材料：beef short ribs （切成一指厚的薄片那种）
调料：韩国烤肉酱
准备时间：5分钟
烹制时间：15分钟
1）用韩国烤肉酱把小牛排腌1小时（我从韩超买的这种排骨酱，比较稀，但效果相当好）
2）小牛排在烤盘上平放好，把腌肉的酱淋一些在肉上面，再撒一点点盐、胡椒粉、蒜粉、和任何喜欢的香料。
3）放烤箱用broil的high档，烤8分钟
4）取出来把小牛排翻面，再烤6-8分钟。大功告成。
Tips：
烤肉的时候不垫锡纸比较好，垫了话会存水，颜色不好看，肉也会有点硬。
如果不想洗盘子一定要垫的话，中间把肉翻面的时候可以把水倒掉。
Kalbi Sauce
Tuesday, August 28, 2012
slow cooked salmon
slow cooked salmon
This recipe is SO easy and lazy that I’m not even going to give you the traditional formatted recipe. Improvise, make it your own and have fun. This is truly lazy at its finest. The salmon cooks on a bed of either sliced onions, citrus or herbs – the bed serves a purpose. When you slow cook salmon, some of the proteins break down and can cook out. The bed helps any fats and proteins drain away. Plus, the fish gets gently perfumed with whatever you use for the bed
4 (6 ounce) salmon fillets (1 per person) Choose ingredients below:
Seasonings
|
Bed
|
Finishing (after cooking, top with)
|
(PHOTO ABOVE) brush w/cooking oil, salt, pepper, ground coriander, top with orange slices
|
thin sliced oranges and onions
|
crushed macadamia nuts, mint
|
brush w/oil, salt, pepper, brown sugar
|
sliced ginger, green scallion sections
|
minced scallions
|
brush w/honey, salt, pepper
|
thin sliced fennel pulb
|
parsley, more thinly sliced fennel
|
(PHOTO BELOW) brush with honey, salt, pepper
|
sliced oranges, lemons
|
sweetened coconut flakes, diced mango, papaya, red onion, golden raisins
|
brush with oil, salt, pepper, garlic powder
|
sliced red onions
|
how to cook salmon low and slow
1. Preheat to 250F. Season salmon and let sit at room temperature for 20 minutes. <- important. Otherwise the time in the oven will be devoted to un-chilling your salmon, instead of cooking it. Grab a pan big enough to hold all fillets in single layer. Make bed of whatever ingredients you’ve chosen.
2. Place the salmon fillets on the bed you’ve made. Cook for 30 minutes. [if you're cooking more than 4 fillets, just add another 2 minutes per additional filet] To test for doneness, stick a sharp paring knife in, if it goes in an out very easily, its done. Even if you leave it in the oven for an extra few minutes, don’t worry, it is impossible to overcook the salmon this way….unless you, uh, leave it in the oven for a week.
3. Top with whatever finishing herbs, spices or ingredients you’ve chosen. After cooking, the salmon is going to look almost exactly the same as when you first put it in. Don’t worry, after 30 minutes in the oven it is cooked.
If you generally like your tuna seared, or you like your salmon “medium rare” – you must try this recipe. Low and slow really does capture and deliver what the ingredients should taste like exactly. The salmon still retains all of its gorgeous color, even when fully cooked. The texture and flavor is sublime!
Thursday, August 16, 2012
法式芥末烤新西兰羊排
法式芥末烤新西兰羊排 主料： 新西兰羊排 辅料： 面包糠、大蒜、番茄、番薯 调料： 鲜迷迭香、旗牌芥末、意大利黑醋、盐、黑胡椒粉、橄榄油。 做法： 1、用蒜碎、迷迭香、面包糠，加橄榄油混合在一起； 2、将羊排剔干净，用盐、黑胡椒腌制后，煎至3成熟； 3、在羊排外表抹芥末后，再裹上做好的香草包糠，放入烤箱（200℃）烤5分钟即可； 4、用炸番薯条、烤番茄配菜； 5、用意大利黑醋加橄榄油浇汁。[1]
Asparagus Recipe
Asparagus Recipe
Print OptionsPrint (no photos)Print (with photos)
Cook time: 10 minutesAdd to shopping listIngredients
1 bunch of medium sized asparagus, about 1 lb
2 Tbsp of the most exquisite extra virgin olive oil
2 Tbsp freshly grated Parmesan cheese
1 teaspoon lemon zest - freshly grated lemon rind
Salt and freshly ground black pepper
Method
1 Prepare the asparagus by rinsing them thoroughly, break off any tough, white bottoms and discard. Cut into 1 to 2 inch sections, slicing the asparagus at a slight diagonal.
2 Fill a medium sized saucepan half way with water, bring to a boil. Add the asparagus and reduce heat slightly to a simmer. Parboil the asparagus for exactly 2 minutes. Drain the hot water. While the asparagus are still hot, toss them in a bowl with the olive oil, Parmesan, and lemon rind. Salt and pepper to taste. Serve warm or room temperature.
Note that when you are working with so few ingredients, it's important to make sure they are of the highest quality.
Yield: Serves 4.
Tuesday, August 14, 2012
Monday, July 9, 2012
Shrip Paella
From Of Course
onion, chopped finely
red bell pepper, chopped roughly
garlic, sliced thinly
Valencia rice
chicken broth (use 3 cups)
parsley, minced
tomatoes, chopped roughly
shrimp, thawed
peas (use 1 cup)
lemon, cut into wedges
From the pantry
saffron (optional)
bay leaf (optional)
salt
black pepper
Directions
Please be sure to wash all produce.
1.Using a large skillet, add 2 tablespoons olive oil, 3/4 cups of onions, the bell pepper, and cook for 5 minutes over medium heat.
2.Add 2 cloves sliced garlic and 1 1/2 cups of rice. Stir for 2 minutes.
3.Add 3 cups broth, 1/8 teaspoon saffron (if using), 1/2 teaspoon salt, 1/4 teaspoon black pepper. Bring to a simmer, then add 2 tablespoons parsley, 1 bay leaf, and the chopped tomatoes. Stir and return to a simmer. Cover and reduce the heat to medium-low. Cook for about 20 minutes, then add shrimp and 1 cup of peas, cover again and cook for another 5 minutes.
4.Before serving, remove the bay leaf and taste the dish to determine if more salt is needed.
5.Serve in large bowls with lemon wedges on the side.
Sunday, July 8, 2012
Sunday, June 3, 2012
凉拌粉丝
凉拌粉丝一：粉丝两小把，黄瓜、油、盐、老陈醋、李锦记凉拌汁、李锦记“天成一味”生抽、蒜各适量。粉丝用温水泡软；黄瓜切丝；蒜拍碎，凉拌汁，生抽陈醋和盐倒在碗里拌匀。锅里放水，放少量盐和两滴油烧开，吧粉丝放进去煮一分钟至熟，捞起，过凉水或者放在风扇旁吹凉也可以。把晾凉的粉丝和第一步调好的酱汁拌匀，另外把炒锅烧热，放油和蒜末爆香，油烧至沸腾再把油和蒜末浇在粉丝上，撒上黄瓜丝，拌匀即可。
南瓜的做法
一、南瓜切成五六厘米的薄片,放在微波炉内高火,时间视南瓜的多少而定,直到南瓜八九分熟
二 、蛋黄弄碎洒点水放在微波炉中高火1分钟,打散
三、锅内放油,小火,把蛋黄放进去炒一下,直到起泡泡,然后把南瓜放在锅内翻炒,注意不要把南瓜炒得太碎,否则会影响美观哦,好了,起锅,一道香甜的蛋黄南瓜就做成了
二 、蛋黄弄碎洒点水放在微波炉中高火1分钟,打散
三、锅内放油,小火,把蛋黄放进去炒一下,直到起泡泡,然后把南瓜放在锅内翻炒,注意不要把南瓜炒得太碎,否则会影响美观哦,好了,起锅,一道香甜的蛋黄南瓜就做成了
Daily Menu
1. Microwave Fish, Water Cress with Chicken Broth
2. Shredded Toufu in chicken broth, 雪菜, 丝瓜毛豆.
3. Korean short rib grill, seaweed salad, rice, green
4. Sttoufer Lasignia
5. lamb chop, couscous, asparagus
6. Dumpling
7. 呛锅面, 鸡汤, 卷心菜, 肉丝, 面.
8. Dry sauteed shrimp, mushroom/tomato/green
9. Slow cook Salmon
1. Microwave Fish, Water Cress with Chicken Broth
2. Shredded Toufu in chicken broth, 雪菜, 丝瓜毛豆.
3. Korean short rib grill, seaweed salad, rice, green
4. Sttoufer Lasignia
5. lamb chop, couscous, asparagus
6. Dumpling
7. 呛锅面, 鸡汤, 卷心菜, 肉丝, 面.
8. Dry sauteed shrimp, mushroom/tomato/green
9. Slow cook Salmon
Rost Duck Leg
4 duck legs
• 3 spring onions, finely chopped
• 2 garlic cloves, crushed
• 3 tbsp. balsamic vinegar
• 3 tbsp. honey
• 2 tbsp. soy sauce
• Pinch of sea salt & a few peppercorns (if you have a mixture of pink & black peppercorns so much the better, but just ordinary black will do)
180, 1.5hours
4 duck legs
• 3 spring onions, finely chopped
• 2 garlic cloves, crushed
• 3 tbsp. balsamic vinegar
• 3 tbsp. honey
• 2 tbsp. soy sauce
• Pinch of sea salt & a few peppercorns (if you have a mixture of pink & black peppercorns so much the better, but just ordinary black will do)
180, 1.5hours
Inventory
1 三杯鸡
2 Etouffee
3 Peking Duck
4 Lamb chop
5. Rib eye steak
6. 西班牙海鲜饭
7. Shrimp, yellow squash
12 stouffle lasagna
13 special salad
14 Chinatown wenton soup
15 烤小排骨
16 鸡汤毛豆毛瓜
17 Microwave Fish
18 Clam Chowder
19 Bacon wrapped fish
20 Fish wrapped with veggie and pinenut
21 Corn Salad
22 Lamb and cuscus
23 Water cross ==============
1. 葱椒芋头
2. 阳葱鸡
3. 煮干丝
4. 油面筋塞肉
5. 12345排古
6. 葱油鸡
7. 小鸡顿磨姑
8. 咖哩土豆和牛肉
9. 百叶节烧肉
10. 麻油鸭
11. 红烧带鱼
12. 芋头烧肉
1 三杯鸡
2 Etouffee
3 Peking Duck
4 Lamb chop
5. Rib eye steak
6. 西班牙海鲜饭
7. Shrimp, yellow squash
12 stouffle lasagna
13 special salad
14 Chinatown wenton soup
15 烤小排骨
16 鸡汤毛豆毛瓜
17 Microwave Fish
18 Clam Chowder
19 Bacon wrapped fish
20 Fish wrapped with veggie and pinenut
21 Corn Salad
22 Lamb and cuscus
23 Water cross ==============
1. 葱椒芋头
2. 阳葱鸡
3. 煮干丝
4. 油面筋塞肉
5. 12345排古
6. 葱油鸡
7. 小鸡顿磨姑
8. 咖哩土豆和牛肉
9. 百叶节烧肉
10. 麻油鸭
11. 红烧带鱼
12. 芋头烧肉
Wednesday, September 28, 2011
Is US turning into Japan?
Interest rates close to zero and all the related issues are relatively new in the U.S. and Europe, but they’ve been around in Japan for two decades. So, many wonder if the U.S. is headed for Japan’s 20-years-and-running deflationary depression. And regardless, what does the Japanese experience tell us about living in this atmosphere?
The Japanese bubble economy was cruisin’ for a bruisin’, and its demise was aided by the Bank of Japan’s hike in interest rates, starting on May 31, 1989. Soon, exuberant real estate prices collapsed as did stock prices and economic growth nearly ceased. Lately, the earthquake and tsunami have added to Japan’s woes, at least on a short-term basis. Real GDP fell 1.3% in the second quarter from a quarter earlier at annual rates, following the 3.6% drop in the first quarter and the third quarter in succession to decline.
Similarities
There are a number of similarities that suggest that America is entering a comparable long period of economic malaise. The Age of Deleveraging forecasts a similar decade, at least quite a few years, of slow growth and deflation as financial leverage and other excesses of past decades are worked off. The recent downgrade of Treasurys by S&P parallels the first cut in Japanese government bond ratings in 1998, followed by S&P’s cut to AA-minus early this year and Moody’s reduction from Aa2 to Aa3 last month.
The recent slow growth in the U.S. economy—real GDP gains of 0.4% in the first quarter and 1.0% in the second—looks absolutely Japanese. Furthermore, the prospects of substantial fiscal restraint in the U.S. to curb the federal deficit is reminiscent of tightening actions in Japan in the mid- 1990s. The economy was growing modestly, but deficit- and debt-wary policymakers in 1997 cut government spending and raised the national sales tax to 5%. Instant recession was the result.
Big government deficits in recent years are another similarly between these two countries.
The U.S. net federal debt-to-GDP ratio is also headed for the Japanese level.
Japan’s gross government debt last year was 226% of GDP, far and away the largest ration of any G-7 country. All governments lend back and forth among official entities so their gross debt is bigger than the net debt held by non-government investors, and Japan does more of this than other developed lands. Still, on a net basis, its government debt-to-GDP is only rivaled by Italy’s and leaped from a mere 11.7% in 1991 to 120.7% in 2010. Is the U.S. far behind?
Japan, in reaction to chronic economic weakness, has spent gobs of money in recent years, much of it politically motivated but economically questionable, like paving river beds in rural areas and building bridges to nowhere. Is that distinctly different than the U.S. 2009 $814 billion stimulus package that was supposed to finance shovel-ready infrastructure projects when, in reality, the shovels had not even been made yet?
A key reason for the 2009 and 2010 U.S. fiscal stimuli and continuing deficit spending in Japan is because aggressive conventional monetary ease did not revive either economy. Zero interest doesn’t help when banks don’t want to lend and creditworthy borrowers don’t want to borrow. Both central banks found themselves in classic liquidity traps, so both resorted to quantitative ease, without notable success.
But Differences, Too
There are, then, many similarities between financial and economic conditions in the U.S. and Japan. Nevertheless, there are considerable differences that make Japan’s experience in the last two decades questionable as a model for America in future years. Note, however, that every time I visit Japan, I return convinced that I understand less about how they function than I did on the previous trip. I’m sure they behave rationally, but it’s a different rationale than in the West, or at least the one I understand.
The Japanese are stoic by nature, always looking for the worst outcome while Americans are optimistic—not as optimistic as Brazilians, but still prone to look on the bright side. Otherwise, why would the Japanese voters stand for two decades of almost no economic growth? Japanese are comfortable with group decision-making while Americans revere individual initiative, something the Japanese disdain. The nail that sticks up will be pounded down, is a favorite expression there. Perhaps because of this, the government bureaucracy in Japan is much stronger than in the U.S. while elected officials have less control and room for initiative.
Despite little economic growth, the Japanese enjoy high living standards.
And the Japanese are an extremely homogenous and racially-pure population. In a related vein, immigration visas don’t exist in Japan, so there’s nothing in Japan like the chronic shift of U.S. income to the top quintile. Nothing like the two-tier economic recovery that benefited top-tier stockholders in 2009-2010, but left the rest struggling with collapsing prices for their homes and high unemployment.
Fertility rates in Japan are about the lowest in the world and life expectancy is high. So the rapidly aging and declining population lack the innovation and dynamism of more youthful populations in the U.S. where immigration, legal and illegal, is high as are fertility rates.
The Japanese bubble economy was cruisin’ for a bruisin’, and its demise was aided by the Bank of Japan’s hike in interest rates, starting on May 31, 1989. Soon, exuberant real estate prices collapsed as did stock prices and economic growth nearly ceased. Lately, the earthquake and tsunami have added to Japan’s woes, at least on a short-term basis. Real GDP fell 1.3% in the second quarter from a quarter earlier at annual rates, following the 3.6% drop in the first quarter and the third quarter in succession to decline.
Similarities
There are a number of similarities that suggest that America is entering a comparable long period of economic malaise. The Age of Deleveraging forecasts a similar decade, at least quite a few years, of slow growth and deflation as financial leverage and other excesses of past decades are worked off. The recent downgrade of Treasurys by S&P parallels the first cut in Japanese government bond ratings in 1998, followed by S&P’s cut to AA-minus early this year and Moody’s reduction from Aa2 to Aa3 last month.
The recent slow growth in the U.S. economy—real GDP gains of 0.4% in the first quarter and 1.0% in the second—looks absolutely Japanese. Furthermore, the prospects of substantial fiscal restraint in the U.S. to curb the federal deficit is reminiscent of tightening actions in Japan in the mid- 1990s. The economy was growing modestly, but deficit- and debt-wary policymakers in 1997 cut government spending and raised the national sales tax to 5%. Instant recession was the result.
Big government deficits in recent years are another similarly between these two countries.
The U.S. net federal debt-to-GDP ratio is also headed for the Japanese level.
Japan’s gross government debt last year was 226% of GDP, far and away the largest ration of any G-7 country. All governments lend back and forth among official entities so their gross debt is bigger than the net debt held by non-government investors, and Japan does more of this than other developed lands. Still, on a net basis, its government debt-to-GDP is only rivaled by Italy’s and leaped from a mere 11.7% in 1991 to 120.7% in 2010. Is the U.S. far behind?
Japan, in reaction to chronic economic weakness, has spent gobs of money in recent years, much of it politically motivated but economically questionable, like paving river beds in rural areas and building bridges to nowhere. Is that distinctly different than the U.S. 2009 $814 billion stimulus package that was supposed to finance shovel-ready infrastructure projects when, in reality, the shovels had not even been made yet?
A key reason for the 2009 and 2010 U.S. fiscal stimuli and continuing deficit spending in Japan is because aggressive conventional monetary ease did not revive either economy. Zero interest doesn’t help when banks don’t want to lend and creditworthy borrowers don’t want to borrow. Both central banks found themselves in classic liquidity traps, so both resorted to quantitative ease, without notable success.
But Differences, Too
There are, then, many similarities between financial and economic conditions in the U.S. and Japan. Nevertheless, there are considerable differences that make Japan’s experience in the last two decades questionable as a model for America in future years. Note, however, that every time I visit Japan, I return convinced that I understand less about how they function than I did on the previous trip. I’m sure they behave rationally, but it’s a different rationale than in the West, or at least the one I understand.
The Japanese are stoic by nature, always looking for the worst outcome while Americans are optimistic—not as optimistic as Brazilians, but still prone to look on the bright side. Otherwise, why would the Japanese voters stand for two decades of almost no economic growth? Japanese are comfortable with group decision-making while Americans revere individual initiative, something the Japanese disdain. The nail that sticks up will be pounded down, is a favorite expression there. Perhaps because of this, the government bureaucracy in Japan is much stronger than in the U.S. while elected officials have less control and room for initiative.
Despite little economic growth, the Japanese enjoy high living standards.
And the Japanese are an extremely homogenous and racially-pure population. In a related vein, immigration visas don’t exist in Japan, so there’s nothing in Japan like the chronic shift of U.S. income to the top quintile. Nothing like the two-tier economic recovery that benefited top-tier stockholders in 2009-2010, but left the rest struggling with collapsing prices for their homes and high unemployment.
Fertility rates in Japan are about the lowest in the world and life expectancy is high. So the rapidly aging and declining population lack the innovation and dynamism of more youthful populations in the U.S. where immigration, legal and illegal, is high as are fertility rates.
Wednesday, August 3, 2011
Marc Faber’s May Outlook: Beware the False Breakout in Stocks
Swiss investor Marc Faber has just released his latest issue of the Gloom, Boom, and Doom Report where he discussed his outlook for the stock market, gold, emerging markets, and other financial topics. Here are a few highlights from the report:
1. Equity Markets–The markets may be giddy about stocks hitting new highs, but contrarian investor Marc Faber is having nothing of this. He is concerned that stocks will fall sharply in May and that the recent breakout in stocks will prove to be trap for the bulls. The markets are due for a correction and the technicals point to a weak market. In particular, Faber points to the decline in new 52 week highs as evidence of an unhealthy internal market. Right now, Faber would stay away from cyclicals, tech stocks, and banks. If you have to own stocks make sure it is something safe like consumer staples (MO, JNJ, PEP, KO, etc).
2. Gold & Silver—Still likes gold as a long-term investment and recommends dollar cost averaging every month regardless of the price. However, when it comes to silver, Faber is more cautious, noting the recent run-up in the price. He expects a 20%+ correction in the metals complex because the inflation trade has become too crowded.
3. Commodities–Dr Copper is issuing a warning to investors. While the S&P 500 has made a new high, copper failed to do so (non-confirmation). This is a significant development because Dr Copper and the SP 500 have a very high correlation. This signal, along with the large declines in other commodities such as sugar and cotton, leads Faber to believe that stocks could follow commodities lower (in the short-term)
4. Buy Housing–While Faber thinks the US housing market has another 10% to fall, he would be a buyer because of attractive valuations. Faber compares the price of US housing to gold and concludes that housing has not been this cheap since the early 1980′s. But do not think there will be a quick recovery–there won’t be. The main point about housing is that it is a good inflation hedge and will likely keep its purchasing power of the next 10 years. In a serious inflation environment, Faber would rather own housing than paper dollars.
5. More QE Guaranteed–In Faber’s opinion, QE 3 is a near certainty. The US will be running trillion dollar budget deficits for the next 10 years. There is no way they can finance all of this through bond issuance. The Fed will have to at least partially monetize this to keep interest rates low.
1. Equity Markets–The markets may be giddy about stocks hitting new highs, but contrarian investor Marc Faber is having nothing of this. He is concerned that stocks will fall sharply in May and that the recent breakout in stocks will prove to be trap for the bulls. The markets are due for a correction and the technicals point to a weak market. In particular, Faber points to the decline in new 52 week highs as evidence of an unhealthy internal market. Right now, Faber would stay away from cyclicals, tech stocks, and banks. If you have to own stocks make sure it is something safe like consumer staples (MO, JNJ, PEP, KO, etc).
2. Gold & Silver—Still likes gold as a long-term investment and recommends dollar cost averaging every month regardless of the price. However, when it comes to silver, Faber is more cautious, noting the recent run-up in the price. He expects a 20%+ correction in the metals complex because the inflation trade has become too crowded.
3. Commodities–Dr Copper is issuing a warning to investors. While the S&P 500 has made a new high, copper failed to do so (non-confirmation). This is a significant development because Dr Copper and the SP 500 have a very high correlation. This signal, along with the large declines in other commodities such as sugar and cotton, leads Faber to believe that stocks could follow commodities lower (in the short-term)
4. Buy Housing–While Faber thinks the US housing market has another 10% to fall, he would be a buyer because of attractive valuations. Faber compares the price of US housing to gold and concludes that housing has not been this cheap since the early 1980′s. But do not think there will be a quick recovery–there won’t be. The main point about housing is that it is a good inflation hedge and will likely keep its purchasing power of the next 10 years. In a serious inflation environment, Faber would rather own housing than paper dollars.
5. More QE Guaranteed–In Faber’s opinion, QE 3 is a near certainty. The US will be running trillion dollar budget deficits for the next 10 years. There is no way they can finance all of this through bond issuance. The Fed will have to at least partially monetize this to keep interest rates low.
Monday, July 18, 2011
Financial Sense Newshour
In the deflationist scenario, you don’t want to be in US govt. bonds & cash. In that scenario, the fiscal deficit would deteriorate greatly. If the Dow went below 1000, we would be in a total economic collapse where tax revenues would fall off a cliff. So even in the deflationist scenario you don’t want to be in the long end of the government bond market.
In the 50s and 60s, people were more free. Now, we have police states in the West, where restrictions are rather onerous. Also, back in the 50s & 60s, the Bretton Woods System restricted the potential for severe inflation.
‘What is money?’ is a big question. Generally speaking, it’s a medium of exchange, a store of value and a unit of account. Gold is a much better store of value than the dollar. As a unit of account, the dollar is poor. Has the US really been growing at 3% per annum?
The standard of living for the average US household has gone down over the past 20 years. Relative to the rest of the World, the peak of US prosperity occurred in the 1950s. It’s very difficult to measure economic growth and prosperity.
The Emerging Markets used to be way behind the US. Now, the infrastructure in the Emerging Markets is way better than in the US. The US have grossly underinvested in infrastructure.
The US has survived on the continued expansion of borrowing to offset declining income in real terms. Now the power to borrow is gone.
Europeans & Americans are generally complaining about onerous regulations.
On the one hand you have money printing & expansionary fiscal policies. On the other, you have more and more regulation. The small businessman, who can’t employ an army of lawyers and accountants have no appetite to hire. They say that the more tax they pay, the more the government will harass them!
In Asia, there exists the opposite scenario: There is relative economic freedom insofar as you don’t criticise the government. A great quality of the US is that you can pretty much say what you want.
The likelihood of a hyperinflation has increased. If you go back to Jan 2011, would you have thought that the Middle East would blow up as it has? Would you have thought that the NATO countries would go to war against an idiot in Libya? He’s just one of many idiots, if you go after a country like Libya, you may as well go against 180 countries in the world!
The Western press is focussed on how to ‘contain’ China. One way is to control oil in the middle east; for then they can switch on the tap, or close it. The Allies have gone to the Middle East to attempt to gain control of the Oil. But this costs a lot! They’re not in a position to finance the war unless they print money. So we’re likely to see higher inflation.
Bernanke has some knowledge about economic contraction & expansion in a closed system. But he has no clue about the international system!
The more the US will print money, the more the dollar will depreciate against gold, silver, platinum & palladium.
Bernanke is a typical academic. He knows about everything in theory, but no clue about the real world.
A bubble occurs after several years of price increases. At the tail end of the trend, you get an annual appreciation that almost goes vertically. This hasn’t happened in the gold market.
Most people have sold their gold according to Marc Faber’s feedback from his subscribers at gloomboomdoom.com
Marc Faber was at a popular resource conference recently. He asked how many people had more than 5% invested in gold and only about 5 in 400 raised their hands!
If Marc Faber had to have one asset over the next 10 years, he would own gold (for maintenance of purchasing power) or equities (for profits).
It’s important to diversify your assets geographically. Political changes can completely wipe you out if you keep it all in one country.
It’s extremely difficult to get a bank account overseas if you’re an American. Officially there is a free foreign exchange market, but unofficially there are foreign exchange controls.
Easy monetary policies create greed & bubbles. One of the symptoms is fraud & embezzlement. Fannie Mae & Freddie Mac were frauds.
Money Printing in the US has produced bubbles elsewhere in the world.
Do what the Jews do! Marc Faber’s jewish friends have lots of gold and silver. Marc Faber has around 20% in gold & silver & mining stocks.
All this being said, we should note that a correction can occur!!!
In the previous gold bubble, everyone watched gold all day and all night! We don’t have a heavy euphoria yet.
America is a great place with great people. It’s only the Government that’s awful!
In the 50s and 60s, people were more free. Now, we have police states in the West, where restrictions are rather onerous. Also, back in the 50s & 60s, the Bretton Woods System restricted the potential for severe inflation.
‘What is money?’ is a big question. Generally speaking, it’s a medium of exchange, a store of value and a unit of account. Gold is a much better store of value than the dollar. As a unit of account, the dollar is poor. Has the US really been growing at 3% per annum?
The standard of living for the average US household has gone down over the past 20 years. Relative to the rest of the World, the peak of US prosperity occurred in the 1950s. It’s very difficult to measure economic growth and prosperity.
The Emerging Markets used to be way behind the US. Now, the infrastructure in the Emerging Markets is way better than in the US. The US have grossly underinvested in infrastructure.
The US has survived on the continued expansion of borrowing to offset declining income in real terms. Now the power to borrow is gone.
Europeans & Americans are generally complaining about onerous regulations.
On the one hand you have money printing & expansionary fiscal policies. On the other, you have more and more regulation. The small businessman, who can’t employ an army of lawyers and accountants have no appetite to hire. They say that the more tax they pay, the more the government will harass them!
In Asia, there exists the opposite scenario: There is relative economic freedom insofar as you don’t criticise the government. A great quality of the US is that you can pretty much say what you want.
The likelihood of a hyperinflation has increased. If you go back to Jan 2011, would you have thought that the Middle East would blow up as it has? Would you have thought that the NATO countries would go to war against an idiot in Libya? He’s just one of many idiots, if you go after a country like Libya, you may as well go against 180 countries in the world!
The Western press is focussed on how to ‘contain’ China. One way is to control oil in the middle east; for then they can switch on the tap, or close it. The Allies have gone to the Middle East to attempt to gain control of the Oil. But this costs a lot! They’re not in a position to finance the war unless they print money. So we’re likely to see higher inflation.
Bernanke has some knowledge about economic contraction & expansion in a closed system. But he has no clue about the international system!
The more the US will print money, the more the dollar will depreciate against gold, silver, platinum & palladium.
Bernanke is a typical academic. He knows about everything in theory, but no clue about the real world.
A bubble occurs after several years of price increases. At the tail end of the trend, you get an annual appreciation that almost goes vertically. This hasn’t happened in the gold market.
Most people have sold their gold according to Marc Faber’s feedback from his subscribers at gloomboomdoom.com
Marc Faber was at a popular resource conference recently. He asked how many people had more than 5% invested in gold and only about 5 in 400 raised their hands!
If Marc Faber had to have one asset over the next 10 years, he would own gold (for maintenance of purchasing power) or equities (for profits).
It’s important to diversify your assets geographically. Political changes can completely wipe you out if you keep it all in one country.
It’s extremely difficult to get a bank account overseas if you’re an American. Officially there is a free foreign exchange market, but unofficially there are foreign exchange controls.
Easy monetary policies create greed & bubbles. One of the symptoms is fraud & embezzlement. Fannie Mae & Freddie Mac were frauds.
Money Printing in the US has produced bubbles elsewhere in the world.
Do what the Jews do! Marc Faber’s jewish friends have lots of gold and silver. Marc Faber has around 20% in gold & silver & mining stocks.
All this being said, we should note that a correction can occur!!!
In the previous gold bubble, everyone watched gold all day and all night! We don’t have a heavy euphoria yet.
America is a great place with great people. It’s only the Government that’s awful!
Friday, July 15, 2011
Marc Faber again, I started to get crazy about Marc again.
The Daily Bell is pleased to present an exclusive interview with Dr. Marc Faber.
Introduction: Dr. Marc Faber was born in Zurich, Switzerland. He went to school in Geneva and Zurich and finished high school with the Matura. He studied Economics at the University of Zurich and, at the age of 24, obtained a Ph.D in Economics magna cum laude. Between 1970 and 1978, Dr. Faber worked for White Weld & Company Limited in New York, Zurich and Hong Kong. Since 1973, he has lived in Hong Kong. From 1978 to February 1990, he was the Managing Director of Drexel Burnham Lambert (HK) Ltd. In June 1990, he set up his own business, MARC FABER LIMITED, which acts as an investment advisor, fund manager and broker/dealer. Dr. Faber publishes a widely read monthly investment newsletter THE GLOOM, BOOM & DOOM report which highlights unusual investment opportunities. A regular speaker at various investment seminars, Dr. Faber is well known for his "contrarian" investment approach. He is also associated with a variety of funds.
Daily Bell: Thank you for sitting down with us today. Please give us some background. Where were you born? Where did you grow up?
Marc Faber: I grew up in Geneva and Zurich.
Daily Bell: You obtained, at the age of 24, a Ph.D. degree in Economics, magna cum laude. What drove you to accomplish such a feat?
Marc Faber: Well, I passed all my classes not because I was particularly bright but because you have to study what is most important to the work you are interested in doing. I also studied economics, and in those days you didn't have to study more than four years, so I was able to finish relatively early.
Daily Bell: For a while, you worked for the famous White Weld & Company Limited that caused the paper crunch.
Marc Faber: I started with White Weld in 1970 and then in 1978 they were taken over by Merrill Lynch and then I worked for Drexel Burnham.
Daily Bell: You worked in New York City, Zürich and Hong Kong. What was that like?
Marc Faber: In the early 70s, New York was the leading financial center. When I moved to Asia in 1973, Asia was still very poor. Countries like Taiwan, South Korea and Singapore had very poor infrastructure and were still essentially run by "Dictators.". I felt, based on the experience and the rise of Japan in the 50s and 60s, that other countries in Asia were going to grow very rapidly, so I stayed on, mostly in Hong Kong and throughout Asia.
Daily Bell: You moved to Hong Kong in 1973, and became a managing director at Drexel Burnham Lambert Ltd. Hong Kong. You were there throughout. Did Drexel get a bad rap? What about Mike Milken? What do you think of Drexel these days?
Marc Faber: Well I think Mike Milken was a financial genius. I have great admiration for him and his ability to work under enormous pressure. At the end, he had lawsuits, he was defending himself; Drexel Burnham had lawsuits and he was still trading bonds every day. He had unusual abilities to function under very heavy pressure but, obviously, the firm and his department did a few things that were not entirely above the board. I wouldn't think, when looking at what has happened in the last few years, he deserved to go to jail. There are many people that committed far larger financial fraud, or at least contributed to irregularities, that have never gone to jail in the last few years or up to this day. The penalty was disproportionate.
Daily Bell: In 1990 you set up your own business, Marc Faber Limited, now in Thailand. Why there?
Marc Faber: I moved to Thailand in 2000. I still keep an office in Hong Kong.
Daily Bell: Who gave you the title "Doctor Doom?"
Marc Faber: Well, I had predicted the 1987 crash and then it happened and then I was predicting in '88 and '89, the crash of Japan. The first person who gave me the name was Nury Vittachi. He was a journalist at the South China Post and an author of several books; he also had a very popular column in the Post, called "Lai See."
Daily Bell: A book written by Nury Vittachi was entitled Doctor Doom - Riding the Millennial Storm - Marc Faber's Path to Profit in the Financial Crisis. Do you still work with Vittachi? What was the book about?
Marc Faber: The book is a personal account of my life in Hong Kong in the 1980's, but I believe it was published in the early '90's.
Daily Bell: Your company, Marc Faber Limited, acts as an investment advisor, concentrating on value investments. Are there lots of value investments today? Would you elaborate on your investing philosophy?
Marc Faber: Well I think when we talk about value, there is value in the purchase of certain assets if they are depressed and neglected. I also suppose there is value in selling short if assets are way above what I would call an equilibrium price or way above the trend line price. So, value can be interpreted in many different ways. You cannot be too rigid. I don't think there is a clear-cut definition of what value is and each analyst has to decide for himself where he finds value.
In general, value will emerge when things look bad for a corporation or a country or an industry, because market prices will fluctuate more than the fundamentals. In other words, if you look at the price of gold and you look at gold shares, the gold shares will be more volatile than the gold price. Or look at the price of real estate; the price of real-estate related companies will overshoot and undershoot. Some unusual opportunities eventually arise, either on the short or on the long side.
Daily Bell: You also act as a fund manager to private wealthy clients. What do you recommend to them? Why do they come to you?
Marc Faber: The clients I have now, I have had for 20 years. I haven't taken new clients for 12 years. They come to me because they recognize that I have a slightly different investment strategy than most portfolio managers or funds managers. They are remunerated according to whether they beat the index or not. So, if the index is up 20% and the fund manager is up 22%, he's done a good job. Or if the index is down 30% and he's down only 29%, he's done a good job. My clients are different. They want to see a return every year, even if the return is modest.
Daily Bell: Your current – if eccentric – tag-line is: "buy a $100 US bond and frame it to teach your children about inflation by watching the US bond value diminish to almost nothing over the next 20 years." Why are you negative about US Treasuries?
Marc Faber: We have to distinguish the short term and the long term. I think about two months ago, I turned quite positive for US Treasuries. But obviously long term, at less than 3% yield on a ten year US Treasury, I don't see any value. I think that interest rates in time will be much higher because the fiscal deficit will stay very elevated or even increase and that will impair the ability of the government to pay the interest. If the ability to pay the interest is impaired, there's only one way out and that is for them to print money, and so eventually you will get higher interest rates.
Daily Bell: What caused the crash of 1987? Was it caused by a currency agreement between the Reagan White House and Japan? Please tell us about that.
Marc Faber: Well I am not sure what caused the crash but the market started to go down in August '87. The market had become immensely over bought and there was a lot of speculation and investor sentiment played on one side – the bullish side. So I think a correction was easy to predict and that the crash would happen. As I said, it was an accidental thing, but I had predicted it and then it happened one week later. In other cases, like the NASDAQ or the Japanese market crash, it took longer.
Daily Bell: You predicted the rise of oil, precious metals, other commodities, emerging markets and especially China in your book Tomorrow's Gold: Asia's Age of Discovery. How did you know?
Marc Faber: Basically, commodities move in long-term cycles and they had peaked out in 1980. After 1980, they had been in a downtrend, including oil and industrial commodities. When the incremental demand from China kicked in, it was an easy call to say, "eventually commodities will go up," given a 20-year bear market and they were extremely inexpensive compared to NASDAQ stocks.
Daily Bell: You also correctly predicted the slide of the U.S. dollar since 2002.
Marc Faber: The US has essentially one advantage and that is they issue their governments debt in US dollars. In other words, they have no mismatch of assets and liabilities. So, that's imperative to printing money. When you read the notes and the speeches from Mr. Bernanke, it's very clear that he would rather take the weaker dollar, than to have domestic style deflation. So, I think that there are several factors that point to a declining dollar, but I have to say the other currencies are not much better. I would also say the purchasing power of the Euro has gone down, along with the purchasing power of the Swiss franc, which has also dropped when we measure what kind of basket of goods we can buy in Switzerland today compared to 10 years ago.
Daily Bell: You said at one point there were no value investments left except for farmland and real estate in some emerging markets. Do you still believe this?
Marc Faber: I think that I was lucky because I kind of predicted the 2008 financial crisis; it took a while until it happened and I was worried about it for a number of years. If someone today would receive a billion dollars, it will be quite difficult to make a lot of money in the next 10 years. I am not saying if he puts the whole billion in gold, maybe gold will go up or if he puts the whole billion in silver, silver will go up. It would be quite risky for an investor to put the billion in one asset. Even if he diversifies, I don't think he will make a lot of money.
I think we had the collapse of the financial system in 2008; the failed institutions and failed system were bailed out by government. Ultimately governments will fail. The US and Europe will print money, and when everything fails, they'll go to war and then we have the complete collapse.
Daily Bell: You said in 2007 there was going to be a crash, but you also said US equities were only moderately overvalued. Would you tell us more about that?
Marc Faber: The market based on price earnings was not incredibly over valued. What concerned me was the over-valuation in real estate and in financial stocks. The overall market wasn't selling at 80 times earnings, like Japan in '89 or the NASDAQ in March 2000. From that point of view, there wasn't a tremendous over-valuation. What was happening in 2008 was that there was an earnings collapse in the financial sector.
The financial sector accounted at the peak in 2007 for over 40% of S&P earnings and obviously the S&P earnings collapsed. 2008 was not really a financial crisis and we have come out of it. In 2007, there wasn't a huge over-valuation, but there was a concentration of money in the financial sector.
Daily Bell: Do you still expect hyperinflation?
Marc Faber: In my view, the debt level, especially in the US, if we include the unfunded liabilities of Medicare, Medicaid, Social Security and these entitlement programs, is beyond repair. And this will necessitate printing more money. Also, in my view, there is no real political will to address the issues, because who ever would cut entitlements, will not be re-elected. So we have a tyranny of the masses.
Daily Bell: Did you miss the stock market rally of the last two years?
Marc Faber: No, as I said, I felt positive in March 2009. Starting about a year ago, I became more cautious. Since February of this year, I am kind of concerned that the market is building something more significant than just a short downturn correction. This is a distribution phase and for the market to make a new high, above the recent high, will be difficult.
Daily Bell: What has been your position on gold and silver? Do you expect the purchasing power of either or both to go higher?
Marc Faber: Well I basically focus more on gold than silver, although I am on the board of a company, Sprott Inc., that is identified with a very bullish view of silver. I prefer gold. My view is, yes, I have been positive for gold for the past 10 or 12 years and I could make a case that gold today is cheaper than it was in 1999 when it was at $252. Cheaper in the sense that if I compare gold to international reserves or to the increase in the credit markets in the world, I don't think it's expensive. And yes, I think it will go higher or, expressed differently, that paper currencies will go lower against the value of gold. But this will be an irregular process, and along with this move into US Treasuries and away from risky assets, I wouldn't be surprised if the price of gold went down $200. It's not necessarily a prediction, it just wouldn't surprise me.
Daily Bell: Tell us about your report. Why you named it what you did and how people can get it.
Marc Faber: I have two reports, the written, printed report called the Gloom, Boom and Doom report, which is relatively detailed and focuses on monetary issues. Then I have a website report which is sent out by email and people can inquire about it on the website, www.gloomboomdoom.com.
Daily Bell: Here is a famous quote: "The federal government is sending each of us a $600 rebate. If we spend that money at Wal-Mart, the money goes to China. If we spend it on gasoline it goes to the Arabs. If we buy a computer it will go to India. If we purchase fruit and vegetables it will go to Mexico, Honduras and Guatemala. If we purchase a good car it will go to Germany. If we purchase useless crap it will go to Taiwan and none of it will help the American economy. The only way to keep that money here at home is to spend it on prostitutes and beer, since these are the only products still produced in US. I've been doing my part." Is this really true?
Marc Faber: Well, actually beer is now mostly owned by foreign companies. In reality, America still has a very large manufacturing base and we shouldn't underestimate that; there are some very good companies in America. At the moment, it's meant as a joke. But it is true that the problem of America is consumerism. By encouraging this leverage on the consumer level, particularly in the housing market and on credit cards, which is the worst, America has lent to a consumer economy and an economy that doesn't spend enough on investment.
Investments are infrastructure expenditures. They are expenditures for education, research and development, and plants and equipment. A lot of money has been channeled into wasteful government administrations. The smaller a government is, the more dynamic the economy will be and the larger the government is, the more stagnant the economy will become.
There are exceptions to this rule. The Nordic countries of Norway, Sweden, Finland and Denmark, have very large governments but I suppose in small countries, you can run the country like a country club where people essentially develop solidarity and say OK, we pay high taxes – but we have very good health care; OK, we pay high taxes but we have very good schools for our children. So let's say in Norway and Finland you don't need to send your children to private schools, but in America it would be difficult to send your children to government schools because essentially they are inefficient.
Daily Bell: You serve as director or advisor of a number of investment funds that focus on emerging and frontier markets, including Leopard Capital's Leopard Cambodia Fund and Leopard Sri Lanka Fund. You seem to believe a lot in emerging markets. True?
Marc Faber: Yes. I think the world is in a gigantic transition. The growth will be in new economies, countries like India and China. This trend I think, will be with us for a very long time. It will be a contributing factor to geopolitical tensions because obviously the West will not be very happy to see its super power status diminish relative to the rest of the world.
Daily Bell: Would you say you are an Austrian when it comes to economics?
Marc Faber: Yes, but I think we can't be overly dogmatic in economics because certain things may work for one system and other things may not work in another system and so forth. Economics is a very complex system and is essentially human life and the behavior of humans. So to build one theory around it is probably wrong. Sure I am leaning more to the Austrian school, particularly when it comes to debt cycles. But I have sympathy for the Keynesian approach if, and this is a big question, IF it is implemented properly.
In other words, the business cycles will lead to excursions of prosperity and during these excursions into prosperity the system should build up reserves. Then when the excursion in depressions occurs below the trend line, use these reserves. But the problem with Keynesian economics has been that in the excursions into depression the reserves were always used but were never accumulated in the periods of prosperity, and so you build up larger and larger government debt and print more money; that is the problem. It's the problem of democracy.
Daily Bell: What do you think of Ludwig von Mises?
Marc Faber: I have a high regard for all the Austrian economists, but I also have a high regard for other economists. They made many contributions to the understanding of economics. I have little understanding when it comes to Ben Bernanke because he disregards the entire importance of credit and is obsessive about credit growth. Also Alan Greenspan, I mean, credit expanded much more rapidly in the past 30 years. This is not sustainable. Maybe for 10 years, but not in the long run. That they completely disregard the danger of leverage will always remain a mystery to me.
Daily Bell: Is there a cartel of wealthy banking families that runs the world? Are they located in the City of London? Do they by any chance seek one world government?
Marc Faber: I don't know. I think there are some very important banking dynasties for sure. People sometimes refer to them as the Rothschilds and that they have benefitted from wars – so I am not sure I would want a one-world government. When I compare my life today to the life I had in the 50s and 60s, we have much less freedom. Everything is regulated as the governments have become like a cancer; they keep expanding and regulating and dictating everything. In my opinion, this creates not a very favorable environment in the Western world.
Daily Bell: Is the EU going to collapse? Just the euro?
Marc Faber: This is a political question and it will depend on the political will. The euro in my opinion will weaken against the US dollar in the next couple of months and along with the dollar it will weaken against the price of gold in the long run.
Daily Bell: Is the dollar finished as the world's reserve currency?
Marc Faber: It's not finished as the world's reserve currency; it will continue to exist for a while. But obviously there will be competition and there will be currencies people trust more than the US dollar. I think the US dollar has lost prestige. When I think of the 50s or 60s, the US dollar was worth a lot of money and people trusted the US dollar and also the United States. At that time, it was by far the leading economy in the world; that prestige will continue to be eroded.
Daily Bell: What will take its place?
Marc Faber: That I don't know, but I think in Asia we will have currencies that will be important. I don't think we can have united currencies the way we have the Euro because there are numerous political disagreements from the expansion of the influence of China. Obviously, the Chinese currency will be an important currency in Asia.
Daily Bell: Do you have any thoughts on Real Bills? How about free banking?
Marc Faber: I think the idea that you have different banks issuing their own currencies is not a bad idea. The bank that has a very conservative balance sheet will have a strong paper currency and the ones with a weak balance sheet will have a weak currency. There is some merit between having competition this way, and we have that with currency issued by different governments. Some are more desirable than others, like Canadian dollars, Australian dollars, the Swiss Franc ... but that hasn't always been the case. In the US, because of the political process, I have my reservations, I think it's already too late.
Daily Bell: Are you hopeful about the world's economic future in the long term?
Marc Faber: I suppose the world will always develop but that we will always have periods where we have wars and tremendous wealth destruction, or where we have plague and where the population shrinks. I am optimistic about certain issues and pessimistic about others.
Daily Bell: What are you working on now?
Marc Faber: Every month I am writing my report, so I am always working on something. But I am not working on anything new or writing any books because I don't have the time. I will again in the future.
Daily Bell: Thank you for your time and a very interesting interview.
Daily Bell After Thoughts
This was a lot of fun. You have to read the interview closely, but if you do, you may start to sense a kind of musical quality in the way Dr. Marc Faber responds. Ask him a question and you get back free-form jazz riff, complete with prices, dates and macro- and micro-elaborations.
To be Dr. Marc. Faber is to have a head that is constantly processing data, comparing it to other data and putting it into a larger context. You can hear it if you listen. He's like Charlie Parker – "The Bird" – the great alto-saxophone composer. Ask Marc Faber a question and the answer just pours out of him. He may have an eidetic memory – remembering virtually everything about every day, at least as it relates to finance. He sure remembers a lot, specific prices, etc.
Interviewing him, one is reminded again that there are few accidents when it comes to achievement over time. People who have success, especially when it comes to investing, are usually pretty smart. That's not say there aren't plenty of fund managers who ride the market up and then all the way back down, but Faber has been doing what he does for decades and is still in business. He hasn't had the crutch of a big financial firm to support him. For the most part, he's done it on his own.
We found several quotes of his to be most thought provoking. The first one was this: "We had the collapse of the financial system in 2008; the failed institutions and failed system were bailed out by government. Ultimately governments will fail. The US and Europe will print money, and when everything fails, they'll go to war and then we have the complete collapse."
We surely agree!. We've written over and over that the dollar-reserve financial system basically died in 2008. The Federal Reserve and other central banks have by now apparently handed out tens of trillions in low-interest loans and outright "investments."
In fact, we've estimated that this financial "crisis" will eventually result in an aggregate of US$100 trillion being injected into the West's "free-market" economies by central banks and fiscally, too, before this current episode of fiat money insanity trickles to a close. Invest US$100 trillion into ANYTHING and you are basically re-setting the system, whatever it may be. You are showing, by your actions, that it doesn't exist anymore.
The ramifications are endless. Europe is collapsing. UK and America may be next. Unlike Dr. Faber, we expect China to collapse as well. Doesn't matter about the region or the cycle. China's financial system is Western – actually worse than Western. We don't believe you can trust a single Chinese number at this point. They're building empty cities and ghost highways throughout that vast country.
China is an inflationary accident ready to happen. We'll be surprised if the landing is soft. If it IS hard, like a bowling ball, it will knock down a lot of other economies as well. Europe is already teetering. America is on the brink. Japan is savaged. Imagine what a crash in China will do to Western economies.
If China does crash, or even if it doesn't, the US dollar reserve system is pretty much finished. Something else is in the air. Something else is destined to take its place. The "crisis" shows no sign of receding in our view; in fact, doubtless there will be more financial stimuli as time goes on. None of it will be any more effective than what has gone before.
The only solution, as Dr. Faber says (and as we regularly write), is war. And war is what we are starting to get. There will be more of it. Nothing else will suffice. The elites are desperate to retain their seat at the head of the table. Let chaos reign.
This brings us to the other quote we found interesting. Dr. Faber seems positive about John Maynard Keynes, a Fabian Socialist and Bloomsbury member who believed that the implementation of economic leveling was to take place via trickery in order to maintain the current system with its elite beneficences.
We differ. As believers in free-market thinking, we can't conceive that government interventions into the marketplace EVER result in anything good. In fact, this latest crisis shows once again that Keynes' approaches are basically bunkum. It is impossible for bureaucrats to save up currency in the "good" times to anticipate the bad ones. It's like asking a heroin addict to build up a stash in anticipation of scarcity. Won't happen.
But let us not quibble. We return to our fundamental observation that, like a great musician, Dr. Faber does what he does because he CAN – perhaps unconsciously. He makes market calls within a week of their occurrence. He turns a profit when others do not. He talks at one point about sensing where the market is headed. This is certain kind of talent. Investing as an art form.
It's interesting to listen to. Read between the lines and you may come to the conclusion as we did, that he's holding back in a few places. A smart guy. Success, no accident.
Reprinted with permission from The Daily Bell.
Introduction: Dr. Marc Faber was born in Zurich, Switzerland. He went to school in Geneva and Zurich and finished high school with the Matura. He studied Economics at the University of Zurich and, at the age of 24, obtained a Ph.D in Economics magna cum laude. Between 1970 and 1978, Dr. Faber worked for White Weld & Company Limited in New York, Zurich and Hong Kong. Since 1973, he has lived in Hong Kong. From 1978 to February 1990, he was the Managing Director of Drexel Burnham Lambert (HK) Ltd. In June 1990, he set up his own business, MARC FABER LIMITED, which acts as an investment advisor, fund manager and broker/dealer. Dr. Faber publishes a widely read monthly investment newsletter THE GLOOM, BOOM & DOOM report which highlights unusual investment opportunities. A regular speaker at various investment seminars, Dr. Faber is well known for his "contrarian" investment approach. He is also associated with a variety of funds.
Daily Bell: Thank you for sitting down with us today. Please give us some background. Where were you born? Where did you grow up?
Marc Faber: I grew up in Geneva and Zurich.
Daily Bell: You obtained, at the age of 24, a Ph.D. degree in Economics, magna cum laude. What drove you to accomplish such a feat?
Marc Faber: Well, I passed all my classes not because I was particularly bright but because you have to study what is most important to the work you are interested in doing. I also studied economics, and in those days you didn't have to study more than four years, so I was able to finish relatively early.
Daily Bell: For a while, you worked for the famous White Weld & Company Limited that caused the paper crunch.
Marc Faber: I started with White Weld in 1970 and then in 1978 they were taken over by Merrill Lynch and then I worked for Drexel Burnham.
Daily Bell: You worked in New York City, Zürich and Hong Kong. What was that like?
Marc Faber: In the early 70s, New York was the leading financial center. When I moved to Asia in 1973, Asia was still very poor. Countries like Taiwan, South Korea and Singapore had very poor infrastructure and were still essentially run by "Dictators.". I felt, based on the experience and the rise of Japan in the 50s and 60s, that other countries in Asia were going to grow very rapidly, so I stayed on, mostly in Hong Kong and throughout Asia.
Daily Bell: You moved to Hong Kong in 1973, and became a managing director at Drexel Burnham Lambert Ltd. Hong Kong. You were there throughout. Did Drexel get a bad rap? What about Mike Milken? What do you think of Drexel these days?
Marc Faber: Well I think Mike Milken was a financial genius. I have great admiration for him and his ability to work under enormous pressure. At the end, he had lawsuits, he was defending himself; Drexel Burnham had lawsuits and he was still trading bonds every day. He had unusual abilities to function under very heavy pressure but, obviously, the firm and his department did a few things that were not entirely above the board. I wouldn't think, when looking at what has happened in the last few years, he deserved to go to jail. There are many people that committed far larger financial fraud, or at least contributed to irregularities, that have never gone to jail in the last few years or up to this day. The penalty was disproportionate.
Daily Bell: In 1990 you set up your own business, Marc Faber Limited, now in Thailand. Why there?
Marc Faber: I moved to Thailand in 2000. I still keep an office in Hong Kong.
Daily Bell: Who gave you the title "Doctor Doom?"
Marc Faber: Well, I had predicted the 1987 crash and then it happened and then I was predicting in '88 and '89, the crash of Japan. The first person who gave me the name was Nury Vittachi. He was a journalist at the South China Post and an author of several books; he also had a very popular column in the Post, called "Lai See."
Daily Bell: A book written by Nury Vittachi was entitled Doctor Doom - Riding the Millennial Storm - Marc Faber's Path to Profit in the Financial Crisis. Do you still work with Vittachi? What was the book about?
Marc Faber: The book is a personal account of my life in Hong Kong in the 1980's, but I believe it was published in the early '90's.
Daily Bell: Your company, Marc Faber Limited, acts as an investment advisor, concentrating on value investments. Are there lots of value investments today? Would you elaborate on your investing philosophy?
Marc Faber: Well I think when we talk about value, there is value in the purchase of certain assets if they are depressed and neglected. I also suppose there is value in selling short if assets are way above what I would call an equilibrium price or way above the trend line price. So, value can be interpreted in many different ways. You cannot be too rigid. I don't think there is a clear-cut definition of what value is and each analyst has to decide for himself where he finds value.
In general, value will emerge when things look bad for a corporation or a country or an industry, because market prices will fluctuate more than the fundamentals. In other words, if you look at the price of gold and you look at gold shares, the gold shares will be more volatile than the gold price. Or look at the price of real estate; the price of real-estate related companies will overshoot and undershoot. Some unusual opportunities eventually arise, either on the short or on the long side.
Daily Bell: You also act as a fund manager to private wealthy clients. What do you recommend to them? Why do they come to you?
Marc Faber: The clients I have now, I have had for 20 years. I haven't taken new clients for 12 years. They come to me because they recognize that I have a slightly different investment strategy than most portfolio managers or funds managers. They are remunerated according to whether they beat the index or not. So, if the index is up 20% and the fund manager is up 22%, he's done a good job. Or if the index is down 30% and he's down only 29%, he's done a good job. My clients are different. They want to see a return every year, even if the return is modest.
Daily Bell: Your current – if eccentric – tag-line is: "buy a $100 US bond and frame it to teach your children about inflation by watching the US bond value diminish to almost nothing over the next 20 years." Why are you negative about US Treasuries?
Marc Faber: We have to distinguish the short term and the long term. I think about two months ago, I turned quite positive for US Treasuries. But obviously long term, at less than 3% yield on a ten year US Treasury, I don't see any value. I think that interest rates in time will be much higher because the fiscal deficit will stay very elevated or even increase and that will impair the ability of the government to pay the interest. If the ability to pay the interest is impaired, there's only one way out and that is for them to print money, and so eventually you will get higher interest rates.
Daily Bell: What caused the crash of 1987? Was it caused by a currency agreement between the Reagan White House and Japan? Please tell us about that.
Marc Faber: Well I am not sure what caused the crash but the market started to go down in August '87. The market had become immensely over bought and there was a lot of speculation and investor sentiment played on one side – the bullish side. So I think a correction was easy to predict and that the crash would happen. As I said, it was an accidental thing, but I had predicted it and then it happened one week later. In other cases, like the NASDAQ or the Japanese market crash, it took longer.
Daily Bell: You predicted the rise of oil, precious metals, other commodities, emerging markets and especially China in your book Tomorrow's Gold: Asia's Age of Discovery. How did you know?
Marc Faber: Basically, commodities move in long-term cycles and they had peaked out in 1980. After 1980, they had been in a downtrend, including oil and industrial commodities. When the incremental demand from China kicked in, it was an easy call to say, "eventually commodities will go up," given a 20-year bear market and they were extremely inexpensive compared to NASDAQ stocks.
Daily Bell: You also correctly predicted the slide of the U.S. dollar since 2002.
Marc Faber: The US has essentially one advantage and that is they issue their governments debt in US dollars. In other words, they have no mismatch of assets and liabilities. So, that's imperative to printing money. When you read the notes and the speeches from Mr. Bernanke, it's very clear that he would rather take the weaker dollar, than to have domestic style deflation. So, I think that there are several factors that point to a declining dollar, but I have to say the other currencies are not much better. I would also say the purchasing power of the Euro has gone down, along with the purchasing power of the Swiss franc, which has also dropped when we measure what kind of basket of goods we can buy in Switzerland today compared to 10 years ago.
Daily Bell: You said at one point there were no value investments left except for farmland and real estate in some emerging markets. Do you still believe this?
Marc Faber: I think that I was lucky because I kind of predicted the 2008 financial crisis; it took a while until it happened and I was worried about it for a number of years. If someone today would receive a billion dollars, it will be quite difficult to make a lot of money in the next 10 years. I am not saying if he puts the whole billion in gold, maybe gold will go up or if he puts the whole billion in silver, silver will go up. It would be quite risky for an investor to put the billion in one asset. Even if he diversifies, I don't think he will make a lot of money.
I think we had the collapse of the financial system in 2008; the failed institutions and failed system were bailed out by government. Ultimately governments will fail. The US and Europe will print money, and when everything fails, they'll go to war and then we have the complete collapse.
Daily Bell: You said in 2007 there was going to be a crash, but you also said US equities were only moderately overvalued. Would you tell us more about that?
Marc Faber: The market based on price earnings was not incredibly over valued. What concerned me was the over-valuation in real estate and in financial stocks. The overall market wasn't selling at 80 times earnings, like Japan in '89 or the NASDAQ in March 2000. From that point of view, there wasn't a tremendous over-valuation. What was happening in 2008 was that there was an earnings collapse in the financial sector.
The financial sector accounted at the peak in 2007 for over 40% of S&P earnings and obviously the S&P earnings collapsed. 2008 was not really a financial crisis and we have come out of it. In 2007, there wasn't a huge over-valuation, but there was a concentration of money in the financial sector.
Daily Bell: Do you still expect hyperinflation?
Marc Faber: In my view, the debt level, especially in the US, if we include the unfunded liabilities of Medicare, Medicaid, Social Security and these entitlement programs, is beyond repair. And this will necessitate printing more money. Also, in my view, there is no real political will to address the issues, because who ever would cut entitlements, will not be re-elected. So we have a tyranny of the masses.
Daily Bell: Did you miss the stock market rally of the last two years?
Marc Faber: No, as I said, I felt positive in March 2009. Starting about a year ago, I became more cautious. Since February of this year, I am kind of concerned that the market is building something more significant than just a short downturn correction. This is a distribution phase and for the market to make a new high, above the recent high, will be difficult.
Daily Bell: What has been your position on gold and silver? Do you expect the purchasing power of either or both to go higher?
Marc Faber: Well I basically focus more on gold than silver, although I am on the board of a company, Sprott Inc., that is identified with a very bullish view of silver. I prefer gold. My view is, yes, I have been positive for gold for the past 10 or 12 years and I could make a case that gold today is cheaper than it was in 1999 when it was at $252. Cheaper in the sense that if I compare gold to international reserves or to the increase in the credit markets in the world, I don't think it's expensive. And yes, I think it will go higher or, expressed differently, that paper currencies will go lower against the value of gold. But this will be an irregular process, and along with this move into US Treasuries and away from risky assets, I wouldn't be surprised if the price of gold went down $200. It's not necessarily a prediction, it just wouldn't surprise me.
Daily Bell: Tell us about your report. Why you named it what you did and how people can get it.
Marc Faber: I have two reports, the written, printed report called the Gloom, Boom and Doom report, which is relatively detailed and focuses on monetary issues. Then I have a website report which is sent out by email and people can inquire about it on the website, www.gloomboomdoom.com.
Daily Bell: Here is a famous quote: "The federal government is sending each of us a $600 rebate. If we spend that money at Wal-Mart, the money goes to China. If we spend it on gasoline it goes to the Arabs. If we buy a computer it will go to India. If we purchase fruit and vegetables it will go to Mexico, Honduras and Guatemala. If we purchase a good car it will go to Germany. If we purchase useless crap it will go to Taiwan and none of it will help the American economy. The only way to keep that money here at home is to spend it on prostitutes and beer, since these are the only products still produced in US. I've been doing my part." Is this really true?
Marc Faber: Well, actually beer is now mostly owned by foreign companies. In reality, America still has a very large manufacturing base and we shouldn't underestimate that; there are some very good companies in America. At the moment, it's meant as a joke. But it is true that the problem of America is consumerism. By encouraging this leverage on the consumer level, particularly in the housing market and on credit cards, which is the worst, America has lent to a consumer economy and an economy that doesn't spend enough on investment.
Investments are infrastructure expenditures. They are expenditures for education, research and development, and plants and equipment. A lot of money has been channeled into wasteful government administrations. The smaller a government is, the more dynamic the economy will be and the larger the government is, the more stagnant the economy will become.
There are exceptions to this rule. The Nordic countries of Norway, Sweden, Finland and Denmark, have very large governments but I suppose in small countries, you can run the country like a country club where people essentially develop solidarity and say OK, we pay high taxes – but we have very good health care; OK, we pay high taxes but we have very good schools for our children. So let's say in Norway and Finland you don't need to send your children to private schools, but in America it would be difficult to send your children to government schools because essentially they are inefficient.
Daily Bell: You serve as director or advisor of a number of investment funds that focus on emerging and frontier markets, including Leopard Capital's Leopard Cambodia Fund and Leopard Sri Lanka Fund. You seem to believe a lot in emerging markets. True?
Marc Faber: Yes. I think the world is in a gigantic transition. The growth will be in new economies, countries like India and China. This trend I think, will be with us for a very long time. It will be a contributing factor to geopolitical tensions because obviously the West will not be very happy to see its super power status diminish relative to the rest of the world.
Daily Bell: Would you say you are an Austrian when it comes to economics?
Marc Faber: Yes, but I think we can't be overly dogmatic in economics because certain things may work for one system and other things may not work in another system and so forth. Economics is a very complex system and is essentially human life and the behavior of humans. So to build one theory around it is probably wrong. Sure I am leaning more to the Austrian school, particularly when it comes to debt cycles. But I have sympathy for the Keynesian approach if, and this is a big question, IF it is implemented properly.
In other words, the business cycles will lead to excursions of prosperity and during these excursions into prosperity the system should build up reserves. Then when the excursion in depressions occurs below the trend line, use these reserves. But the problem with Keynesian economics has been that in the excursions into depression the reserves were always used but were never accumulated in the periods of prosperity, and so you build up larger and larger government debt and print more money; that is the problem. It's the problem of democracy.
Daily Bell: What do you think of Ludwig von Mises?
Marc Faber: I have a high regard for all the Austrian economists, but I also have a high regard for other economists. They made many contributions to the understanding of economics. I have little understanding when it comes to Ben Bernanke because he disregards the entire importance of credit and is obsessive about credit growth. Also Alan Greenspan, I mean, credit expanded much more rapidly in the past 30 years. This is not sustainable. Maybe for 10 years, but not in the long run. That they completely disregard the danger of leverage will always remain a mystery to me.
Daily Bell: Is there a cartel of wealthy banking families that runs the world? Are they located in the City of London? Do they by any chance seek one world government?
Marc Faber: I don't know. I think there are some very important banking dynasties for sure. People sometimes refer to them as the Rothschilds and that they have benefitted from wars – so I am not sure I would want a one-world government. When I compare my life today to the life I had in the 50s and 60s, we have much less freedom. Everything is regulated as the governments have become like a cancer; they keep expanding and regulating and dictating everything. In my opinion, this creates not a very favorable environment in the Western world.
Daily Bell: Is the EU going to collapse? Just the euro?
Marc Faber: This is a political question and it will depend on the political will. The euro in my opinion will weaken against the US dollar in the next couple of months and along with the dollar it will weaken against the price of gold in the long run.
Daily Bell: Is the dollar finished as the world's reserve currency?
Marc Faber: It's not finished as the world's reserve currency; it will continue to exist for a while. But obviously there will be competition and there will be currencies people trust more than the US dollar. I think the US dollar has lost prestige. When I think of the 50s or 60s, the US dollar was worth a lot of money and people trusted the US dollar and also the United States. At that time, it was by far the leading economy in the world; that prestige will continue to be eroded.
Daily Bell: What will take its place?
Marc Faber: That I don't know, but I think in Asia we will have currencies that will be important. I don't think we can have united currencies the way we have the Euro because there are numerous political disagreements from the expansion of the influence of China. Obviously, the Chinese currency will be an important currency in Asia.
Daily Bell: Do you have any thoughts on Real Bills? How about free banking?
Marc Faber: I think the idea that you have different banks issuing their own currencies is not a bad idea. The bank that has a very conservative balance sheet will have a strong paper currency and the ones with a weak balance sheet will have a weak currency. There is some merit between having competition this way, and we have that with currency issued by different governments. Some are more desirable than others, like Canadian dollars, Australian dollars, the Swiss Franc ... but that hasn't always been the case. In the US, because of the political process, I have my reservations, I think it's already too late.
Daily Bell: Are you hopeful about the world's economic future in the long term?
Marc Faber: I suppose the world will always develop but that we will always have periods where we have wars and tremendous wealth destruction, or where we have plague and where the population shrinks. I am optimistic about certain issues and pessimistic about others.
Daily Bell: What are you working on now?
Marc Faber: Every month I am writing my report, so I am always working on something. But I am not working on anything new or writing any books because I don't have the time. I will again in the future.
Daily Bell: Thank you for your time and a very interesting interview.
Daily Bell After Thoughts
This was a lot of fun. You have to read the interview closely, but if you do, you may start to sense a kind of musical quality in the way Dr. Marc Faber responds. Ask him a question and you get back free-form jazz riff, complete with prices, dates and macro- and micro-elaborations.
To be Dr. Marc. Faber is to have a head that is constantly processing data, comparing it to other data and putting it into a larger context. You can hear it if you listen. He's like Charlie Parker – "The Bird" – the great alto-saxophone composer. Ask Marc Faber a question and the answer just pours out of him. He may have an eidetic memory – remembering virtually everything about every day, at least as it relates to finance. He sure remembers a lot, specific prices, etc.
Interviewing him, one is reminded again that there are few accidents when it comes to achievement over time. People who have success, especially when it comes to investing, are usually pretty smart. That's not say there aren't plenty of fund managers who ride the market up and then all the way back down, but Faber has been doing what he does for decades and is still in business. He hasn't had the crutch of a big financial firm to support him. For the most part, he's done it on his own.
We found several quotes of his to be most thought provoking. The first one was this: "We had the collapse of the financial system in 2008; the failed institutions and failed system were bailed out by government. Ultimately governments will fail. The US and Europe will print money, and when everything fails, they'll go to war and then we have the complete collapse."
We surely agree!. We've written over and over that the dollar-reserve financial system basically died in 2008. The Federal Reserve and other central banks have by now apparently handed out tens of trillions in low-interest loans and outright "investments."
In fact, we've estimated that this financial "crisis" will eventually result in an aggregate of US$100 trillion being injected into the West's "free-market" economies by central banks and fiscally, too, before this current episode of fiat money insanity trickles to a close. Invest US$100 trillion into ANYTHING and you are basically re-setting the system, whatever it may be. You are showing, by your actions, that it doesn't exist anymore.
The ramifications are endless. Europe is collapsing. UK and America may be next. Unlike Dr. Faber, we expect China to collapse as well. Doesn't matter about the region or the cycle. China's financial system is Western – actually worse than Western. We don't believe you can trust a single Chinese number at this point. They're building empty cities and ghost highways throughout that vast country.
China is an inflationary accident ready to happen. We'll be surprised if the landing is soft. If it IS hard, like a bowling ball, it will knock down a lot of other economies as well. Europe is already teetering. America is on the brink. Japan is savaged. Imagine what a crash in China will do to Western economies.
If China does crash, or even if it doesn't, the US dollar reserve system is pretty much finished. Something else is in the air. Something else is destined to take its place. The "crisis" shows no sign of receding in our view; in fact, doubtless there will be more financial stimuli as time goes on. None of it will be any more effective than what has gone before.
The only solution, as Dr. Faber says (and as we regularly write), is war. And war is what we are starting to get. There will be more of it. Nothing else will suffice. The elites are desperate to retain their seat at the head of the table. Let chaos reign.
This brings us to the other quote we found interesting. Dr. Faber seems positive about John Maynard Keynes, a Fabian Socialist and Bloomsbury member who believed that the implementation of economic leveling was to take place via trickery in order to maintain the current system with its elite beneficences.
We differ. As believers in free-market thinking, we can't conceive that government interventions into the marketplace EVER result in anything good. In fact, this latest crisis shows once again that Keynes' approaches are basically bunkum. It is impossible for bureaucrats to save up currency in the "good" times to anticipate the bad ones. It's like asking a heroin addict to build up a stash in anticipation of scarcity. Won't happen.
But let us not quibble. We return to our fundamental observation that, like a great musician, Dr. Faber does what he does because he CAN – perhaps unconsciously. He makes market calls within a week of their occurrence. He turns a profit when others do not. He talks at one point about sensing where the market is headed. This is certain kind of talent. Investing as an art form.
It's interesting to listen to. Read between the lines and you may come to the conclusion as we did, that he's holding back in a few places. A smart guy. Success, no accident.
Reprinted with permission from The Daily Bell.
Thursday, July 14, 2011
Buying US Debt 'Mind Boggling"
It is mind boggling that people would consider buying 10-year U.S. Treasurys with yields trading at around 3 percent, said Marc Faber, the author of the closely-watched Gloom, Boom and Doom report in an interview with CNBC on Thursday.
“I don’t think the U.S. will default in terms of not paying the interest on its debt. They will though default via a falling dollar [.DXY 75.26 0.05 (+0.07%) ] as Bernanke begins printing more money,” Faber said.
His comments follow statements by Ben Bernanke on Wednesday in which the Federal Reserve chairman indicated he would consider more extraordinary measures if U.S. economic conditions get worse.
On Wednesday, Moody’s [MCO 36.28 -0.37 (-1.01%) ] warned it could downgrade America’s credit rating as talks over the debt ceiling became increasingly acrimonious on Capitol Hill.
“They will get an agreement or fiddle around with the debt ceiling,” Faber said.
“I disagree with the bond bulls that are basing their case on a deflationary environment. In such an outcome tax revenues would collapse and stocks would fall heavily.”
Faber predicted that 1,370 was the high for the S&P 500 index in 2011 and told CNBC that if stocks fall another 10 percent or 20 percent from here, another round of quantitative easing is inevitable.
“The risk is not to hold gold. Whilst there is the potential for 10 percent downside in the short term over the next five to ten years the gains will be big. Or put another way, the purchasing power of paper money will fall," Faber said.
“Cash is very risky asset except in times of major market corrections,” he added
“I don’t think the U.S. will default in terms of not paying the interest on its debt. They will though default via a falling dollar [.DXY 75.26 0.05 (+0.07%) ] as Bernanke begins printing more money,” Faber said.
His comments follow statements by Ben Bernanke on Wednesday in which the Federal Reserve chairman indicated he would consider more extraordinary measures if U.S. economic conditions get worse.
On Wednesday, Moody’s [MCO 36.28 -0.37 (-1.01%) ] warned it could downgrade America’s credit rating as talks over the debt ceiling became increasingly acrimonious on Capitol Hill.
“They will get an agreement or fiddle around with the debt ceiling,” Faber said.
“I disagree with the bond bulls that are basing their case on a deflationary environment. In such an outcome tax revenues would collapse and stocks would fall heavily.”
Faber predicted that 1,370 was the high for the S&P 500 index in 2011 and told CNBC that if stocks fall another 10 percent or 20 percent from here, another round of quantitative easing is inevitable.
“The risk is not to hold gold. Whilst there is the potential for 10 percent downside in the short term over the next five to ten years the gains will be big. Or put another way, the purchasing power of paper money will fall," Faber said.
“Cash is very risky asset except in times of major market corrections,” he added
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