Tuesday, October 18, 2011

Another Marc Faber Shocker - Beacon Equity Research

The always-entertaining Marc Faber has done it again.  Speaking with CNBC’s Joe Kernen yesterday, the eclectic Swiss-born money manager from Chiang Mai, Thailand, blasted the American people for its whining, tantrums and bellyaching now that six decades of dollar hegemony has left a tab too enormous to pay.


The message to Americans who saw his appearance on CNBC, which, by the way, has quickly spread throughout the Web is: “Listen you lazy bugger, you need to tighten your belts, you need to save more, you need to work more for lower salaries.” A truly vintage Faber shocker.


Another guest, who was in studio, chimed in following the Faber rant, “Well, that’s essentially what David Cameron is saying in the United Kingdom and it doesn’t seem to be working too well, so far.”


“Yes, because no one wants to work in the UK,” Faber chuckled.


Looking a tad puffy in the eyes, Faber originally began the Kernen interview by noting that he had just been chatting with some “chums” with his “blonde” in Montreal, where he was telecast for the early-morning appearance at CNBC’s studio in New York.  So those familiar with Faber’s moods just knew several more quotable Faberisms were in the offing.


In between the colorful rhetoric, Faber said the present gyrations in the markets can be traced to a tightening of global liquidity brought about by European banks front-running the scheduled debt maturities time bombs in Greece and Italy (among other countries not evident on the radar due to transparency issues, bogus accounting and stress tests).  And when liquidity becomes tight, as happened in 2008, the risk-on trade comes off and the dollar trade comes back on—the knee-jerk reaction among traders that commodities guru Jim Rogers alluded to in his interview with Russia Today on Oct. 4.


“As far the dollar is concerned, the reason I’m actually quite positive is that global liquidity, despite of the fact that the ECB and the European governments will flood the market with liquidity to pay the sales out, that global liquidity is tightening,” said Faber.  “And whenever global liquidity is tightening, it’s bad for asset prices but good for the U.S. dollar as was the case in 2008.”


Faber blames policymakers and lobbyists for U.S. debt woes, suggesting to Occupy Wall Street protesters, without mentioning them by name, that attacking the free market system is misguided, but going after the architects of a failed crony capitalism system, instead, is understandable.


“As to that huge level of debts, I don’t see how the Western world, including the U.S., Japan and Western Europe can actually grow,” Faber explained.  “They’re going to stagnate. And when you have stagnation over a longer period of time, people start to ask questions and then they go after minorities. And Wall Street is a minority – they are a minority and anyone else would have done the same. They use the system. But they didn’t create the system. The system was created by the lobbyists and by Washington. So they should actually go to Washington and also occupy the Federal Reserve on the way.”


What the U.S. really lacks, according to Faber, is an iron-fisted ‘leader’ such as Singapore’s first prime minister, Lee Kwan Yew—the man who believed public caning was appropriate punishment for 40-listed criminal offenses.


“I’ll tell you what the U.S. needs,” Faber began to rant, as only he can.  “The U.S. needs a Lee Kwan Yew who stands in front of the U.S. and tells them, ‘Listen you lazy bugger, you need to tighten your belts, you need to save more, you need to work more for lower salaries’”


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