Marc Faber: Treasurys Are A "Suicidal Investment"

Good discussion in the last couple of posts.

I'm sitting here having breakfast looking out the window to see this new growth turn around. The same houses are on the market and have been for the last two years even after they cut $100k off the price.

Even my work colleagues are planning on pulling there 401k out of the equity markets and parking in stable fund. They just wanted to get back what they lost over the last 18 months and all feel nervous about the run up and the future and do not want to see another repeat of their 401ks crashing. As pointed out earlier as many of us get near retirement risk taking is off the table......stable fund is better than high risk gambling in equities.

They also remember the flash crash of the wall street casino.

I believe we are in an unsustainable recovery just as the lead up to the great recession was the home owners using their homes as an ATM we now have the government using the FED as an ATM to support the recovery. We have simple exchanged private debt for government debt.....bit like moving the deck chairs on the Titanic.

The bottom line is growth can not be supported indefinitely through the growth in debt.
 
Houston we have a problem with social security. Funds paid out now exceed funds paid in $19B short in Q3. This wasn't meant to happen until some years into the future.

The SSA now has to start handing back the IOUs to the treasury for cash.Treasury will now have to borrow more to pay SSA IOUs.....do we have a problem you be the judge.

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http://www.ssa.gov/oact/ProgData/assets.html
 
Quote from Trendytrader:

Good discussion in the last couple of posts.

I'm sitting here having breakfast looking out the window to see this new growth turn around. The same houses are on the market and have been for the last two years even after they cut $100k off the price.

Even my work colleagues are planning on pulling there 401k out of the equity markets and parking in stable fund. They just wanted to get back what they lost over the last 18 months and all feel nervous about the run up and the future and do not want to see another repeat of their 401ks crashing. As pointed out earlier as many of us get near retirement risk taking is off the table......stable fund is better than high risk gambling in equities.

They also remember the flash crash of the wall street casino.

I believe we are in an unsustainable recovery just as the lead up to the great recession was the home owners using their homes as an ATM we now have the government using the FED as an ATM to support the recovery. We have simple exchanged private debt for government debt.....bit like moving the deck chairs on the Titanic.

The bottom line is growth can not be supported indefinitely through the growth in debt.
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The consumerism model of econonmics it set up for failure. I wholely agree that the debt production is not a long term solution. A commodities based recovery could occur if some of the enviromental zealots would back off. The United States could sell some "stuff" and bring in real money into the system to start paying back the debt. Another option would be to sell all the cars on US parking lots and send them abroad. The adoption of national mass transit would also be a big plus.

Akuma
 
Quote from Scataphagos:

How much do you think the $USD needs to be trashed before all of that begins to occur?
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I'm not advocating it as a definite positive for the U.S. In fact, by the time the India call centers and Chinese yoyo factories start moving to the U.S. because it's "cheaper", what's left of the former middle class may have already revolted in some fashion. I'm merely pointing out it can't go on forever. Hopefully, and it is a slim hope, profit margins will be squeezed just enough to bring back the slogan "made in the USA" even if corporations use it as marketing gimmicks boasting about job creation etc... Who knows, the working poor may make it out of this mess somewhat intact with new formerly middle class co-workers.
 
Quote from Trendytrader:

We have simple exchanged private debt for government debt.....bit like moving the deck chairs on the Titanic.
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I agree with you in large part. However, we actually haven't really exchanged one for the other. The positive private savings rate we have now after posting a record negative rate before the financial crisis is more a phenomenon of debt destruction (default) than it is of debts being paid down purposefully. I hope someone can show us something that shows investment cash on the sidelines for the "average investor."

I do believe there is a large amount of business cash on the sidelines, so that's a hopeful sign if that cash loosens up some time in the future. If, if, if. My worry is that our massive public debt will end up sucking up that cash out of necessity -- confiscation through taxation. What a tempting pool of available resources. Same with pre-taxed 401K money. If the economy worsens again and the fiscal crisis gets critical, do you think the government will forsake those potential resources. All it would take is another "emergency" law or two. Is that far fetched? Anybody have something to say on that front?
 
Quote from The Fetus:

Regarding trefoil's last post...

Of course, the PMI is a survey, right? So at least we have signs of confidence returning in some areas. That's a first step. I hope it isn't overconfidence.
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The survey is meant to measure production, employment, prices paid, and new orders, according to its opening page: survey itself here. Going through it all, the overall impression is that business is strong. The only real cloud is that getting a loan is still tough.
As for that "first step" comment, no, the recession is over as far as these guys are concerned. The first comment on the comments page: "2010 was a very, very good year, 2011 looks just as strong thru Q1!"
That's a lot more than just "signs of confidence". It's a rather sharp contrast to the constant doomsday scenarios being passed around on this board.
 
Quote from The Fetus:

If the average retail investor is still on the sidelines, it must be because he doesn't have any cash. The cash positions of mutual funds hit an all-time low in July and remains at low levels. What are you using to measure the "average retail investor" cash position? I don't think incomes have exactly been growing like gangbusters and unemployment is still near 10%. Real unemployment is even higher.

Also, the American Association of Individual Investor's survey shows an extremely high level of bullish attitude for that survey and it's a pretty well-respected study. I would tend to think that when individual investors are very bullish, they're probably already in the market awaiting those great returns. Otherwise, they're not putting their money where their mouths/outlooks are, which would be quite unusual, I would think. If one is bullish, why would one be on the sidelines?

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Financial optimists and surveys largely discount 2 huge factors. Some, not all, baby boomers about to retire are simply too tired of what has happened in the markets during the last 10 years or so. They may be "bullish" but their done with securities and their advisers are rightfully scaring them away from bonds. Sidelines is where much of their money will stay in money markets and insurance funds, even at flat and minor negative earnings.

The other factor ignored in surveys and unemployment numbers is benefit losses. It doesn't matter how "bullish" you are when you can't make the rent and need food and gas in the car. 401k contributions aren't going up because people think they can't afford it. Corporate and guvment contributions to pensions are on the decline as a percentage of payroll.

Meanwhile, the ultra rich are in commodity plays, private funds and the like, their money is already in play.

I guess I too would love to understand where all the "other" sideline money is and what the magic bullet is to get it back into the markets?
 
Quote from rock34748:

It doesn't matter how "bullish" you are when you can't make the rent and need food and gas in the car.
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Okay, but this particular survey polls "individual <u>investors</u>," right? So I take it you are saying that these bullish respondents would be invested bullishly if they could afford to be, but they don't have the money, right? If I understand you correctly, then would you agree that the survey is making the same point regardless? That is, the supposed sidelined pool of "average investor" cash probably doesn't exist.
 
Quote from The Fetus:

Okay, but this particular survey polls "individual <u>investors</u>," right? So I take it you are saying that these bullish respondents would be invested bullishly if they could afford to be, but they don't have the money, right? If I understand you correctly, then would you agree that the survey is making the same point regardless? That is, the supposed sidelined pool of "average investor" cash probably doesn't exist.
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Yes, agreed. I'm looking for other "facts" revealing this supposed cash and what it will take to put it to work in the economy. I'm open minded enough to change my belief on the subject but the facts about excessive sidelined cash seem to be lacking.

At this point I'm concerned that proponents of the sideline cash issue will soon have facts backing up billions on the sidelines. But it may be the cash of GS execs and the Buffetts of the world who recently realized they have squeezed their securities for all their worth, hence they move to cash. :eek:
 
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