Tuesday, December 31, 2013

Higher taxes slows country growth and personal freedom

I oppose higher taxes under any circumstances because higher taxes allow the government to expand and, in the process of expanding, to retard economic growth and curtail individual freedom. We are all aware of how dysfunctional and wasteful the US government is. 

In some European countries, the situation is not much better or is even worse. 
 via Economist

Does anyone really want to give the government more money with which to wage additional senseless and extremely costly wars, and to distribute even more food stamps, and to allow even more people to receive disability benefits ?

Tuesday, December 24, 2013

Singapore, Hong Kong better now than 15 years ago

The difference between the wealth and income inequality in Singapore and Hong Kong, and that in the US, is that most people in these two cities (the so-called 90%) enjoy better living conditions than 15 years ago and their net worth has appreciated, whereas in the US this is not the case.

Monday, December 23, 2013

Gold shares could go up 30 percent in 2014

Given all the money printing that is going on globally . . . and given that the total credit as a percentage of the advanced economies is now 30% higher than in Year 2007 before the crisis hit, I think Gold is good insurance.

I think Gold shares are very inexpensive. So a basket of Gold shares I think next year could easily appreciate 30 percent.

Wednesday, December 18, 2013

The state of mind of the Fed

In my view in a few years the Asset Purchases will be substantially higher than they are right now. 

(Watch the video for the full comments)

From Indonesia, Phillipines, Thailand to India

Money is flowing out of countries like Indonesia, Philippines, Thailand into India. We had an under-performance of India compared to other emerging economies until recently. 

And we have this pool of international liquidity that is driven by asset allocators, so they look at India - they see a relative poor performance and they see some marginal improvement in the macroeconomic environment of India. 

Latest Stock Market analysis Interview: Watch now

Monday, December 16, 2013

Faber: Best tax is Flat Tax

The English philosopher and political economist John Stuart Mill took the view that
 “unless … savings are exempted from income tax, the contributors are twice taxed on what they save, and only once on what they spend.”

The Swedish Nobel Laureate, economist, sociologist, and politician Karl Gunmar Myrdal opined: “Taxation is the most flexible and effective but also dangerous instrument of social reform. One has to know precisely what one is doing lest the results diverge greatly from one’s intentions.”

Canadian politician and Cabinet Minister Sir Thomas White had it right when he said, “In such experience as I have had with taxation — and it has been considerable — there is only one tax that is popular, and that is the tax that is on the other fellow”.

Personally, I have spent a considerable amount of time on taxation issues. My doctoral thesis was on the financial reforms of Sir Robert Peel, which when implemented in 1842 included the introduction of an income tax as a permanent tax on high income earners. (The top rate was 7%.) At the same time, numerous indirect taxes and import duties were eliminated, which greatly simplified the tax system.

In my humble opinion, the probably fairest tax is a flat tax on incomes (no deductibles such as the interest payments on debts, children allowances, or investment tax credits, and no subsidies for any interest groups) which is levied on all income earners and corporations, churches, missions, charities, pension funds, government officials and governmental organisations, etc. at a maximum rate of between 10% and 15% per annum.

Source: http://dailyreckoning.com/the-worlds-only-popular-tax/

Wednesday, December 11, 2013

Thursday, December 5, 2013

Oil demand to rise rapidly in China, India

They[Different commodities] move in general in the similar direction but maybe at different times. Now, say if the price of corn goes up substantially, the farmers can right away increase the production of corn and a year later the additional supplies will then essentially contain further price increase and the price will go down. 

In the case of the oil industry and also for copper, once you have shortages developing, until new large reserves come on stream and until new mines essentially produce, the response time is very long and we have essentially in the world, coming from emerging economies – those would be China and India – very rapidly rising oil demands.

In China over the last fifteen years, oil imports, they have risen three times. China consumes now almost ten million barrels of oil a day. So the demand is there, if they slow down somewhat, long-term it’s there. Every oil well eventually runs dry. It cannot produce forever. New oil is very costly to produce. In other words you have to go and drill and you have to then extract the oil and there’s a lot of safety regulations and very costly, probably around eighty Dollars a barrel. 

Tuesday, December 3, 2013

Gloom Boom Doom Report - December 2013 Issue

Marc Faber writes on the December issue of the Market Commentary:

"High valuations, excessive debts, and extremely bullish sentiment do not necessary imply that a US stock market collapse is imminent. This especially not in an environment of unlimited money printing but if we believe in Selling Disciplines then the combination of high valuations and extremely positive sentiment strongly argues for reducing one’s exposure to US equities."

Read the full Gloom Boom Doom report at http://drmarcfaber.blogspot.com/2013/12/marcfaber-market-commentary-dec-2013-gloomboomdoom.html

Monday, December 2, 2013

Large cash depositors can be at risk of haircuts

I think all the investors should consider, what is actually the downside. Say you have a billion Dollars; under normal conditions maybe the safest is to keep everything in cash. Now because under normal conditions, say little inflation and the purchasing power of money is maintained, the banking system is down. So you keep it in cash. But under the present condition, cash could be very dangerous, say if banks had another bailout, I think that the public opinion would shift to penalizing large depositors. 

In other words, if you have 100.000 Dollars on deposit with Deutsche Bank, maybe you get your money back but if you have a billion Dollars, maybe they take the haircut of 50 percent. So in this environment you can ask yourself if you have a billion Dollars. Well, what is relatively safe? 

So I would imagine that real estate is relatively safe because it’s widely owned by a large portion of the population. It may go down in value and it may be taxed away but it’s feasibly safe. If you look at Germany in 1928, the large and the more stable companies from Siemens to whatever it is, say, BASF, they survived. And so you were better off in stocks in the long run to wars and hyperinflation than in cash and bonds. 

When you look at gold, well, gold is very safe. It often has a high return in the long run, per se based provided and this is the proviso, the governments don’t take it away. That is a big issue.