Marc Faber to speak at Cayman Islands Oct 30

Dr Marc Faber will be speaking at the Cayman Investment Forum on Oct 30, 2014 at the Marriott Beach Resort in Cayman Islands. 

The event, which includes lunch and a cocktail and networking event, begins at 11:30 a.m. Tickets are $125 for general admission and $75 for members of CFA Cayman.

Abenomics is a failure

My sense is that Abenomics is a complete disaster in the sense that the cost of living – because Japan imports a lot of goods and as the Yen weakens these costs have been going up far more than wages and so real incomes are down.

Commodities such as Oil have longer term price strength

The markets have become quite volatile, largely because of money printing. This concerns not just oil, but all commodities. The price of corn, wheat, soybeans are all down around 50 percent from the highs. They can be down for a while, but in my view, they will not stay down.

Deflation may be on the horizon

The bond market is manipulated by central bank buying of government debt. Yields are lower than they would otherwise be if the Fed and other central banks didn't buy them. 

Secondly, the decline in yields may be a sign that bonds buyers don't believe in the global recovery story when it comes to the economy. In fact, the low yields on bonds would suggest that we may be entering a period of deflation.

US compares favorably with France in terms of big government

The U.S. is not yet that bad [in terms of Government intervening in private sector]. But say from 1930 government spending as a percent of the economy has gone from 7.8 percent to now over 41 percent. 

It compares favorably with France which is now at 57 percent.

But the bigger the government is, the less dynamic the economy can be and the less gross there will be. But the governments don’t see that way.

Marc Faber latest interview on Fox Business News [VIDEO]

All markets are dangerous in short term

I think most people haven't made that much money in US stocks this year. Some Hedge Funds have made money, and others have lost some money. Its been for many Hedge Funds a difficult environment. And usually when you have US dollar strength, it means its a sign of tightening global liquidity which usually hasn't been particularly good for US Stocks. 

Now if I look around the world, US stocks are very pricey compared to other shares around the world. Maybe they will go up a little bit more like in 1987 or March 2000 and then will drop a lot. 

But in general, if you take a view of the next 7 to 10 years, I think you will make more money in emerging economies, where by near term I think all markets are vulnerable.

More money printing leads to more Inequality in society

"What the Fed has done is catastrophic". - Marc Faber

Gloom Boom Doom - October 2014 Report

Thomas Sowell recently penned an article entitled, Mob Rule Economics in which he takes a critical view of higher minimum wages. Sowell writes that,

“While we talk about democracy and equal rights, we seem increasingly to let both private and government decisions be determined by mob rule. There is nothing democratic about mob rule. It means that some people's votes are to be overruled by other people's disruptions, harassments and threats. The latest examples are the mobs in the streets in cities across the country, demanding that employers pay a minimum wage of $15 an hour, or else that the government makes them do so by law. Some of the more gullible observers think the issue is whether what some people are making now is ‘a living wage.’ This misconstrues the whole point of hiring someone to do work. Those who are being hired are paid for the value of the work they do.”

In general, I believe that people instinctively want to work, and I am also convinced that people who work are happier than people who have no jobs. However, I also see every day people who would be perfectly fit to work – in some cases with special skills – that actually prefer not working and instead opt out to receive some benefits from the government.

High unemployment and a declining labor force participation rate in the Western world has numerous causes including affluence, changing attitudes from “personal responsibility” to “entitlements,” and especially because of the government’s generosity. It is evident that with increasing Government transfer payments, a decline in salaries and wages as a percentage of the economy and a contraction in the civilian labor force participation rate occurred.

Over the last few years, a heated debate has raged about the causes of a structural decline in the rate of economic growth in the advanced economies of the West and Japan. For us investors this discussion is important in terms of the future movement of interest rates, which I think could stay low for US Treasuries for quite some time. 

Today's generation not as motivated to work as previous generation

I think we have today in the world an entire generation who no longer wants to wake up at 7:00 in the morning and go to work at 8:00 or 9:00 in the morning and then come home at 5:00 or 6:00 in the evening and be pushed around by a boss. 

There's a generation of people who would rather do relatively little. They may opt to live with their parents in the basement or wherever that may be, so they have no responsibility to pay the rent for a house or to buy a house. 

They may drive around daddy or mommy's car and so forth. 

So I believe we have a structural change where people actually prefer to not do very much.