Showing posts with label europe. Show all posts
Showing posts with label europe. Show all posts

Monday, January 21, 2013

Long Term Charts Thai Stock Market - January 2013 Update

This is a repost of the article found on CNX Translation forums.

6 months have gone since our last update, and its time again to update the long term charts of the Thai stock market.

The first chart is the SET index between 1975 and January 2013. Following other indices around the world, and despite my overvaluation view 6 months ago, the Thai stock market has continued its (unstoppable) rise in the last 6 months, and now stands at about 1440, a rise of about 40% since I started to become cautious.

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The PER is now around 18, mainly due to the stock market improvement. At 15, I started to be bearish, so at 18 it's extremely unusual for the Thai stock market. So either earnings have to go up substantially, either the stock market has to plunge, or a combination of the two.
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The price to book value slowly crept up to 2.4 which also starts to make Thai stocks overvalued, especially compared to what you get in other markets around the world. (European stocks have a P/B ratio around 1 now)
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To conclude, I believe the Thai stock market is relatively overvalued both historically, and compared to other stocks markets around the world. The dividend yield is now around 3% which is is that more than can get in a fixed deposit (Bangkok Bank now offers up to 2.65 % p.a for a 36 months fixed deposit), so why take the risk? There is also a lot of optimism around the world, which IMHO is not warranted, so I would not be surprised to see a massive correction in the Thai stock market within the next year.

Saturday, December 1, 2012

Marc Faber December 2012 Market Commentary

Marc Faber has just released his December 2012 market commentary "Always try to be a little kinder than Necessary" on gloomboomdoom.com.

This month report explains that something is clearly not quite right with the economy, as the recent performance of Wal-Mart, Tiffany, Genesco, and Kohl’s show. What concerns Marc Faber greatly is that most asset markets had outsized gains since early 2009, excluding Vietnamese, Chinese, Japanese, and European equities, as well as US housing. He believes that investors’ expectations about future returns are far too optimistic, and that in a world that currently hardly grows, investors will need to reduce their future return expectations. Therefore, 2013 will most probably not be a good year for holders of assets, and he has now shifted to the preservation of the outsized gains he has achieved over the last 3 years.

Marc Faber also wishes Merry Xmas to everybody and reminds his readers to try to be as nice and kind to other people quoting Albert Schweitzer: "Constant kindness can accomplish much. As the sun makes ice melt, kindness causes misunderstanding, mistrust, and hostility to evaporate." 

The monthly market commentary including one attachment:
  • The Fed’s Last Hope by Michael A. Gayed,Chief Investment Strategist at Pension Partners, LLC.
I cannot find the attachment, but Gayed mentions it in a marketwatch.com articles, and explains bonds have now very little value, and the relative advantage of dividend yields over bonds yields, will be bullish for stocks.

If you want to access the full Monthly Market Commentary (MMC) by Marc Faber, it is available for 300 USD per year.

Tuesday, July 17, 2012

Marc Faber: China is Weak, Don't Short Commodities and Buy Europe

Marc faber is interviewed on CNBC on the 15th of July to discuss the (fake) Chinese GDP number and his outlook on commodities and stocks

His view is that China economy is much weaker than  expected, and there should be some stimulus. He would not short Copper, because it can be easily manipulated, and rally in commodities could be in the making.

He sees good investment opportunities in Europe in countries such as Spain, Portugal and France.

Tuesday, June 19, 2012

GEAB 66: Global Systemic Crisis Red Alert !

Here are the highlights of GEAB 66 (June 2012) entitled "Red Alert Global Systemic Crisis September-October 2012 : When the 7 Jericho trumpets will blow for the world of before the crisis":
  • Red Alert Global Systemic Crisis September-October 2012 : When the 7 Jericho trumpets will blow for the world of before the crisis. LEAP 2020 team has never seen so many economic, financial and political factors converge at the same time and this leads them to issue a Red Alert for Autumn 2012.They see 13 factors:
    1. Global recession.
    2. Insolvency of the financial system in the West.
    3. Increasing Weakness of bank assets such as sovereign debts, real estate and CDS.
    4. Slump of international trade.
    5. Geopolitical tensions, especially in the Middle East.
    6. Long term global geopolitical deadlock at the UN.
    7. Rapid collapse of funded pension plans in the Western economies.
    8. Increasing political rifts in major economies (USA, China, Russia).
    9. Lack of "miracle" solutions like in 2008/2009.
    10. Complete lack of credibility for countries battling with high private and public debts.
    11. Failure to reduce the unemployment rate and long term unemployment
    12. Failure of both monetary and financial stimulus policies and austerity policies.
    13. Complete lack of effectiveness of G20, G8, Rio+20, OMC... meetings
  • Three economic-financial chocs at the heart of the heart of the historical choc of September/October 2012. "Taxmargeddon" will start in the US this summer, the City-Wall Street will have their own Bankia moment and QE will be too weak to be effective.
  • Temporal converge of 4 major geopolitical crises for September/October 2012.  LEAP 2020 anticipate the Iran war will take place this year, along with continued conflicts in Syria, and the Afghanistan/Pakistan debacle. After the Arab Spring last year, they foresee the Arab Autumn.
  • Strategic and operational recommendations. Need to re-adjust currency holdings,  stay invested in Gold, last chance to get out before massive stock market crash and major risk for banks. 
  • GEAB $ Index June 2012 - First time since 2006 : The US dollar goes up against the currency basket €, ¥, Ұ et R$ .
  • The GlobalEurometre - Results & Analyses. The majority of respondents think that a European solution to the crisis is better than national solutions (96% this month vs 91% last month)
The full GEAB 66 report (PDF format) is available to LEAP 2020 subscribers for 200 Euros per year for 10 new issues + the 6 issues published before subscription.

Sunday, June 10, 2012

Barron's Midyear Roundup: Marc Faber Markets Outlook

Now is the time for Barron's Midyear Roundup. They had 10 experts on their panel including Marc Faber. Here are Marc Faber's picks.

Investment/Ticker Price 6/6/12
Gold (spot, per ounce)$1,619.30
Goldcorp/GG40.24
Singapore REITS
Mapletree Comm Trust/MCTS$0.92
Frasers Centrepoint Trust/ FCT1.63
K-REIT Asia/KREIT0.98
Mapletree Logistics Trust/MLT0.98
Ascott Residence Trust/ART1.06
Cache Logistics Trust/CACHE1.03
Parkway Life/PREIT1.81

and what he had to say:
Are things really as bad as they look?

FABER: The global economy has slowed considerably. Europe is in recession, and growth in U.S. GDP might owe more to statistical aberrations than reality. In Asia, the Chinese economy has been decelerating sharply, which impacts China's trading partners and industrial commodity prices. Lower demand for commodities hurts commodity producers, whether in Argentina, Brazil, Africa, or Russia.
Will things get worse before they get better?
Yes, possibly much worse. Central bankers will argue that more stimulus is needed. But the crisis has occurred in large part because governments have grown excessively large. The private sector produces growth. When government is 40%, 50%, 60% of the economy, the economy won't perform well. If you cut government spending meaningfully, you produce more growth, although this can be painful in the near term. Canada took this course in the mid-1990s. The outlook is grim for the federal deficit in the United States. Regardless of who wins the election, there will be compromises. But spending cuts will be back-end loaded and tax increases will be postponed. We won't see a federal deficit below a trillion dollars for a long time.

What will the stock market do for the rest of this year?
Most markets peaked in May 2011. The S&P 500 fell to 1,074 by Oct. 4 from 1,370. Then we had a strong rebound with the index making a new high at 1,422. This high wasn't confirmed by other indexes, such as the Value Line Index, the Russell 2000, and the Dow Jones Transportation index. The S&P 500 is vulnerable at this level. I anticipate further weakness in the second half of the year. Corporate profits will disappoint. Some 40% of S&P 500 earnings come from overseas, and a large proportion are generated in Europe.
There is no resolution to the problem in Europe because no one wants to accept austerity. The best outcome for Greece probably would be to exit the euro zone. But the new Greek drachma would depreciate by 50% to 70% against the euro. The Greeks don't want their pensions paid in a depreciating currency. Nor do they want austerity, as their pensions and government salaries would be cut by 50%.
How will the stalemate end?
The breaking point could be three, four, five years away. The world is heading toward a major crisis. In the meantime, central banks can continue to print money and markets might move up. Since 2009 stocks around the world have more or less doubled. But the economy hasn't performed well, and the typical household hasn't been helped. With quantitative easing, money flows into the hands of relatively few people. I am very negative about the outlook longer term.
It is safest to buy U.S. Treasuries because the U.S. can print money. It will pay the interest. But you are earning only 1.6%, and the cost of living is increasing by about 5% a year around the world. You are getting a negative real return.
So you're recommending equities, despite the poor backdrop?
I still like my January investment picks. As a group, Singapore REITS look OK. Among them I like Mapletree Commercial Trust [MCT.Singapore], Frasers Centrepoint Trust [FCT.Singapore], K-REIT Asia [KREIT.Singapore], Mapletree Logistics Trust [MLT.Singapore], Ascott Residence Trust [ART.Singapore], Cache Logistics Trust [CACHE.Singapore] and Parkway Life [PREIT.Singapore].
I am also warming to gold shares. Gold corrected to $1,522 last December from $1,921 in September. It rebounded to $1,795 in February and is back down around $1,600. The correction could last longer, but given that governments will print more money, gold is relatively effective as a currency. My preference is physical gold, but I would also own some gold shares, which have been decimated. Goldcorp [GG] is attractive because most of its properties are in the U.S., Canada, and Mexico. The company isn't exposed to regimes that are talking about nationalizing resources. In general, stock markets are oversold. The U.S. government-bond market is overbought. The U.S. dollar is overbought, and gold is oversold near term.

 Source: http://online.barrons.com/article/SB50001424053111904470204577446414018834948.html

Monday, May 28, 2012

Marc Faber: Global Recession in Q4/2012 Q1/2013

Marc Faber is interviewed on CNBC on the 25th of May 2012.

He explains that the best solution would be for a Greek exit, but what's likely to happen is a softening of the German position and the start of Euro-bonds which would be negative for the Euro. However, currently the Euro and the stock markets are oversold and we should anticipate a counter trend rally.

He also mentioned that as everybody focuses on Europe, the real threat to the economy could be the slowdown in India and China.

Some analysts estimate that a Greek exit could lead to a 50% correction in European stocks, but Marc Faber disagrees and views this as a good outcome likely to be positive for stocks.

He then goes into technical analysis and explains that many stocks are breaking and we should except a significant recession, so significant that he's 100% sure there will be a global recession by Q4 2012/Q1 2014 and recommends to hide in US dollars.

Tuesday, May 15, 2012

GEAB 65: Global Systemic Crisis / H2 2012 – Convergence of 4 Explosive Factors: Banks-Stock Markets-Pensions-Debts

Here are the highlights of GEAB 65 (May 2012) entitled "Global Systemic Crisis / H2 2012 – Convergence of 4 Explosive Factors: Banks-Stock Markets-Pensions-Debts":

  • Global Systemic Crisis:Convergence of 4 Explosive Factors: Banks-Stock Markets-Pensions-Debts - Basically the SHTF for Western economies in the second semester of 2012 with bank failure, stock market crashes, pension funds and debt crisis.
  • Which languages should your child learn so that they are useful to him in 20 years? Forecast of the main languages used within Europe and in the World by 2030.
  • Strategic and operational recommendations. Gold will prevail in the long run, preservation of capital for retirees, time to exit the stock markets before complete chaos, don't blindly trust the banks and don't be trapped in sovereign bonds.
  • The GlobalEurometre - Results & Analyses. The majority of respondents think that large banks in their country may go bankrupt by the end of 2012 increases to 66% this month against 61% last month.
The full GEAB 65 report (PDF format) is available to LEAP 2020 subscribers for 200 Euros per year for 10 new issues + the 6 issues published before registration.

Thursday, May 10, 2012

Marc Faber: If the Market Makes New Highs, It Will Crash Like It's 1987

Marc Faber is interviewed on Bloomberg on the 10th of May 2012.

When asked if Greece will leave the Eurozone, he answered that it would be much better for Greece and the entire Europe, going even further Spain, Italy or even France should leave the Euro. European countries should all go back to their local currencies and trade internationally with the Euro. If you keeping bailout them out, it just compounds the problem. The public has just been brainwashed into thinking that there would be an economic catastrophe would the Eurozone break up, although it could just be th solution to the European crisis. He then comes hard on European bureaucrat saying they make the government in the U.S. look like an organization consisting of geniuses. The problem in European is too much debt and lack of fiscal discipline.

He has a bearish view on the economy, but investments in Europe might still go up if this print enough money. Speculators should look at high quality stock in Spain, Portugal and Italy, as the market is oversold.

There has been a minor correction in the US, but it could become more serious. A new high has been made in April (S&P at 1422), but technicals look bad and he does not see the S&P 500 making new high unless there is a HUGE QE 3. But if QE 3 occurs, and the markets make new highs, you can expect a massive crash like in 1987.

Monday, April 30, 2012

Marc Faber on Money Printing, Asset Allocation, Crude Oil and More

Here's a 2 part interview of Marc Faber by Future Money Trends uploaded on the 29th of April 2012.

In the first video, MArc Faber explains that money printing won't help the general population, but it will increase asset prices, so people who own assets will benefit. The other issue is that central banks can't control where the money go and as a consequence the unemployment rate has not improved much ion the US and in Europe, but people living in emerging economies have benefited.

When asked about equities, he said that also equities are not a good bargain right now, and we may have the high for the end on the S&P 500 at 1422, there is a big risk in not owning equities because of (you guessed it) money printing. He recommends to own some equities especially in Asia (dividends are good ~ 5 to 7%) possibly via ETFs, some precious metals, and for US residents, some real estate in the South of the US.

He concludes by explaining that eventually there will be a complete reset, a complete collapse because there is simply too much debt with bankrupt banks lending to bankrupt to governments and vice versa, and the Ponzi scheme will come to an end. In the second video, they discuss how the ponzi scheme could end. Marc thinks there could be significant price inflation, government may try to give more handouts to their citizen while increasing taxes on rich people, and eventually they'll go to war to put the blame on some other countries.

Then  they switch to discussing about crude oil. Marc Faber first explains that oil prices are volatile and much of it is due to government policy such as manipulating interest rates. When he looks at several aspect of the oil market (demand in the west flat, demand rising in emerging markets, supply constraint and geopolitical tensions in the middle east), he would rather be long on oil.

Marc then talks about  the declining standard of living of US citizen which has started some 30 to 40 years ago compared to the rest of the world and it will continue to fall.

Finally, he's asked what he would advice to young people in Western economies. It might not always be a good idea to borrow money to get a degree, but if your parents are rich enough to pay it, then go for it. He would then start to work for somebody successful in any industry and acquire knowledge. Obviously, you should choose something that you like. There are different kind of success, not only monetary, but a happy family, helping others may also be successes.

Friday, February 24, 2012

Jeremy Grantham's Quarterly Newsletter February 2012 Summary

Jeremy Grantham, GMO, has just released its Quarterly Newsletter entitled "The Longest Quarterly Letter Ever" a 15 pages report divided into 3 parts in contrast to his previous Letter "The Shortest Quarterly Letter Ever" with 4 pages only.

Part I: Investment Advice from Your Uncle Polonius
In the first part, which he could also have called "the 10 commandments of the individual investor", he gave 10 recommendations:
  1. Believe in history - Be patient and fair for assets to be at or below fair value
  2. Neither a lender nor a borrower be - Avoid leverage because it impacts an investor greatest asset: Patience
  3. Don't put all your treasure in one boat - If you diversify, your portfolio will be much more resilient
  4. Be patient and focus on the long term - Wait until markets are very cheap before making your move. Individual stocks usually recover, and markets always do.
  5. Recognize your advantages over the professional - Again, patience is your asset. Professional cannot wait to career and/or business risk (losing one's job or clients due to short term underperformance). You can afford to wait several years, professionals can't.
  6. Try to contain natural optimism - This is especially true for Australian and US investors that do not like to hear bad news
  7. But on rare occasions, try hard to be brave - You can't take bigger risks than professionals when markets are extremely mispriced even though it may come with pain in the short term.
  8. Resist the crowd: cherish numbers only - If you see your neighbors get rich during a bubble, do not jump on the wagon, follow some simple ratios that can help you estimate the markets over/udner valuation.
  9. In the end, it's quite simple.  Really - Workout simple ratios and follow them. For example, the meaning reversion of profit margins and price earnings ratios. GMO does that for the 7-year market forecast.
  10. This above all: To thine own self be true - Know yourself.  If you are easily influenced by others and cannot resist temptation during a bubble, you should NOT manage your own money.
Part II: Your Grandchildren Have No Value (And Other Deficiencies of Capitalism)

In the second section of the newsletter, Jeremy Grantham talks about the shortcomings of capitalism and how it focuses on short term gains and ignore long term pain. Examples are the current debt and resources depletion. The other problem is that capitalism buys (political) influence as was the case with tobacco companies that also insisted smoking tobacco was harmless, and now with energy companies that try to misinform the public and influence regulations.

The main problem, however, is capitalism inability to process finite resources and maintain rapid economic growth as it is mathematically impossible. Many people would cry foul if you say that a decline in population is necessary so that we can live peacefully. Some scientists also estimated that if Indian and Chinese were to catch the average American lifestyle, we would need 3 planets to live sustainably.

To conclude, he says that capital does thousands things better than other systems, but the 2 or 3 where it fails, could bring it down.

Part III: Investment Observations for the New Year

In the last part of the newsletter, he reflects on the year 2011 where most markets ended basically flat. Most equity markets are currently close to fair value, except the S&P 500 with expected returns of only 1% per year.

Overpricing exists in debt markets however. He sees great opportunities in avoiding duration in fixed income and recommend to underweight the most of the US market as a whole.
  • Inflation Hedges
 Although inflation is not an issue right now, it will certainly rear its ugly head soon enough.He recommends stocks, and especially things in the ground such as oild and copper as well as forestry and farmland. He also thins Gold may be a good hedge
  • Resources
Farmland has gone up a lot recently, especially in the US, and GMO is looking for opportunities in foreign markets.

On the other end, natural gas is dirt cheap and the natural gas to crude oil ratio (BTU equivalent) is now 14% which is the lowest in 15 year. Anybody with a brain should look into investing in natural gas. Unfortunately,  he did not give any specifics.

He also said that Gold producers look cheaper than Gold itself.
  • European Complexity
GMO could not comment on the European issue specifically because they do not consider themselves experts in "sovereign debt-regulation-political-monetary mess". However, one or two other companies  - which have a good track record on those issues - seem to be more worried than the rest of the market.

Finally, he gave GMO recommendations for the year ahead:
  • Heavily underweight U.S equities, but not the high quality quartile, which is almost fair price. Non-quality equities, in contrast, have a negative imputed 7-year return after their handsome rally in the last 3 months through to mid-February.
  • Slightly overweight other global equities, which are almost fair price, down from a little cheap at year end.
  • In total, be about neutral in global equities. Yes, there is more than our normal fair share of potential negatives lurking around, but on our data: a) most of the negatives are reflected in stock prices; and b) all fixed income duration is dangerously overpriced. This last situation is, of course, engineered by the Fed, which hopes to drive us all into taking more risk, notably by buying more equities. I hate to oblige, but at current equity prices it just makes sense to do what they want. As mentioned earlier, equities are also good long-term hedges against inflation.
  • Underweight as much as you dare long-term bonds, especially higher-grade sovereign bonds.
  • In the long term, resources in the ground, forestry, and agricultural land are attractive, but come with the usual caveats of the risk of short-term over pricing, so average in.
You can read the complete newsletter for free on GMO website.

Tuesday, January 31, 2012

Jim Rogers: Politicians Want To Fool Us This Year

Jim Rogers is interviewed by CNBC on the 30th of January 2012.

They firstly talk about bank bonuses, then about prospects for US and Europe in 2012. Jim Rogers is not worried about the Euro this year, because of the elections around the world, which will lead to more printing by the central banks and more spending by politicians.


Monday, January 16, 2012

Jim Rogers on Europe Ratings Downgrade

Jim Rogers interview on Russia Today on 16 January 2012 where he discusses the recent S&P downgrade of many European countries and what the future may hold if Europe breaks up.


Saturday, January 14, 2012

Marc Faber on US and Europe Credit Ratings

Marc Faber interview on CNBC on Friday 13th 2012.

As France lost its AAA ratings, they discuss what could happen in the Europe, which countries could leave, which ones could stay and how it may affect the Euro. Marc Faber also said that he was not interested in buying any kind of government debt, be it French or American.

He expects the rest of the world (including Europe) to start outperforming the US markets sometimes in 2012, as the US market has better performed than most countries in 2011.

Finally, in case a further deterioration of the economy he expect massive money printing over the world and favor dividend paying high-quality companies such as Total and Novartis.

Monday, December 26, 2011

Jim Rogers: Central Banks and Governments are Ponzi Schemes

Jim Rogers has been interviewed on BBC Radio on the 26th of  December 2011 where he explains that the current flow of money between the governments and central banks around the world is a "ponzi scheme, a fraud and a sham" and everything is going to get much worse in the end.


Here's the transcript of the interview:


Jim Rogers: Martin, it's very serious. America is the largest debtor nation in the history of the world and it's getting bigger and bigger by leaps and bounds at the rate of over $1 trillion a year. And in Europe you have several bankrupt countries and no one is dealing with the problem. If you look at the projections for all the European countries, none of them have reduced debt a year or two or three from now. So, this situation is serious and getting worse.
Martin Webber: Thinking back to the mid-1990s, capitalism seemed ascendant, western capitalism had triumphed over communism, economies were growing, stock markets were growing. Who do you blame for the fact that we have ended up in this mess?
Jim Rogers: Well, essentially it's governments and central banks; especially in the US they just kept spending money and the central bank just kept printing money. But there are several culprits.
Martin Webber: Who else apart from these authorities?
Jim Rogers: The government of United Kingdom, the central bank in the United Kingdom, the governments in places like Greece which used phoney bookkeeping, but also even Italy and France and Germany. They all started using phoney bookkeeping. They knew that the other countries were using phoney bookkeeping and they all said, oh it's okay, everything will be okay in the end.
So, the central banks and the governments were going hand-in-hand and spending money they did not have. Now, that's wonderful. It's great. It can cause huge growth. As you just pointed out, for 15 years you had great growth. But eventually, somebody has to come up with and pay for it, or eventually you just run out of other people's money.
Martin Webber: What seems to be going on at the moment is that central banks are creating money, lending it to banks, who are then lending it to governments in terms of buying their bonds because the private investors are no longer doing that. So you have got government owned institutions effectively buying government bonds. People don't seem to really understand what on earth can be going on?
Jim Rogers: It is a recipe for disaster. I am glad you pointed it out because there is nothing more authoritative than the BBC. It's a Ponzi scheme, it's a fraud, it's a sham and we are all going to have to - we are already starting to pay for it, Martin. It's going to be much, much worse in the end.
Eventually one of two things has to happen. We have to get together now and ring-fence the problem and figure out how we are going to survive and start over. Or, in a year or two or three, the market is going to say, no more money, we won't put up any more money. And then the whole system collapses, then you have gigantic chaos, social unrest, governments failing, civil war - huge mess.
Martin Webber: Let's try the more optimistic scenario. You say it is possible still to get a grip on this problem, what are the measures that need to be taken right now then to avoid the other scenario of civil war?
Jim Rogers: Well, at the moment some governments have credibility, Germany for instance still has credibility. And if they all got into a room together and Mrs. Merkel said, okay, you guys are going to fail, you have failed, and now you are going to fail. We are going to hold these banks, these companies up. We are going to make sure they survive. We are going to make sure bank deposits are okay. We are going to make sure checks continue to clear and the system will survive. Some of you are going to take huge losses and huge pain, but then we start over.
It would be a terrible two- or three-year period, Martin, but then the system could survive and we could rebuild after the people who have made mistakes take the losses. That's what capitalism is supposed to be all about. If you fail, you fail.
Martin Webber: And what are the mistakes then? Is it that the people who bought government bonds of France, Italy and all the other countries are going to have to take losses?
Jim Rogers: Absolutely. The banks who made these loans, and the bondholders who bought these loans, and the stockholders who own stock in these banks. They were making mistakes. They are all going to have to take huge losses. Now you are going to say, that's very painful, that's bad.
Well, I will remind you Martin that in the early '90s, Scandinavia had the same problem. They did exactly this. They ring-fenced everybody, many people failed, there was horrible pain, but after three or four years Scandinavia has been one of the great growth areas of the past 15 years or so. That's the way the system is supposed to work.
In Japan in the early '90s, they said nobody will fail. Well you know they have lost two decades in Japan. You know about zombie banks. You know about zombie companies. The Japanese way doesn't work. It is not going to work in America or Europe.
Martin Webber: So we got a situation there where people invested in banks lose money, presumably people with pensions who have investments in these banks lose money, and government bonds lose money too. But the politicians have a much nicer sounding solution it seems, which they have just come up with, which is that the European Central Bank creates money, lends it to the IMF and the IMF then lends it back to them. Sounds much nicer, doesn't it?
Jim Rogers: It sounds wonderful, doesn't it? But it is not based on reality. It's based on "Never Never Land." It's based on the "tooth fairy." Somebody has got to come up with real money somewhere along the line and payoff real debts somewhere along the line.
Martin Webber: But isn't that possible, that if you are the government, you can create as much money as you want because it's your money?
Jim Rogers: You certainly can. You can debase currency, and history is replete with governments that have debased their own currency and ruined their own currency for hundreds of - well for thousands of years it has been going on. You can do that and everything is okay for a while, but eventually you have inflation, you have high interest rates, you have currency turmoil, you have people no longer trusting each other to invest with each other, and then you have the end of the system, and we have chaos, and it starts over again.
Martin Webber: Is that not the more likely scenario in that the politicians never like to tackle problems. They are always interested in the next day's headlines. Isn't it more likely they will find yet another ruse to put off the day of reckoning?
Jim Rogers: Absolutely. You are a very insightful observer of the passing scene. That's exactly what they are going to do. If a politician ran on the platform, oh my gosh, we have got to take a lot of pain. Even if he won, Martin, which is very unlikely, but even if that politician won, after six months or a year or two of serious pain, he will be either thrown out or assassinated or something would happen because people would say this is too much pain. We didn't know you meant it was going to be this bad. Let's get out of this.
Martin Webber: Now many people say it's the euro that's at the heart of this crisis. They are calling it the "euro crisis." Is that how you see it?
Jim Rogers: No, absolutely not. It's not the euro. The world needs the euro or something like it to compete with the US dollar. We need another sound currency. The eurozone as a whole is not a big debtor nation. The eurozone has some debtor problems, some debtor nations, debtor states, but it's not a big, big problem. The euro is good for the world. It needs to work.
Martin Webber: Do you think in the past that political leaders were stronger, perhaps were less influenced by short-term considerations, had a greater feeling for the common good, perhaps the people themselves had a greater community spirit and would actually be happier to take austerity to understand you have to live within your means. Do you think in a way it's not just the political class, this is something at issue in society as a whole?
Jim Rogers: That's good observation, yes. We did have more discipline and more understanding in the past few decades, but that's partly because of the history of those decades. We remembered the First and Second World War. We remembered the Great Depression. We remembered what happened when you got too leveraged and couldn't pay your bills. We knew what happened when you debased your currency.
But now of course, since the Second World War, we have had two or three generations grow up who don't remember all of that, haven't read their history, politicians who didn't know anything about history at all and don't know anything about economics at all. So everybody thinks there's a free lunch.
Martin Webber: Do you think the media is to blame?
Jim Rogers: Well, the media are the same ones, Martin. I mean, you and everybody else grew up went to the same schools, had the same teachings and had the same period of good times. Since the Second World War, things have been pretty good in most of the western world, the developed world anyway, and we all grew up thinking, well this is the way the world is and it has been that way. But that's not the way the world has been for the past few thousand years.
Martin Webber: We have had this "Occupy Wall Street" movement emerging. Do you have any sympathy with any of the things that they are saying?
Jim Rogers: Well, I do have sympathy with the fact that they are saying, we shouldn't have bailed out the banks. I would have let all those banks go bankrupt, as you've heard me say before. But beyond that I don't have too much sympathy with them. You know, we all want a free lunch. I would like somebody to pay my bills too. I would like somebody to take care of me the rest of my life too.
Listen it's outrageous that the government took the money and saved the banks. Absolutely, they are right about that. It's outrageous, totally outrageous that governments went and bailed out some banker so they could keep their Lamborghinis and their summerhouses. But beyond that, I don't have too much sympathy with them.
Martin, whenever there are hard times, people look for somebody to blame. And they always blame the financial people, they always blame foreigners, and they always blame reporters. They always say, well if the reporters didn't write about this problem, we wouldn't have a problem. So be careful. Financial types get blamed first, the foreigners get blamed second, you are next.
Martin Webber: Okay. I am prepared.

Thursday, December 15, 2011

GEAB 60: Global Systemic Crisis: USA 2012/2016 : An Insolvent and Ungovernable Country

Here are the highlights of GEAB 60 (December 2011) entitled "Global Systemic Crisis: USA 2012/2016 : An Insolvent and Ungovernable Country ":
  • From the non-dismemberment of the Euroland to the dismemberment of the United Kingdom: The United Kingdom could be broken up with Wales and Scotland becoming independent countries.
  • The Future of the USA 2012/2016 : The United States are insolvent and ungovernable. The US dollar may drop by 30% against a basket of currencies.
  • Yearly evaluation of LEAP anticipations – 82% success in 2011
  • Strategic and operational recommendations - Currency trend reversal, gold constant and British pounds currency crisis by 2015.
  • The GlobalEurometre - Results & Analyses - 65% of respondents expect a collapse of the US dollar in 2012.
The full GEAB 60 (PDF format) is available to subscribers for 200 Euros per year (10 + 6 issues).

Friday, December 9, 2011

Marc Faber: The Best Would Be to Disolve Europe

Fox Business interview with Marc Faber on the 8th of December 2011.

He discusses about the Europe crisis, and possible solutions.
He thinks there could be dual currency. i.e for greece the Drachma and the Euro, like it is done in South America, where you can use both the local currency and the dollar.

Wednesday, December 7, 2011

6 Video Interviews With Jim Rogers

TheStreetTV has uploaded 6 short video interviews with Jim Rogers on the 6-7 December 2011.

2012 Investment Strategy


Fed Is the Worst Central Bank


Own Japanese Stocks for 2 to 3 Years


Adam Smith for President?


China's #1 Problem


Euro Will Survive 2012

Tuesday, December 6, 2011

Jeremy Grantham Quarterly Newsletter December 2011 Summary

Jeremy Granthan from GMO has just released its Quarterly Newsletters entitled "The Shortest Quarterly Letter Ever".

Yes, it's short, it's just 4 pages long and comprise a list of notes to himself, subject that he plans to write about mainly:
  • Caution is advised due to the situation in Europe.
  • The U.S., and to some extent the world, will not easily recover from the current level of debt overhang.
  • Western world will know a period of slow growth due to population dynamics and lack of savings especially in the US and the UK.
  • US income gap inequality.
  • Equity markets have been absolutely bombarded by bad news since last spring.
  • Profit margins are likely to decrease.
  • “No Market for Young Men.”: A market forecast of the market (S&P 500) based on previous bear market and showing it return below 1000 and staying there for about 10 more years.
  • Underweight equities until the market becomes cheap again or during the next 3rd year of the presidential cycle (2015) whichever comes first.

Finally he gives some recommendations:

  • Avoid lower quality U.S. stocks but otherwise have a near normal weight in global equities.
  • Tilt, where possible, to safety.
  • Try to avoid duration risk in bonds. For the long term they are desperately unattractive.
  • I like (personally) resources in the ground on a 10-year horizon, but I am nibbling in very slowly because, as per my Quarterly Letter on resources in April 2011, I fear a major short-term decline in commodities based on a combination of less bad weather – which has been bad, but indeed less bad – and economic weakness, especially in China. Prices have declined, often quite substantially, since that letter. However, I believe chances for further price declines in resources are still better than 50/50 as China and the world slow down for a while, and the weather becomes a bit more stable.
You can read the complete 4-page newsletter available for free on GMO website.

Wednesday, November 16, 2011

Jim Rogers: The US is Becoming More and More Dictatorial

Very interesting 40 minute interview of Jim Rogers by Alex Jones (prisonplanet.com).

They talk of the current economic situation in Europe and US, why Jim Rogers has move to Singapore (for is daughters), the loss of freedom in the US, Jim Rogers current investment themes (commodities), his views on Silver and Gold and more.






Tuesday, November 15, 2011

GEAB 59: Global Systemic Crisis: 30 Trillions USD Will Disappear By 2013

Here are the highlights of GEAB 59 (November 2011) entitled "Global systemic crisis: 30,000 billion US dollars in ghost assets will disappear by early 2013 / The crisis enters a phase of widespread discounting of Western public debt ":
  • Global systemic crisis: 30,000 billion US dollars in ghost assets will disappear by early 2013 / The crisis enters a phase of widespread discounting of Western public debt
As we come to the end of the second half of 2011, it is evident that 15,000 billion in ghost assets have gone up in smoke since last July, just as was anticipated by LEAP/E2020 (GEAB N°56). And, according to our team, this process figures to continue at the same rate throughout the year to come. Indeed we estimate that, with the introduction of a 50% discount on Greek government debt, the global systemic crisis has entered a new phase: that of the generalized discount on Western public debt and its corollary, the fragmentation of the global financial markets… Read public announcement
  • An on average 30% discount of Western debt between now and early 2013 ... without activation of sovereign CDSs, which appear a vast scam
According to LEAP/E2020, from now through the first quarter of 2013, Western public debt will be affected by a discount of 30% on average. This includes European debts (Euroland, the United Kingdom, the countries of Central and Eastern Europe) as well as the United States and Japan. Of an approximate $45,000 billion, this will mean an extra $15,000 billion that will be transformed into “ghost assets”, leading to a new shock for the global financial system, and contributing in particular to the decimation of Western banks — as anticipated in the GEAB N°58 — and to the loss of an additional $15,000 billion…
  • 2017 – End of the transatlantic relationship formed after 1945: The last US soldier leaves European soil
The same cause can produce totally inverse effects, depending on the original state of the systems under consideration. Thus we see that the current debt crisis in the Western world, in particular with regard to sovereign debts, will generate two inverse evolutions when it comes to the politics of defense, one playing out in the United States, another in Euroland...
  • Strategic and operational recommendations
. Financial sector (banks, insurance, pension funds, hedge funds): The trend is confirmed!
. Gold: Stay on course!
. Stock Market: Restrictions grow tighter!
. Commodities: Warning, danger!
. Currencies: Lurch ahead!
  • The GlobalEurometre - Results & Analyses
A major change can be observed in the emergence of a strong majority of respondents indicating that we are witnessing the establishment of Euroland governance (68%, as opposed to 48% the previous month)…

The full GEAB 59 (PDF format) is available to subscribers for 200 Euros per year (10 + 6 issues).