Faber musings not what the doctor ordered for CLSA hangover
Some of the press were feeling a little overworked yesterday morning after attending CLSA's party on Thursday night. And after an hour of listening to CLSA's super-bear Russell Napier yesterday morning - and with another bearish hour from Marc Faber over lunch looming - slashing your wrists seemed like a good option. But Faber was rather less gloomy than usual. 'I promise I will not depress you - you will leave with a sense of optimism - it may be difficult but I will try,' he declared. Nevertheless his view of the world was not overly cheery.
'There are plenty of clouds and very little sunrays,' he said. Markets are heading down, but don't despair. Doctor Doom's main worry is Western banks. Having been bailed out in 2008, they appear to have learnt nothing. Faced with artificially low interest rates and zero deposit rates, they have been speculating in all kinds of products. 'I have lots of clients and readers of my newsletter, but don't know anyone who holds Greek bonds. But why do the banks hold Greek bonds along with Spanish, Portuguese and Italian bonds?' So he argues that consumer banks need to ring fence their operations from their more aggressive investment banking arms. Will banks have to be bailed out again? Sadly, he feels the answer is yes, and then the government will go bust. Then there are all the unfunded liabilities that need to be addressed with the West's increasingly ageing populations having to be supported by a shrinking workforce. More doom and gloom. He believes that if the US had let AIG and Goldman Sachs go bust, instead of bailing them out, we wouldn't be in such a bad mess.
So what to do with our money if we have any left? Faber says that, given the continuous government intervention in monetary and fiscal policies, nobody can say where markets will go long term. So, individual investors should have 25 per cent of their assets in each of four categories: Asian real estate, equities, cash, and precious metals such as gold.
Reflecting on some of the strategic issues around the world, he felt the Middle East was a concern. 'In the Middle East there is no hope, no jobs and no sex - this makes people very restless.' Faber, who lives in Chiang Mai, notes 'You don't have that problem in Thailand.' Hmmm.
Ghost of Nero on the dance floor
Legend has it that the Roman emperor Nero played the fiddle during the great fire of Rome in the first century. We can attest that none of the hundreds of brokers and asset mangers gathered at CLSA's gala party on Thursday night were playing the fiddle. But you could say they were doing the next best thing - swaying to the sumptuous sounds of singing star Christina Aguilera. She, together with her band and dancers, put on a classy show, which for a while distracted the crowd from their BlackBerries as markets tanked. A fin de siecle moment?
Missing in action
The Greener Skies conference organised by the magazine Orient Aviation kicks off next Tuesday, with an impressive cast of luminaries from the aviation and climate sectors who are flying in for the event. There is the director general of the International Air Transport Association Tony Tyler; Damien Meadows, who is the acting head of the European Commission's unit responsible for the International Carbon Market, aviation and maritime; Wei Zhenzhong, the head of the China Air Transport Association; a senior figure from the Air Transport Association of America; airline chief executives; senior environment executives from Boeing and Airbus and various experts from the bio-fuel sector. Altogether, about 125 delegates are coming to this event. Interestingly, two invitees were unable to make it. These were our very own Secretary for the Environment, Edward Yau Tang-wah, and Secretary for Transport and Housing, Eva Cheng. They were invited to make a 10-minute address but both told the organiser they were 'unavailable'.
We have some sympathy with their position. The prospect of having to answer questions in public on Hong Kong's negligible efforts at improving the environment is an understandably daunting prospect.
A thinking woman's writ
A writ lodged with the High Court may give former Hong Kong chief executive Tung Chee-hwa something to think about. He's being sued for HK$15 million by a disaffected former member of the ICAC, Leung Kwai-ling. She says that when her contract with the ICAC was not renewed she sent a letter of complaint to the ICAC and a copy to the Chief Executive's Office, in 2000. But 'there has been no satisfactory progress in this matter'. She is asking for 'compensation for loss of employment, employment prospects, effects that follow, and related psychological pressures, worries, unhappiness etc ...' There is a note at the bottom of the writ which says: 'All above contents are based on what I think I remember.'