Thursday, August 13, 2009

They Broke Nouriel Roubini, but not Marc Faber

We have unconfirmed reports that green shoots have entered the blood stream of Nouriel Roubini (source: Clusterstock "Roubini: I'm a Bull Now"/ CNBC)

Personally, I think bears must be heartened from a contrarian standpoint- although this is not exactly a ringing endorsement of great things. I also remember why I try to skip CNBC as much as possible when I hear Joe Kernan calling out Roubini by saying in retrospect there was no need to nationalize banks. I am not sure what the act of putting some $300B+ put into Citigroup (C) and Bank of America (BAC) is, if not partial nationalizing. The only different is semantics and we effectively subsidized bondholders and shareholders with taxpayers money - in fact, I'd call it worse than nationalization. It's picking winners and losers and the many supporting the few. Taxpayers got very little back from their "investment" while a small subset of people worldwide reaped the benefits. If the 2 firms were taken over by government (temporarily) and then stripped of bad assets and broken into small pieces (and sold off to private investors) we'd be far better off in the long run. Now we have "too bigger to fail firms" and the bad actors are laughing at what they can get away with in the future (i.e. anything). But since "nationalization" is akin to "socialism" in this country, instead we basically transferred wealth from the many to the few - ah yes, American socialism: Reverse Robin Hood (steal from the middle to give to the upper 0.2%) Except it's stuffed under the banner of "free market capitalism" so we can save face by not being like those nasty Europeans! hah. Joe, please put down your pom poms - what happened here was a disgrace; the fact those who benefited from the taxpayer handout are benefiting should be shameful, not something to celebrate.

While I enjoy what Nouriel says from an economic standpoint, economist is only 1 hat I wear and for purposes of running a mutual fund I'm more interested in the mass psychology experiment (slash) Goldman Sachs sludge fund that is the market. Hence I want to hear what Marc Faber is saying a lot more - both his short term track record and long term have been excellent. (9 minutes - if you only have time to watch 1 of the 2, see below) As I have been saying usually when you have these once in a lifetime situations (see 1929 to 1930s) you cleanse the system. Instead, our financial oligarchs are so powerful, and politicians so captured - they simply reinforced their protections. And the taxpayer is the effective support who just rolled over and took it. I guess keeping as many people as possible financially illiterate does have its upsides. It is amazing how this all ended up.

[Jun 19, 2009: Marc Faber - 10 to 20% Inflation Coming to US]
[May 20, 2009: Jim Rogers Agrees with Marc Faber]
[May 15, 2009: Faber - This was a Central Bank Printing Press Rally]
[Mar 19, 2009: Both Marc Faber and Jim Rogers Predicting Civil War or Unrest]

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