Don’t stay in School (too long)
Another great must read report by Ice Cap Asset Management.
Dr. Ben Bernanke went to school and never left. He is an academicwho has never worked in the private sector yet controls the fate oftrillions of Dollars, Euros, Yens and Pounds. Today he is smiling.Dr. Marc Faber also went to school, but he didn’t stick around. He hasworked exclusively in the private sector and today is considered oneof the most prescient investors on the planet. Today he is alsosmiling.To better appreciate all the smiling, one must understand exactlywhat happened or better still, what didn’t happen in Brussels lastweek.In the eyes of Dr. Bernanke and Dr. Faber, the historic 17themergencysummit meeting by the Europeans to solve their money problemswent off without a hitch. Not only did the Euro-Elite fail to resolvetheir debt crisis, they failed miserably at even coming close torecognizing the problem. It ’s this distinct lack of recognition that isturning frowns into smiles.Dr. Bernanke is smiling of course because he is a money printer. Thecontinuing inability of the Euro-Elite to solve their problems virtuallyguarantees a 2012 recession in the Old World. In return, this will alsocreate a recession in the US which will provide plenty of excuses forMr. Bernanke to once again print money under the guise of QE3.Dr. Faber ’s uncanny ability to understand the big picture and foreseethe response from financial markets allowed him to predict the 1987crash, the 2008-09 crash, and the resulting 2009 stock market rally.Dr. Faber is smiling today not because he agrees with Dr. Bernanke’sfondness for money printing, but rather because the global financialsystem is developing exactly as he has envisioned. This vision ofcourse is a money maker for both him and his clients.
Dr. Faber once proclaimed that Dr. Bernanke’s US Federal Reserve isan evil institution – it robs from the poor to give to the rich. Byanchoring short-term interest rates at 0% and longer-term rates at2%, central banks around the World have perfected the art of being amodern day anti-Robin Hood.This manipulation of interest rates is forcing investors of all sorts tostretch, tug and pull their portfolios in search of higher yields butwith assuming higher risk.Witness:- Instead of buying 0.5% guaranteed deposits, the little old lady inSaskatchewan is now fully invested in BBB rated unguaranteed bonds.She has no choice – she needs the income.- Rather than maintain their traditional allocation of 60% to top ratedbonds, the local charitable trust in Alaska is now investing heavily inbank and insurance stocks to receive the juicy dividends – they needthe income.
Full Ice Cap December report.