Tuesday, April 16, 2013

Large bank depositors are at risk

The mentality before the 2007 crisis and after that the tax payers bailed out the system but now the asset holders have to contribute to the bailout. As we have seen in the case of Cyprus the large depositors are penalized more than small depositors.

Marc Faber is a famous contrarian investor and the publisher of the Gloom Boom & Doom Report newsletter.

Monday, April 15, 2013

Hold money in Singpore Dollars in a Singaporean Bank

If you have all your money in the bank eventually you may lose up to 40, 50 percent  or even 60 depending on the quality of the Bank. If you hold your money in a Singapore bank in Singapore dollars, I think Singapore dollar deposit may be safe. But if you hold US dollar in a Singapore Bank they place it in a Intermarket rate and that deposit may not be safe.

Marc Faber is a famous contrarian investor and the publisher of the Gloom Boom & Doom Report newsletter.

Friday, April 12, 2013

Wealth Redistribution

One day the treasury may decide to withhold taxes on interest payments to foreigners. One day they may print that much money the treasury market collapses.

The well to do people that benefited thru money printing and easy monetary policies from the early 1980's will have to give back some of their money either thru taxation, or revolution or expropriation.

Thursday, April 11, 2013

Dangers ahead of a deflationary bubble

The next crisis could lead to a deflationary bubble and a bust in governments. We may have a total collapse in confidence in the system and at the same time have an increase in International tension.

Marc Faber is a famous contrarian investor and the publisher of the Gloom Boom & Doom Report newsletter.

Wednesday, April 10, 2013

Singapore $, gold only safe havens: Russell Napier - Daily News &Analysis

This is a very pessimistic presentation so I’ll be brief, CLSA strategist Russell Napier said last week, before suggesting that the only two safe havens for investors are Singapore dollars and gold.
Napier’s talk at the CLSA Investors’ Forum on Friday was followed by a lunch presentation by Marc Faber. The contrarian investor, who goes by the nickname of Dr Doom, was only marginally more positive than Napier and ensured that all those attending the final day of the forum went away on a sombre note.

Investors may have been on a high, literally and figuratively, after listening to Christina Aguilera perform several of her hits, including ‘Beautiful’ and a reggae-styled version of ‘What a Girl Wants’, at the CLSA gala on Thursday night. But they were reminded the very next morning that the current environment is presenting few opportunities for cheer.

The primary message that Napier conveyed in his address, which had stolen its apt title ‘Darkness on the Edge of Town’
from another musician, was that the economic environment will get worse, much worse, before it gets better.
“Things in Asia will get better after 12 months,” he said. “The rest of the world will stay bad for 10 to 15 years.”
Napier also argued that the fact that some banks would be eradicated in the next few weeks was a given and beyond debate. “It is amusing when people talk about a double-dip recession,” he said. Napier himself believes the world has been in a recession since the financial crisis started.
In the summer of 2011 the burden of funding the US government shifted to the savers from the printers [of money], Napier said, reinforcing the point with a slide titled ‘Uncle Sam Needs You’.
US Treasuries used to be a safe haven but this year the supply of US government bonds is at a record high. Foreign buyers are still picking up Treasuries, but more slowly. And the onus of funding the deficit is falling on, among others, money market mutual funds, which are dumping corporate bonds and commercial paper in order to do so.
“This represents a structural change, a change in world history,” said Napier. “There is a long, honourable history of running up government debt in the US.” Until 1932 the US government only borrowed money to kill people, he added, but since then it has been not to kill but to keep people alive. I think I should get into advertising, Napier said, noting that an apt slogan for the US Federal Reserve would be: “The Fed: Printing the American dream since 1913”.
“I agree with Churchill who said: ‘America will always do the right thing but only after exhausting all other options’,” Napier said, alluding to the fact that the US is soon going to have to support a generation of baby boomers unless the social contract in the US is renegotiated. Since Napier feels the US is going to be unable to solve the many problems that it is facing, including the social contract, in the near future, he is negative on any investments in US stocks.
He was equally bearish on the prognosis for Europe. Everybody at the conference thinks Europe will deflate, devalue and depreciate, he said, but it is worse than that - Europe will nationalise.
“Get your money into gold and Singapore dollars; keep your powder dry and wait in the next six to 12 months to buy Asian equities,” Napier advised, noting that he expects the Singapore dollar to become the Swiss franc of the 21st century. Napier’s bullishness on the Singapore currency is driven by the fact that the country has a capital account surplus and the government is also unlikely to impose capital controls on inflows and outflows — something he predicts will happen in Europe very soon.
“Wherever Asia is on the spectrum of free-market capitalism and communism will not move much in the next 10 years,” he said as further support of his case that investments in the Singapore dollar and Asian equities are the way forward.
Napier conceded that his suggested investment strategy was inoperable for the majority of CLSA’s clients. The Singapore dollar market is not deep enough and simply investing in gold provides no diversification. But he suggested European and US investors should at least take their money out of existing investments and move it into an Asian currency.
“The biggest risk in Asia is Pakistan,” said Napier in response to a question about whether political instability in Asia could influence his recommendations. “The fact that it is a nuclear state is what keeps me awake at night.”

China and North Korea conspiracy

Dont believe the North Koreans are acting on their own. Its all a test to see the resolution by the US, Japanese and the foreign powers. The Chinese are watching as they will do the same in a few years.

North Korea can hardly produce bicycles. How can they produce nuclear weapons on their own. The Chinese are using North Korea.

Tuesday, April 9, 2013

Markets could continue higher but watch for crash

Near term the market is overbought, we could make new highs in the S&P500 with very few stocks making new highs.

If we go higher the probability of a stock market crash goes higher sometime in the second half of this year so I dont think its a very good time to buy stocks.

Marc Faber is a famous contrarian investor and the publisher of the Gloom Boom & Doom Report newsletter.

Monday, April 8, 2013

Gloom Boom Doom: April 2013 Monthly Market Commentary

When a government goes bust in a democracy (and most Western governments cannot possibly meet their unfunded liabilities) the majority of people who have no assets or just a few assets will always find it appealing to collect money from the evil “fat cats” (in the case of the US, the 1% who own 42.7% of financial wealth). It should be obvious that if 80% of the population owns just 7% of financial wealth, they will be tempted to transfer at some point in future, part of the wealth of the 5% or 10% richest Americans to the masses that have no savings.

The problems we face today are there because the people who work hard for a living are now vastly outnumbered by those who vote for a living.

Normally, we analyze various asset markets and individual investment opportunities according to their merits. But now, we also need to think which asset classes are the least and which ones are the most vulnerable to wealth taxes.

Friday, April 5, 2013

Future bailouts are dangerous to depositors

The Cyprus incident now shows that, from now on future bailouts can affect depositors as well as tax payers, while in the past the bailouts didn't affect depositors as much.

Marc Faber is a famous contrarian investor and the publisher of the Gloom Boom & Doom Report newsletter.

Thursday, April 4, 2013

There should be no deposit insurance

On Cyprus:

The MF global collapse had a negative effect on the depositors.  By having a deposit insurance consumers don't worry about which Banks and Institutions are safer. But without deposit Insurance consumers will be more cautious.

Tuesday, April 2, 2013

The great caution

When money is printed it doesnt flow equally into the market. My concern is we are going to have a systemic crisis that will may not allow us to even hide in gold.

Monday, April 1, 2013

US stocks dont have much higher to go

I think US stocks wont go too much higher from here and there is considerable downside risks.

Europe has current account surplus but their economy is in a recession and this will affect the US stocks as well. Bulk of the US corporations profits come from Europe. Also at the same time global liquidity is contracting.

Marc Faber is a famous contrarian investor and the publisher of the Gloom Boom & Doom Report newsletter.