Wednesday, August 27, 2014

Financial Crisis will return

There will again be a financial crisis because if you look at the cause of the last financial crisis, it was overly expansionary monetary policies that led to excessive credit growth and the very high leverage in the system was most noted in the US. And now they have bailed out the financial system by pumping even more money in the system. Excessive credit brought the crisis out and now the medicine is even more credit. 

Monday, August 25, 2014

Marc Faber: Africa will never be as successful as China

Africa has no chance to be the new China, not in a million years. You just have to look at how Chinese work, and their work ethics and the work ethics of black people. This is not a racist observation; it's a common sense observation. 

I love Africa. It's the most beautiful continent and the fact that people are easy-going is rather a plus than a negative. 

But I wouldn't want to live in Africa for security reasons. There's a lot of crime and theft and so forth, and number two, wealth that comes from resources usually – there are exceptions – usually does not lead to lasting wealth. 

And the upturn in Africa is largely from the resource price increase.

Wednesday, August 20, 2014

Monday, August 18, 2014

Oil more likely to go up higher than lower

In my view, the long commodities cycle, the so-called Kondratiev, lasts 45 to 60 years. There's no precise date. Now, if we assume that the commodities cycle peaked out in 1980, then we had a bear market until '99 – so in other words, an almost 20-years bear market. And after ''99 I think the Kondratiev cycle started to move up. We're now 2014 so we're essentially 14 years in the upward wave that usually on average lasts something like 22 years – sometimes more, sometimes a bit less. The commodities cycle from '99 to 2007, 2008 was driven by incremental demand from China. That is a big factor. The demand from China may weaken somewhat and for sure it will not grow at the same rate but it will not collapse. It may not go up a lot and in the face of industrialization first commodities demand goes up a lot but then it starts to level off.

But in my view, what can also drive commodity prices, because I'm on the board of some mining companies, and I can tell you that nobody will drill for oil if oil is less than, say, $70 a barrel. Nobody. And the copper price in 1998 was 68 cents a pound, precisely 58 cents a pound at its low. Nobody will look for a new copper mine and produce below, say $2 a pound. 

The costs today of exploration and bringing the commodities to the markets are astronomical and you can also thank the Federal Reserve for that. So if people think that oil will be significantly lower than what oil is now, they're dreaming. It may drop one day to $60 for a few months, but on a long-term basis, in my view, with all the geopolitical problems, with the problems of finding new oil, with many oil fields having less and less production, in my view, the risk for oil is rather on the upside than the downside.

Thursday, August 14, 2014

Burn the Fed

Basically, I don't think they[Occupy Wallstreet protesters] should occupy Wall Street. They should go and burn down the Federal Reserve in Washington and hang up the ultra-dovish Fed governors that advocate even more money printing. That they should do. 

Wednesday, August 13, 2014

Marc Faber: Legalize drugs to reduce its appeal

In general, I believe that any kind of drug should be legalized and there would be less crime and probably less usage. I'm all in favor of legalizing drugs because all I see, and I've looked at it very carefully when I was in Mexico – the drug business is so incredibly profitable that there is widespread corruption, at the CIA, at the FBI, at the police force, in the military, and that is not a very desirable outcome.

If it was legalized, we would have far less crime and far less corruption. It's like during the Prohibition time – alcohol consumption if anything rose and there was much more crime and much more corruption. 

Monday, August 11, 2014

What we need to understand is this

I think we are in an economy that is on steroids – in other words, the money printing – and the money printing goes essentially to wealthy people. Of course, they spend and as a result of the asset bubbles, temporarily the economy improves worldwide but it's not sustainable growth. 

We have to realize that. So economically, I'm actually more pessimistic today than I have been in a long time. That does not imply that asset markets cannot go higher. That is a possibility and, in fact, I hope the US market goes ballistic and creates a gigantic bubble, which will then embarrass the Federal Reserve because every bubble eventually gets deflated. 

Wednesday, August 6, 2014

Marc Faber criticizes the Fed

Janet Yellen is the chief of the Fed
It would seem to me that whereas most fund managers are reasonably honest, a larger issue pertains to what extend central bankers ever consider honor in what they are doing: “the duty imposed by conscience, position, or privilege.” The Fed’s monetary policies have been to the detriment of a large segment of US households.

Monday, August 4, 2014

In bad times equities better than Govt Bonds

In general I'd say I'd keep some money in Real Estate as it is unlikely to be taken away, it maybe taxed but not taken away 100 percent. I'd keep some physical gold in a safe deposit, but not in the US. In general when everything goes bad, equities are better than government bonds and other bonds.

The MF Global mess should wake up people. The key is to have your funds and assets in a secure place and secure custodian, not someone that goes and gambles with your money. But who knows who gambles and who doesn't gamble.