the sense that if you have dividend paying stocks and in the U.S. stocks do not have a high yield, but say in Asia, I can still provide you a portfolio that have equities that will yield between 5% and 7%. But with that kind of a yield, you have a cash flow and you can reinvest your dividends. So in the long run you should be okay. But then again, not only about gold do I have a concern, I also have a concern, generally speaking, about our capitalistic system. For sure, people with assets, they will be taxed more heavily, that is for sure. - in FSN
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US government fiscal and monetary intervention benefited China and other emerging economies

Marc Faber : .... the problem with government intervention both fiscally and monetary, is that there are always unintended consequences. And all I am saying is basically, through the Fed’s intervention—monetary intervention—the U.S. has not progressed in 12 years. Now someone will tell you oh, we have Google and this and that. Yes correct, in that sense, some sectors of the economy have done well, but these sectors belong to say 3% or 1% of the population. If someone wins the lottery in ten years he can say, look I have a method how to win the lottery, once or even twice and so forth, but the majority eventually loses out. But the big winners of this monetary policy were essentially China and other emerging economies because the capital spending and the industrial production shifted to these countries and lifted commodity prices and so on balance, it actually damaged the U.S. and the entire Western World dramatically. - in the Financial sense Newshoure Interview
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We are going to see a Slowdown in India

Marc Faber : All the emerging economies are slowing down, not only India; also the exports are being impaired. We are going to see a slowdown in India in terms of economic activity and this is natural that an economy has phases of rapid growth and then low growth and recession. The government should not intervene in the normal business cycle, but it has always intervened. However, it did not intervene when there was a boom in terms of accumulating savings. So, you have essential asymmetrical monetary policy. - in NDTV 14 Dec 2011

The FED & the ECB know only one thing : Print Money

Marc Faber : “What do these bureaucrats in Brussels do besides eating well and sleeping the whole day…and sharpening their pencils? They’re precisely the useless bureaucrats that have brought about the financial crisis worldwide.”
“Somewhere, somehow the central banks will agree to print money. It may not be called QE3. And in Europe it may not be the ECB that buys bonds, but they may do it through the IMF or some kind of other institution.” - in a recent interview with Fox Business News
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EU should Dissolve & PIIGS should Default

Marc Faber : “If I were Greece or Portugal or Spain, I would say ‘bye-bye.’ I exit the EU. And the debts in EU, that’s your problem.”
“The best would be to dissolve the EU…let the markets sort this out. Let the countries default,” he asserted. ”It’s going to be painful – very painful. But rather than to again intervene into something that is not going to work in the long run is the wrong medicine.”
“Sometimes it’s better to default and take the medicine then to pretend that there is no financial trouble.” - in a recent interview with Fox Business News
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Marc Faber outlook for the next 5 years

Marc Faber : I don’t know how the world will look in a five years’ time; we may have another recession or depression. We may have to deal with high inflation. The bond market and the equity market may break. We don’t know how the world will look like in the next five years because we are not dealing any longer with free markets but with markets that are distorted by continuous intervention by the government. So, making any prediction is very difficult. My advice would be to diversify 25 per cent of your assists in real estate, 25 per cent in equities and 25 per cent in cash and bonds and 25 per cent in precious metals. - in NDTV

Marc Faber : At times Equities are better than Commodities

“We cannot be too dogmatic,”
“I am also interested in commodities in the long run, but there will be times when equities are better than commodities and there will be times when you have to move back into commodities.” Marc Faber, editor and publisher of The Gloom, Boom & Doom Report” said in a keynote address at the IndexUniverse’s 4th Annual “Inside Commodities” conference held on Dec. 8 at the New York Stock Exchange. - in indexuniverse

Why Marc Faber is Bearish on China

Marc Faber : “The reason I’m not very keen on China at the present time [is because] we had a credit bubble, we still have artificially low interest rates and a huge fiscal deficit in orders words artificial stimulus. That’s coming to an end. Yes, the government can further stimulate and slash interest-rates again and reduce reserve requirements, but it will just postpone the problem and aggravate the problem in my opinion.”
“When you have an economy like China that becomes so big so quickly, you can have a more meaningful setback. If the U.S. economy grows at 3% or contracts that 3%, it has no impact on the price of copper to speak of….In the case of China, whether the economy grows at 10% or 5% as a huge impact on the demand for iron ore and copper and aluminum, steel and coal. The Chinese economy today has a much larger impact on the rest of the world than is generally perceived economically speaking.” - in wallstcheatsheet

U.S. Equities Not Terribly Expensive

Marc Faber on his latest report : “It’s actually quite gloomy but if you’re very gloomy what do you invest in: Treasuries, Italian bonds or commodities or equities? I happen to think U.S. equities are not terribly expensive, so relatively speaking to other assets, they may for a while actually do quite well.” - in wallstcheatsheet

Marc Faber : Global Collapse in Derivatives Market coming

Marc Faber : ..when you make a prediction never put a prediction time on it , i do not know when it (Global Collapse) will happen but I am convinced that one day the whole derivatives market will cease to exist will become zero , when it happens I do not know , you know you can postpone the problems with monetary measures for a long time but you can't solve them ...if there is a war in the world , you think that derivatives will be settled ?! of course not , Greece should have defaulted then it would have sent the message that not all the derivatives are equal because it depends on a counter party ...- in Reuters Interview
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