The Gloom, Boom & Doom Report

ISSN 1017-1371 A publication of Marc Faber Limited march 6, 2013 march 2013 REPORT

Why Asset Inflation is Economically More Treacherous than Consumer Price Inflation
We would rather be ruined than changed.
W. H. Auden

If you want to truly understand something, try to change it.

Kurt Lewin

The world hates change; yet it is the only thing that has brought progress.
Charles Kettering

There is a time for departure even when theres no certain place to go.
Tennessee Williams

When a well-packaged web of lies has been sold gradually to the masses over generations, the truth will seem utterly preposterous and its speaker a raving lunatic.
Dresden James

What a man believes upon grossly insufficient evidence is an index into his desires desires of which he himself is often unconscious. If a man is offered a fact which goes against his instincts, he will scrutinize it closely, and unless the evidence is overwhelming, he will refuse to believe it. If, on the other hand, he is offered something which affords a reason for acting in accordance to his instincts, he will accept it even on the slightest evidence. The origin of myths is explained in this way.
Bertrand Russell

It infuriates me to be wrong when I know Im right.

Molire

INTRODUCTION
The Nile is generally regarded as the worlds longest river (6,650 km) and is shared by 11 countries: Tanzania, Uganda, Rwanda, Burundi, Democratic Republic of the Congo, Kenya, Ethiopia, Eritrea, South Sudan, Sudan, and the Arab Republic of Egypt. It has two major tributaries, the White Nile and the Blue Nile. The White Nile originates in the Great Lakes region of central Africa, with the most distant source likely to be located in either Rwanda or Burundi. It flows north through Tanzania, Lake Victoria, Uganda and South Sudan (see Figure 1). The Blue Nile, which is the source of most of the rivers water, begins at Lake Tana in Ethiopia. Most of the worlds river valleys are in a V-shape (e.g. the Colorado River flowing through the Grand Canyon). The Nile for much of its length is in a very wide U-shape. Between Luxor and Aswan, there is relatively fertile flatland extending anywhere from a few hundred metres to a kilometre on either side of the river. Thereafter, the Nile is bordered by high mountains (up to 1,000 metres) without any vegetation at all, and then by desert. The fertile land on each side of the Nile prompted the Greek historian Herodotus to write in the 5th century BC that Egypt was a gift of the Nile. (Herodotus is considered to be the Father of History.) At the time, Egypts population was between 2 and 5 million (the global population was around 50 million), which was amply provided for by the fertile Nile Valley (except during periods of serious drought or plague). Between 1960 and 2012, however, the population exploded (rising from 28 million to over 90 million, about 7 million of whom live outside the country), and the limited fertile land along the Nile is today unable to produce enough food to feed the countrys 84 million people. (Around half of Egypts food is imported.) On my recent visit to Egypt, as we were driving from Luxor to Aswan, I wondered what would be the effect of a significant rise in
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the water level. The fertility of the cultivable land bordering the Nile would increase, producing higher crop yields. However, there would be no benefit experienced in the desert areas that lie to the north, beyond where the fertile land gives way to mountain ranges on each side of the Nile. In fact, a significant rise in the water level could produce serious flooding, destroying crops along the Nile and impacting not only the people living in the Nile Valley but also the desert-dwelling Bedouins, who would be unable to trade their goods for food. So, whereas Ancient Egypt may have been a gift of the Nile, extreme fluctuations in the river level either too little or too much water are damaging to the countrys economy. (Other early civilisations also developed along rivers: in Mesopotania between the rivers; in India along the Indus, the Brahmaputra and the Ganges; and in China along the Yangtze, Yellow and Pearl rivers.) Just as there is an optimum amount of water in Egypts Nile River, there may be an ideal quantity of money in a capitalistic system. The emergence of free markets,

and of our capitalistic system, was facilitated by the adoption of paper money. However, too much money created by a central bank could have negative consequences. I have discussed elsewhere Milton Friedmans critical views of the Federal Reserve (see the November 2012 GBD report). In Capitalism and Freedom, he noted: It is instructive to compare the experience as a whole before and after its establishment [the Fed ed. note] say, from just after the Civil War to 1914 and from 1914 to date, to take two periods of equal length. The second period was clearly more unstable economically, whether instability is measured by the fluctuations in the stock of money, in prices, or in output. Friedman also rejected the notion that the monetary authorities should maintain a stable price level; while he believed that there is unquestionably a close connection between monetary actions and the price level, he thought the connection not so close, so invariable, or so direct that the objective of achieving a stable price level is an appropriate guide to dayto-day activities of the authorities. In the present state of our knowledge,

Figure 1 The Nile River

Source: Wikipedia

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it seems to me desirable to state the rule in terms of the behavior of the stock of money. My choice at the moment would be a legislated rule instructing the monetary authority to achieve a specified rate of growth in the stock of money. He further noted: The precise definition of money adopted, or the precise rate of growth chosen, makes far less difference than the definite choice of a particular definition and particular rate of growth. As matters now stand, while this rule would drastically curtail the discretionary power of the monetary authorities, it would still leave an undesirable amount of discretion in the hands of the Federal Reserve and the Treasury authorities with respect to how to achieve the specified rate of growth in the money stock, debt management, banking supervision, and the like [emphasis added]. There is a body of economists and fund managers who argue that central banks around the world saved the system following the 2008/2009 crisis by implementing monetary policies that included extraordinary measures. But why didnt these same experts speak out for monetary restraint before the crisis, when they could clearly see the build-up of a gigantic credit bubble that led to a once-in-a lifetime housing boom? And why do they now profess that the system has been saved for good?

article a year ago (see The Fed doesnt expand the money supply by dropping cash from a helicopter. It does so through capital transfers to the largest banks, Wall Street Journal, April 20, 2012), where he wrote: The relentless expansion of credit by the Fed creates artificial disparities based on political privilege and economic power. David Hume, the 18th-century Scottish philosopher, pointed out that when money is inserted into the economy (from a government printing press or, as in Humes time, the importation of gold and silver), it is not distributed evenly but confined to the coffers of a few persons, who immediately seek to employ it to advantage. In the 20th century, the economists of the Austrian School built upon this fact as their central monetary tenet. Ludwig von Mises and his students demonstrated how an increase in money supply is beneficial to those who get it first and is detrimental to those who get it last. Monetary inflation is a process, not a static effect. To think of it only in terms of aggregate price levels (which is all Fed chairman Ben Bernanke seems capable of) is to ignore this pernicious process and the imbalance and economic dislocation that it creates. As Mises protg Murray Rothbard explained, monetary inflation is akin to counterfeiting, which necessitates that some people benefit and others dont. Similarly, the expansion of credit is uneven in the economy, which results in wealth redistribution. To borrow a visual from another Mises student, Friedrich von Hayek, the Feds money creation doesnt flow evenly like water into a tank, but rather oozes like honey into a saucer, dolloping one area first and only then very slowly dribbling to the rest. Above, I explained that when the water level in the Nile rises, it doesnt affect the desert areas that begin with the mountain ranges on either side of the Nile. Similarly, an increase in

the quantity of money only increases the economy of the people closest to the money printing: primarily, the financial sector (banks, brokers, insurance companies, fund managers, useless newsletter writers like yours truly, etc.), powerful interest groups and their lobbyists, and asset markets, which benefit the most. I have written previously about expansive monetary policies widening wealth and income inequality. (Some readers have even called me a socialist because I quoted Emmanuel Saez, a professor at Berkeley, and Robert Reich.) However, two recently published reports have once again focused my attention on this economic and social phenomenon. Chen Zhao, managing editor of the Bank Credit Analyst, in a very insightful report entitled Fire and Ice, Revisited (www.bcaresearch.com), candidly admits that he expected US growth post-2009 to have been stronger than it actually was. In particular, he is now concerned about a structural fall in middle class income levels. Although the recovery in U.S. consumer spending has progressed reasonably well since 2009, income growth has stagnated, suggesting that spending has been partially supported by a falling savings rate. Moreover, he notes that income inequality has deepened at an alarming speed since 1980. In 1970, the top 1% of American income earners took up 8% of total income. Today, the same lucky group takes in 17.4% of overall compensation, a level last seen in the 1930s. The top 50 employers of lowwage workers have been paying their top executives an average of US$9.4 million per year, and since 2006 these same companies have paid out over US$175 billion in dividends to their shareholders. The Gini coefficient for the U.S., a measure of income inequality, is the highest in the industrialized world. The list can be easily expanded, but the message is simple: American workers are being paid less than before, both the size and standard
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MORE INSTABILITY AND IMBALANCES

Contrary to these experts views, I would say that the system has become even more unstable than it was before 2007. The first problem relates to money printing. It should be clear that, as is the case when the Nile carries more water, an increase in the quantity of money doesnt benefit everyone equally. Mark Spitznagel (founder and CIO of the hedge fund Universa Investments L.P.) made this same point in a Wall Street Journal

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of living of the American middle class have been falling, jobs have been hard to come by and income inequality has soared. These trends began as early as 1980, and have greatly accelerated since 2000. The Great Recession has simply exposed the problem in a more acute form. First, the balance of power remains overwhelmingly in favor of capital owners rather than workers, despite increasing political and social tensions. This will not change either easily or at anytime soon. In other words, earnings will continue to thrive on low rates, global growth and subdued labor compensation. Inflation will stay low. All of this is still bullish for stocks. Finally, we should remember that it takes both the supply of money and the demand for it to alter the money stock of an economy. You can take the horse to the river, but you cannot force it to drink. No matter how hard a central bank tries to increase money creation, it has a feeble impact on money demand, which is ultimately dictated by income growth, risk perception and financial markets. So far, G7 central banks have averted a sustained fall in the money stock and spreading deflation. They have not yet been able to get the money stock to expand sharply. What happens if you try to light a fire on ice? Slush or lukewarm is the answer. The current environment will not bring about profound improvements for the majority of the population in the developed countries, but it could still be good for equity owners. Low rates continue to subsidize profits and encourage risk-taking. Multiples on common stocks will keep expanding until they overshoot. We are not there yet. [Emphasis added.] I can assure my readers that BCAs Chen Zhao is not a socialist, but an excellent economist and sharp
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observer of asset markets. (He is also fun to be with.) In my opinion, the reason why the current environment will not bring about profound improvements for the majority of the population in the developed countries but that it could still be good for equity owners is that, under the current conditions in the developed countries, very little money leaves the economy of the capital owners. Moreover, the money that trickles in the direction of the majority of the population may actually do more harm than good. There are many reasons for this unfortunate turn of events. Goods are produced with capital, labour, and land. When interest rates are near zero, there is an incentive for entrepreneurs to substitute labour with capital. Rather than employing 100 workers and 20 machines, the entrepreneur may be able to use 40 machines and just 50 workers. In this case, zero interest rates have a negative impact on employment (not to mention the negative impact of excessive regulation and Obamacare). Also, put yourself in the shoes of a billionaire. (Money printing may see us all soon become billionaires.) You observe how bonds, equities, real estate, art, and commodities have increased in value since the early 1980s (admittedly at different times and with different intensities). Are you really going to start a new business, or would you rather invest your money in existing assets? Most of the wealthy people whom I know would prefer to play the asset markets, though I will concede that some of their money flows into new businesses in the form of private equity and venture capital investments. But my point is that most of their funds remain close to the source of the newly printed money that is, in financial assets (bonds and equities), trophy properties in major financial centres (London, New York, Hong Kong, Singapore, etc.), and in centres of corruption and white-collar crime (always the political capitals of countries), as well as in rare collectibles and art. In the case of real

estate, it is interesting to note that, according to Bloomberg, in the fourth quarter of 2012 the average price of a home in the Hamptons (on New Yorks Long Island) had jumped 35% from a year earlier to $2.13 million, the highest figure since Miller Samuel Inc. (an appraiser) began tracking Hamptons sales in 1999. According to Miller Samuel, there were 49 sales in the quarter at over $5 million, the highest number since the firm began tracking that data in 2006. (The median price for all luxury transactions, the top 10% of all sales by price, climbed 17% from a year earlier to $7 million. According to Town & Country, the dollar volume of all homes that changed hands in the fourth quarter surged 51% from a year earlier to $771 million.) In California, according to the National Association of Realtors, existing home prices rose 26% in 2012! In London, the situation is similar. According to the Financial Times (see FT, February 1, 2013), houses in Londons 10 most expensive boroughs are now worth as much as the property markets of Wales, Scotland and Northern Ireland combined, underlining the extent of Britains growing wealth divide (for example, the total housing stock in Elmbridge, a Surrey borough popular with City workers, is worth more than the entire property value of Glasgow). The FT quotes Lucian Cook, director of residential research at Savills, the property consultancy that compiled the figures using the 2012 Census and Land Registry data, as saying that the divergence in values would have dramatic and longterm impacts on mobility of labour as well as the pace and distribution of economic recovery. More housing wealth is being concentrated in fewer peoples hands. That restricts the ability of some groups particularly younger generations to get on to, or trade up, the housing ladder, creating longer-term implications on the lifetime cost of housing (emphasis added). I know that some of my readers will say that I have got it all wrong and that money has flowed into all the property markets around the US
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and lifted prices. This is true, but compared to record prices achieved in Manhattan, the Hamptons, and London, prices have recovered only modestly (see Figure 2). Moreover, as Martin Conrad, chief investment strategist for CIG, a private investment group, points out in a Barrons article (see Barrons of February 9, 2013), Reinflating the collapsed housing bubble, as many desire, would likely yield the same disastrous result. Whats needed are lower, fairer prices, and more investment in more productive sectors of the economy (emphasis added). Conrad makes some pertinent points, including: Manias occur for many reasons, but great manias are made possible and sustained by errant government policies that may seem to have good reasons, none of them with any longterm economic value. He further notes: [The] desire to simply reinflate the collapsed bubble would likely yield the same disastrous result again. Another course would likely be more effective: restructuring away from so much dependence on leveraged, expensive, and speculative housing values. We should no more regret the demise of expensive housing than we should the decline of expensive oil, both of which are poorly correlated with productive, sustainable economic growth, but strongly correlated with damaging inflation [emphasis added]. The problem with the housing recovery in the US as I see it is that, following the crash, private equity firms moved in and bought thousands of homes at distressed prices, which they financed with little equity and lots of low interestbearing debt. Regular readers of this report will recall that in the March 2012 GBD report I wrote about a relatively depressed asset class homes in Phoenix and Atlanta and that Aaron Edelheit (aaraon@ theamericanhome.com) contributed to the same issue a report entitled A

Figure 2 S&P Shiller Home Price Index, 19872013

Source: Ron Griess, www.thechartstore.com

Journey from Investing in Equities to Investing in Single-Family Homes. (At about the same time, I recommended some homebuilding stocks.) However, because of the buying of properties by private equity firms, home prices didnt adjust sufficiently to the downside to enable the typical household of the 44-years and younger age group (not to mention the under-35 years cohort) to purchase homes (see Figure 3, and also January 2013 GBD report). These households unlike private equity funds would unlikely have had access to credit (and if they had had access to credit, it would certainly have been on far less favourable terms than offered to private equity firms). Before closing my remarks about the US housing market I should mention that, whereas homebuilders were an excellent buy in 2011 and early 2012, I should think that they are now in a selling range (see Figure 4). Another sector of the economy where expansionary monetary policies have had a rather negative impact on the purchasing power of less-affluent households is the commodity complex. Undoubtedly, commodity prices would have risen

anyway after 1999 (following a 20-year bear market and the rapid growth of China until 2007), but near zero interest rates allowed speculators to hoard commodities at extremely low cost and, therefore, were (and still are) responsible for commodity prices that are higher than would be the case if interest rates were high in real terms. I see a number of key differences between the 1930s Depression and the current poor economic conditions. Throughout the 1930s, wages remained too high in real terms and failed to adjust sufficiently on the downside. Unemployment was therefore extremely high. On the other hand, prices collapsed, which improved the purchasing power of those people who were still employed. In the current economic malaise, real wages have declined and unemployment, while high, is not at 25%, as was the case in the Great Depression. However, most importantly, the cost of living has increased (and by more than governments are admitting), which has lowered the purchasing power of most households in the Western world. As a result, the standard of living of most households has declined.
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Figure 3 Median Household Net Worth by Age Group, 19892010

was largely financed by the Fed; in Europe, it was financed either directly or indirectly by the European Central Bank.) I am indebted to my friend Mike (Mish) Shedlock (http:// globaleconomicanalysis.blogspot. com) for pointing out that Spains public debt exceeded 882 billion Euros at the end of 2012 (it increased by 146 billion Euros in one year), and that its debt-to-GDP is the highest since 1910 (see Figure 5). Mish adds that, according to Emilio Ontiveros, president of Financial Analysts International (AFI), the main problem is the payment of interest, because it is the most unproductive spending item possible and occurs in a country that has had to cut back in other areas and needs to recover growth. He further notes: Spain had never spent so much money to pay only the interest on its debt: 38.66 billion. Financial expenses for the first time in history exceeded staff costs. If you do not grow, you cannot pay your debts, said Ontiveros. Jose Carlos Diez, chief economist Intermoney, warns that Spain fails in all the variables that serve to stabilize the debt: its economy does not grow, it pays a high interest rate and has primary deficit (prior to payment of interest on the debt). This dynamic eventually leads to nonpayment, he reflects [emphasis added]. I think the US government should take careful note of these words. In my opinion, by far the most negative impact of artificially low interest rates on employment and, therefore, on the entire economy is brought about by mergers and acquisitions, and leveraged buyouts. Take the recent announcement by Office Depot (ODP) that it will acquire OfficeMax (OMX) for stock. The takeover will lead to some store closures and a reduction in the workforce of the two companies. Worse, it will lead to less competition in the industry and, likely, higher prices. Admittedly, the merger may
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Source: Board of Governors of Federal Reserve System, 2010, Economic Policy Institute

Figure 4 Toll Brothers, 20092013

Source: www.decisionpoint.com

Since I have discussed in earlier reports how money printing is allowing governments to be profligate in a grand style, which in turn is bringing about more businesshindering regulations and laws (and restricting peoples basic freedoms),
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I shall refrain from repeating myself. Still, it should be clear that the level of government debt has increased in most developed countries, and that, in time, this will lead to another set of problems. (In the US, the increased government debt

Figure 5 Spanish Government Debt, 19902013

Source: Mish Shedlock, El Pais

lead to higher profits for Office Depot, but from a macroeconomic point of view the impact is negative on employment. Back in 2004, the late Kurt Richebcher considered mergers and acquisitions to be a macro profit killer. M&As, he said, immensely enrich investment banks and CEOs, but from a macro perspective, they produce national impoverishment by boosting consumption at the expense of capital investment. The first thing to see about such deal making is that it adds nothing, absolutely nothing, to the economys current and future revenue stream. These are purely financial transactions, occurring outside the economy and undertaken with the intent to extract big gains from playing market valuations. In essence this boils down to financial plundering of corporations. [T]he main motivation toward the public is longer-term profit improvement through synergy effects that

is, through cutting expenses. But as we explained with the case of wage cuts, cutting expenses is no solution in the aggregate because from a macro perspective lower expenses implicitly mean lower aggregate revenues. Yet the worst macroeconomic damage of mergers and acquisitions occurs through their adverse effects on new capital investments. It is a highly reasonable assumption that firms purchasing rapid growth of assets and profits at exorbitant prices through heavily leveraged acquisitions will voluntarily or involuntarily curtail their alternative expansion through new capital investment. To this extent, the merger mania effectively diminishes the growth of the productive capital stock. By fueling the consumer borrowing-and-spending binge, the soaring stock prices, on the other hand, boost consumption as a share of GDP. The net result, as earlier elucidated, is macro capital

consumption and impoverishment [emphasis added]. I am less dogmatic about the impact of M&As on the economy, because in cases where a large company takes over a small tech or exploration company and finances the development of its services, products, or mining deposits, there could be some macroeconomic benefits. However, what I have tried to do in the above discussion is to show that it is far from clear whether the economic benefits of quantitative easing outweigh their negative and usually unintended consequences. I know that the interventionists will claim that the entire global economic system would have collapsed had central banks post-2008/2009 crisis not intervened to the extent they did. I agree that the financial system would have collapsed. But I am far less certain that failure of the leveraged financial players, and of the entire derivatives market, would have been a catastrophe for the
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global economy in the long term. I can see that it would have been painful in the short term, but we may now face even greater problems in the future. As Bertrand Russell said, If a man is offered a fact which goes against his instincts, he will scrutinize it closely, and unless the evidence is overwhelming, he will refuse to believe it. If, on the other hand, he is offered something which affords a reason for acting in accordance to his instincts, he will accept it even on the slightest evidence. It should be clear that people in the financial sector will accept bailouts and money printing even on the slightest evidence that these policies work, because they afford a reason for acting in accordance with their instincts, which will always support any economic policies that boost asset values, performance fees and their personal wealth. How these monetary policies will eventually play out remains to be seen. The optimists will contend that the world is healing. I maintain that these interventions will cause even more problems down the road, including a financial and economic systemic crisis (compounded by recent military interventions in the Middle East and North Africa, which are having an enormously destabilising impact on the region). However, I also acknowledge that the great thing about being a pessimist is that you are always pleasantly surprised. My friend Kenny Schachter, a keen observer of the art scene and an

Figure 6 MEI Moses World All Art Index Compared to S&P 500 and FTSE, 19612011

Source: www.artasanasset.com

active participant as a dealer, recently gave a lecture at the University of Zurich in which he described art as a fully-fledged commodity market. Schachter explains far better than I could do in my modest attempt above how the newly printed money stays in the economy of the Nile Valley, or the owners of capital, and consequently fails to flow into the desert, or broader economy. I should add that the general direction of art prices follows the movement of the S&P 500, with a period of significant underperformance in the 1990s. Since 2000, however, art prices have (with few exceptions) outperformed equities (see Figure 6). (Schachter

believes that, within the next ten years or so, we shall see the first piece of art sell for over $1 billion. If Janet Yellen becomes the next Fed chairman, this is almost a certainty.) Schachters lecture is lengthy but well worth a read because it illustrates so vividly how excessive liquidity has polluted the market for beautiful things from art, cars, antiques, sculptures, watches, clocks, books, etc. to scenic farms and country homes. But sadly, Schachter observes, when you collect and hoard treasure assets, we are left with cars we dont drive, houses we dont live in, wine we dont drink and art we dont look at.

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When Art Became Traded vs. Bought and Sold

Kenny Schachter, E-mail: schachter@mindspring.com

University of Zurich, Executive Master in Art Market Studies, January 26, 2013
In todays global macroeconomic climate low interest rates and lousy returns available from other investments art has been bumped up to a widely recognized investmentgrade asset class, a safe harbor in a world of mass economic uncertainty bordering on hysteria. With the recent enormous values of certain paintings, art has become a fullyfledged commodity market. Especially art, with such well-documented recent astronomical returns, right smack in the middle of the worlds most prolonged and deep recession. Which is a good thing (if you like art), as the audience has grown exponentially partly as a result of press and prices and continues to do so, more in the past 10 years than in the previous 100. People have now come to expect a mostly fair, healthy, burgeoning trade with at least a little semblance to a transparent forum in which to transact business. Art is no longer just bought and sold, but rather, has all the attributes of a mature commodity market that is actively traded in high volumes, in public forums, along with readily available resources for reliable pricing histories (Artnet, Artprice, Artinfo). That is why we are here. If numbers like $100200 million werent screeching across the headlines, as they are, we wouldnt be sitting in this classroom and no one would be interested in how much a Jeff Koons just fetched and why Damien Hirsts market is down 30%. Andy Warhol foresaw all of it; he took the time-worn notion of painting in a modest series and blew it up with industrial-scale production. To quote Hirst: They dont just make dog food in factories; they make Ferraris, too. Warhol saw art as a source of capital generation with the capacity to be used as a means of exchange, but never lived to see his vision come to fruition. Or at least not to the levels we are seeing today. His auction record during his lifetime

was $385k for a work, 200 one dollar bills, once owned by Ethel and Robert Scull (see below) and subsequently sold, just 23 later years (in 2009), for $43,762,500. The only thing worse than being behind the times is being too far ahead. People complain of overproduction and limitless supply in the contemporary art sector, but they fail to understand that a real market that can sustain prolonged growth needs not less works, nor even constantly innovative and original pieces, but rather more of the same to feed demand. We live in a world of brand-driven me-too-ism, where everyone wants what his or her pals have, something easily recognizable as much for what it looks like as for how much it costs. Its much easier to gauge value when comparing like to like if there are loads and, to boot, everyone can get a piece of what they want, or think they want. The move away from the tradition of art being bought and sold in gentlemanly one-on-one dealings, and auctions that were largely colorless affairs attended by professionals only, dates back to a few momentous occasions which broadened the market to include contemporary art and raised the profile to wider audiences with ever-increasing prices. Art went from being collected quietly in the manner in which LIoyds of London has operated for centuries, to all-out grandstanding, glitz and glamor widely reported as much in the gossip pages as in the financial press. And then, of late, the art business went somewhere altogether different and came to mimic the cannibalistic ways of investment banking: with big bucks inevitably follows a certain bloodlust. The first such event that transformed the art market into the mature platform it is today was the 1973 auction of 50 contemporary artworks belonging to Robert and Ethel Scull who became famous on the back of their Pop and Minimal art collection. Rather than being celebrated for cashing in on the

foresight of their wise investments, for which they paid very little, they were castigated by artists and critics alike, including protests prior to the sale outside of Sothebys, and accusations by Robert Rauchenberg of profiteering and lack of loyalty. Rauchenberg was said to have punched Robert Scull after the sale, which provocation did little to impede the momentum of what was to become a full-on raging bull. Another major turning point was the forced Sothebys sale in May 1997 of contemporary art works purchased by cardiologist, Dr. Bernardo Nadal-Ginard, who was convicted in the U.S. District Court in 1994 of embezzling funds from Boston Childrens Heart Foundation, Childrens Hospital. A person who robs money earmarked for childrens heart surgeries is what Id politely call a really determined collector indeed, but one whose actions had the unintended effect of ushering in a time when recently made works by recently minted artists came to be seen as viable fodder for a highstakes evening sale. Such works would have previously been accorded lower day sale status, but after the huge successes (for better or worse), the floodgates were opened in the expansion of the definition of what would constitute expensive, and hence covetable, art. According to Judd Tully in a 1997 Artnet article: Prices realized, such as the record $343,500 for Barneys Transexualis (Decline) from 1991 (est. $100,000$150,000), $167,500 for Whitereads Untitled (Double Amber Bed) also from 1991 (est. $30,000$40,000) and $233,500 for Kiki Smiths crouching Pee Body from 1992 (est. $60,000 $80,000) not only set individual artist records at auction, but elevated these young stars (and other contenders, such as Robert Gober, Jeff Koons, Barbara Kruger and Cindy Sherman) to serious blue-chip terrain.
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 The records kept falling with Stacked (1988), Jeff Koons vertical group of polychromed wood animals, carved in a litter (edition of three), which sold to an anonymous telephone bidder for $250,000 (est. $125,000 $175,000). Similarly, Robert Gobers wax human trunk from 1990, Untitled, brought $189,500 (est. $125,000$175,000), selling to Zurich dealer Ivan Wirth of Galerie Hauser & Wirth. While not a record, Bruce Naumans aluminum and wire Large Butt To Butt (1989) went to SoHo dealer David Zwirner for a huge $299,500 (est. $150,000$200,000). The true globalization of the art market, led by emerging markets such as Russia, the Middle East and China, was yet another element that contributed to catapulting contemporary art into the forefront of the market and, in the process, elevating the market itself to a whole other level. Multi-national galleries such as the Gagosian model, coupled with the expansion of the auction houses from opening worldwide branches, to initiating private treaty sales and primary market exhibitions such as Sothebys S2 gallery as well as the proliferation of art fairs opening each and every month at a location near you, all helped to create a new world order with art at the forefront of a new class of investments. Though they may be labeled variously as Passion or Treasure assets, under any guise, you have a phenomenon that is now approaching tsunami scale. And it isnt going to stop anytime soon. The fact that art is now traded like shares or coal defines a new era in how art is perceived and transacted that will be with us for some time to come.

Dont Shoot the Messenger

A prediction: The market is getting so much press play, people will revert to thinking, speaking and writing about art from sheer boredom. But until that happens, lets look a little more closely at the topic. In the book Rembrandts Enterprise, by Svetlana Alpers, it was mentioned that the
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artist bid up his own prints at auction, and his assistants painted coins directly onto the floor as a ruse to get him to pick up and try to pocket the change. When Picasso was asked what a painting was about, he was said to respond: About 50 grand to you. He was also known to have backdated his works to a period when they were more valuable and always strictly controlled his market. Art and money go way back. Marcel Duchamp printed stock shares to sell his work as an IPO (Initial Public Offering) and had various harebrained ideas on how to make money, from dyeing fabric to inventing toys. Although none of his schemes ultimately worked, there was the underlying notion of equating art with money helping to pave the way for others, leading to where we find ourselves today in this frenzied art economy, where not only does art sell for a lot of money, but a lot of art is in fact about money. It is my position that art has an inherent calculable value; besides, its been assiduously collected since it came off the cave wall. Picasso is the gold standard against which all is measured: His prints, paintings, sculptures, ceramics, whether early or late in his career, are all sought after today with palpable fervor. The medium, size, colors, composition, subject matter and year of origin, are all relevant in determining the price of a work by the artist, although it is certainly true that just about every artwork has a different price depending on who is standing in front of it. A seasoned pro or important client often demands and receives a better deal than a neophyte: Buyers beware squared. When setting or considering the price of an individual artist, the simple parameters are size, cost of materials (an expensively fabricated vitrine vs. paint on canvas), age of maker, where the art is being shown, whether there are any commercial venues abroad, extent of involvement with public and private institutions, and finally, auction history. Basically, at the early stages of an artists career, whos selling, buying and writing about the work is as important, if not

more so, than the artwork itself, and that is true for many years to follow. Eventually, the fair value of an artists work (if there is a God), and you trust in the notion of a meritocracy, will be established based on something other than the amount of ready cash thrown at it. Strangely, the values of an artists output as his or her career matures can be measured like an annuity in reverse, as the highest-valued work typically is that which is made earliest in a career hence Picassos backdating. Of course, there are always anomalies, and artist prices move within the realm of the momentum you see in other more traditional markets. When they hit a high at a given time, they dont necessarily go on to establish further records in subsequent years; oftentimes, prices will begin to trend down. Artists, or the speculators that trade in their works, can shoot their load too quickly with sudden increases in prices that cannot be sustained; the art world is a fickle lot. For example, there are instances of artists who peaked in 2008, a kind of frothy, overheated top in the contemporary art market, never to bounce back to those levels since. The longer the softness lasts in relation to the prices of a particular artist, the harder it is to recover. The actual process of buying and selling art is rather unlike any business on the planet. Sadly for those in the business of promoting the work of emerging, unproven artists, buyers approach the relationship like going into a supermarket, and attempting to negotiate down the price of a liter of milk, not paying for a year, then returning it due to the milk being rancid. In an art world afflicted with collective ADD (Attention Deficit Disorder), there is little or no use (or demand) for skill, criticism or connoisseurship when the singly recognized indicator of value is price and that alone. I have no issue with the hot and heavy romance between art and money, but when it comes to offshoots of the phenomenon such as art funds and art financing, thats
March 2013

where I draw the line. I do not concur with the occurrence of funds because they divorce the aesthetics from the art, and I cannot be so clinical and dispassionate in my choices. In any event, the kicker of owning art is the visual dividend afforded by living in close proximity to the works whether experienced by studied or casual glances. Joe Rosemans book on alternative investments entitled SWAG, an acronym for Silver, Wine, Art and Gold, makes for an interesting read. While I agree with the concept that most of these are now all but fullyfledged asset classes, in an effort to coin a clever term, he misses the point: Substitute real estate and classic cars for silver and you have a more accurate picture. But sadly, when you collect and hoard treasure assets, we are left with cars we dont drive, houses we dont live in, wine we dont drink, and art we dont look at. But these are no playpens for the inexperienced or under-informed: a Ferrari from the same year can sell for $40,000 or $40,000,000 and the same can be said for a Warhol (with a lot more at risk). Private museums have eclipsed museum-museums to confer value, not to mention the death of the critic and art journal, soon to be followed by the end of galleries as we know them. Business journals like Bloomberg, Financial Times and Wall Street Journal are todays art magazines. And the patrons are in the midst of becoming more known and revered than the artists. In the not so distant past, the Gagosian quotient i.e. an artist getting absorbed into the worlds most high profile gallerys stable would add, in my estimation, a 20% increase of prices on average. This could be more systematically established by researching auction prices of artists in the year before and after joining Gagosian. But it seems that we are now in a Post Gago universe, an age of artist free-agency where rich artists have cut loose from the gallery system; a new paradigm where the once all-powerful galleries stand to lose as much as everyone else. Even the most expensive living

artist can face a collective nose snub from the collecting public. An example is a group of Gerhard Richter pencil drawings I was offered, for which there is a separate catalogue raisonn (a log of all recognized works by a given artist). Despite the unequivocal virtuoso nature of the works and their large museum history, they are too esoteric, too far afield from the artists colorful abstractions or blurred photo-based realism to be wholly absorbed and embraced for the moment at least. The market is too damn like-minded and capricious to assign value to such a largely unknown and under-appreciated aspect of Richters body of work. Arts trading floors for bulk business, aside from Sothebys and Christies, are the freeports, international fairs and offshore outposts of mega dealers, where clients trade according to the most advantageous tax jurisdiction. At present, with third party guarantees and dubious bidding by interested parties, auctions are like dog and pony shows for publicly setting (propping up) values. A rule of thumb is that sought-after artists sell more expensively at auction than on the primary market (they are harder to come by, and you need good personal relations with the dealer and sometimes the artist too), and lukewarm ones go for less at public sale than in a private gallery. Now the auction houses are bearing down more than ever in going head to head with commercial galleries. In this vein, you have Sothebys S2 venture, a result of the fact that auction houses face a new degree of pressure to become more proactive i.e. more year-round profit making, in addition to regularly scheduled sales. But a problem in todays Big Money art world faced by dealers and auction houses alike is chasing collectors in an effort to draw out valuable works fresh to the market. I know of one who turned down the price of an office building to sell a classic Picasso, stating an often heard refrain: What will I do with the money? In the newfangled art-finance landscape we now inhabit, all manner

of technical graphing tools have come into play to try and help (novices presumably) make sense out of the soup. In this regard you have Artprice, Artnet Analytics and Moses/Mei: artist and art market tracking indices but are they as pointless as they seem? After reading the website of Moses/ Mei, coordinated under a company called Beautiful Asset Advisor, LLC, Id venture to say irrelevance isnt a strong enough term. Breaking art down into such sophomoric and pedantic graphs and charts is at best foolhardy and, worst, gives a misleading picture indeed. As the last fully unregulated multi-billion dollar industry, insider trading in art is not sanctioned but certainly permissible by buying ahead of unannounced museum shows. They say art is a good place to launder money, and with tighter monetary reporting regulations and banks selling client lists to governments like hotcakes, perhaps there is some truth to this. Taking into consideration all the above, are we approaching a climate ripe for regulation in the art market? The recent spate of art world lawsuits (mostly involving Gagosian) especially those asking the question: can dealers represent both sides of a transaction without disclosing such agency relationship? would certainly indicate the climate is ripe for some regs. Art is a tricky thing to codify as just another offshoot of a financial instrument. As a collector, you are really no more than a mere custodian charged with ensuring the safekeeping of often very fragile and fleeting objects. On the secondary market, questions of authenticity and title are less clear than ever before and only getting more convoluted. Also, you can never overemphasize how illiquid art is in relation to shares and bonds. In other words, art is as much of a minefield for the uninitiated as trading in financial derivatives. From simpler times when art was collected with passion and dedication, albeit a passion with social cachet, somewhere along the way it became a bigger business than the business I initially ran away from when I began curating.

March 2013 The Gloom, Boom & Doom Report 11

INVESTMENT OBSERVATIONS
The most common themes I hear nowadays are the following: Sell US government bonds and buy US equities. The global economy is healing. Chinas economic growth is accelerating. High-yield bonds are vulnerable. US stocks will outperform other equity markets around the world. Corporate profits will remain high. All asset prices have been inflated and there is a lack of great investment opportunities. The bull market in gold is over. I tend to agree that equities will perform better than bonds over the next five to ten years. However, the almost unanimous consensus about this view concerns me. In addition, I could argue that for the next few months, US government bonds (and other so-called high-quality sovereign bonds) could outperform equities. Following tax increases after January1, 2013, US consumption is likely to weaken somewhat. (This view is supported by weak sales at Walmart and McDonalds.) Should Democrats and Republicans fail to come to an agreement shortly, sequestration, which should start March 1, would likely weaken GDP further. I suppose that US government bond investors would be cheered by spending cuts (even if they are extremely modest). Given the extremely oversold condition of government bonds and the extremely negative sentiment among investors about long-term government bonds, I could see a decent rebound (see Figure 7). Also, whereas I believe that the yield on ten-year Treasury notes will rise over time, I wouldnt be surprised by a retest of the lows in yields we saw in July 2012 (see Figure 8). To refresh the memory of my readers, I should remind them that in the summer and early autumn of 2012, a large number of experts were forecasting ten-year yields to drop to less than 1%. Whereas investors sentiment about bonds is extremely bearish,
12 The Gloom, Boom & Doom Report

it is exuberantly optimistic about equities. Widespread unanimous bullishness about the outlook of equities is usually associated with either intermediate or longer-term market tops (see Figure 9). Since I have discussed the Asian markets in the past, and the Thai stock market more recently, it might be timely to mention the following. I started investing in Thailand in the early 1980s, and I have had a house in Chiang Mai for 13 years. The speculation I am seeing now in real estate and in equities has occurred only four times since the early 1970s: in the late seventies, which was followed by the collapse of Raja Finance; in 1987 ahead of the global stock market meltdown; and in 1994 and again in 1996, dead ahead of the Asian crisis. (The Thai SET stock market index peaked out in 1994 at 1,789 and has not since exceeded that high.) This isnt to say that the Thai stock market cannot move higher in the near future (I think it will), but it is becoming extremely frothy (see Figure 10). As is the case elsewhere in the world, real interest rates provided inflation has been measured correctly are extremely negative. I estimate that prices for

most goods (including food and energy) and services are up by at least 50% in the last seven years or so (see Figure 11). Land prices in Chiang Mai have approximately doubled in the last three years and are up by far more in other areas of the country. In the meantime, the Thai SET stock market index is up from 380 at its low in November 2008 to 1,540. My purpose in briefly discussing the Thai stock market (and having Kenny Schachter brief us about the art market) is to show my readers that asset inflation has touched many different asset classes in just about every corner of the world. I am deeply concerned about what will happen to the global economy when this universal, all-encompassing credit-driven asset inflation ends. It should be clear that all types of inflation eventually give way to deflation. At that point, cash will be the most desirable asset. I will conclude with a few additional thoughts about the ongoing asset inflation. High consumer price inflation such as occurred in the 1970s is certainly undesirable. However, when it comes to an end and is replaced either by deflation or disinflation, the outcome

Figure 7 20+ Year Treasury Bond ETF, 20112013

Source: www.decisionpoint.com

March 2013

Figure 8 Ten-Year US Treasury Notes Yield, 19692013

Source: Ron Griess, www.thechartstore.com

Figure 9 NASDAQ Newsletter Sentiment Index, 20052013

Source: www.elliottwave.com

March 2013 The Gloom, Boom & Doom Report 13

Figure 10 Thailands Local Investors Trading Volume and their Trading as a Percent of Total Trading, 20052013

Source: Dan Fineman, Credit Suisse

Figure 11 Thailands Electricity Costs (baht per KWh), 20042013

Source: Credit Suisse

Figure 12 Baltic Dry Index, 20032013

Source: www.decisionpoint.com

is an improvement in economic conditions and rallying asset markets. Asset inflation, when it occurs, is like a great party where booze, drugs, and women and men (to be politically correct) are available for free. Unlike times of consumer price inflations, which hurt the economy, asset inflations, which are driven by excessive credit growth, initially boost economic activity. The damage is caused when the asset inflation comes to an end, which is inevitable at some stage. I cannot think of any serious recession or depression in our free market economic system that wasnt preceded by a high asset inflation, excessive debts, and wild speculation. I read a very large number of economic publications. In the past month, I have seen an increasing number of extremely bearish economists, many of whom missed the entire 20092013 US bull market and the huge upward move in European stock markets since May 2012, turn relatively optimistic about equities. In the meantime, insider selling has picked up and is at a historically extremely high level. Personally, I would rather rely on corporate insiders than on economists, in terms of economic and corporate profit forecasts. The only missing link, which usually accompanies major stock market peaks, is the lack of a heavy new issue calendar. The notion that the global economy is healing is not confirmed by the performance of the Baltic Dry Index or that of copper (see Figures 12 and 13), particularly given the fact that so many economists are arguing that Chinese economic growth has reaccelerated. (It probably has, but it is once again driven by credit and looks to this observer to be unsustainable.) I agree that high-yield bonds are vulnerable. However, if there is really a high-yield bond bubble that is about to burst, then I suppose that the stock market wont be far behind, since both equities and high-yield bonds correlate closely. I should add that the new issue boom in the current bull market may have
March 2013

14 The Gloom, Boom & Doom Report

Figure 13 Copper, 20112013

Source: www.decisionpoint.com

Figure 14 Combined Tonnes of Gold Held in US Gold ETFs, 20112013

Source: Tom McClellan, www.mcoscillator.com

bypassed the stock market and been replaced by an extremely heavy new issue calendar of lower-quality bonds. In the December 2012 GBD report, when gold was trading around $1,650 per ounce, I mentioned that I would increase my position if

gold dropped another $100 or so. I explained at the time that the heavy short position of commercials in the precious metals future market was disconcerting. The technical position of gold has improved, but ideally I would like to

see another bout of liquidation by speculators. In other words, I would like to see the combined tonnes of gold held in the GLD and IAU Trusts decline by at least 10% (see Figure 14). Still, for my readers who have no exposure to gold, I consider the current price to be a good entry point from a longer-term perspective. (Commercials now have the lowest short exposure since the gold markets low in late 2008.) I doubt that the uptrend in precious metals is over. However, if the precious metals bull market is indeed over, as so many experts suddenly seem to think, the entire bull market in asset prices, including equities, could be over. In a deflationary collapse, I should think that investors in physical gold will be better off than in financial assets. I agree with some thoughtful fund managers and strategists who consider most asset prices to be grossly inflated. However, the NASDAQ was overvalued in 1999 and still managed to double between August 1999 and March 2000. I dont know precisely when the Great Asset Inflation will end, but considering the price increases we have had already, we are moving into a high-risk asset bull market phase. As explained in earlier reports, I believe the Japanese, Chinese, and Vietnamese stock markets are relatively attractive, and I shall increase my position on a correction of the Vietnamese and Japanese markets. In terms of property markets, I should mention that Irish properties are now a bargain. Regular readers of this report should remember that I take a very dim view of social and political developments in the Middle East. However, I also find that Iraqi stocks are selling at incredibly low valuations. My friend Geoffrey Batt, managing member of Euphrates Advisors LLC (I am an investor in the fund), has kindly provided an update of current investment opportunities.

March 2013 The Gloom, Boom & Doom Report 15

Below is a copy of the January 2013 newsletter for the Euphrates Iraq Fund, a fund dedicated to public equities listed on the Iraq Stock Exchange. Trading at 4.9 times earnings, our portfolio of Iraqi equities are among the cheapest in the world, despite core banking and consumer product companies experiencing earnings growth of 90% or more in 2012. Euphrates Advisors discuss the recent record IPO of mobile phone company Asiacell on the stock exchange in Baghdad and its role in creating a local equity culture among Iraqis.

Euphrates Advisors LLC

80 Broad Street, 5th Floor, New York, NY 10004, +1 212 837 7727 Geoffrey Batt, Managing Member (gsb@euph.com) Grant Felgenhauer, Principal (gpf@euph.com) The IPO of Asiacell, Iraqs second largest mobile telecom provider, captured the markets attention for most of January, and on February 3rd the stock began trading. While long anticipated, few believed the Iraqi bourse could pull off such a sizable listing. Indeed, just six months ago the notion that the largest IPO in the Middle East since 2008 would occur on the Iraq Stock Exchange struck many as sheer fantasy. Sometimes truth is stranger than fiction or fantasy, as it was in the final days of January, when we learned the Asiacell IPO was oversubscribed, with foreigners accounting for 70% of demand, buying $890 million of the $1.3 billion offering. Chart 1 places this foreign interest in context. Foreign purchases of Asiacell stock amounted to 174% of the total foreign trading volumes on the Iraq Stock Exchange in the four years from 2008 through 2011. In other words, foreign investors committed more money to Iraqi equities on a single day in early February than over a recent span of four years. Moreover, this demand materialized despite the fact that a lone local broker marketed the entire deal; no foreign banks were involved. In addition to doubling the market capitalization of the Iraq Stock Exchange (ISX) overnight with its $5 billion valuation, we believe Asiacell is transformative for the following reasons: It demonstrates the ISX is a viable capital market, capable of attracting the foreign and local capital flows needed to support large listings. It may induce more local entrepreneurs to list their companies on the ISX.
16 The Gloom, Boom & Doom Report

Chart 1

Source: Iraq Stock Exchange, Euphrates Advisors Research

It should force international skeptics to reexamine their beliefs about Iraq generally; local Iraqis know their country best and people dont invest in local equities if they believe economic chaos, civil war, or the other trappings of a failed state are likely to materialize. It marks the first, large step toward establishing a local equity culture. This last point is especially significant, and we witnessed it first-hand when we traveled to Sulaymaniyah, Iraq in mid-January to spend time with the founders of Asiacell as part of our pre-IPO diligence. While these meetings were useful, the deepest impression was made by what we saw outside our brokers office: crowds of locals holding bags of Iraqi dinars waiting to open their first brokerage account and participate in the Asiacell IPO. Given our experience in early 1990s Russia, what we saw was reminiscent of their famed voucher auctions that for all their faults

ultimately laid the foundation for Russias post-Soviet capital markets and equity re-rating. As with residents of voucherera Russia, most Iraqis today are unbanked and un-invested in equities. Since approximately 30% of the Asiacell subscriptions originated domestically and since much of this domestic demand came from new brokerage accounts it now appears the Iraqi people are taking another collective step into the modern world. Their desire to exchange tangible dinars for fractional ownership of Asiacells equity implies: Local recognition of public equities as means to preserve and grow wealth over time. Iraqis chose to invest in Asiacell rather than hold their dinars in a deposit account that in Iraq can yield anywhere from 47% annually. Asiacell is the first stock most Iraqis have bought. It will not be the last. A greater banked percentage of the population. When the time comes to take money out of the market,
March 2013

Table 1

Iraq Middle East Investment Bank Comparative Financial Performance

brokers dont hand out physical dinars, they wire proceeds or issue checks that need to be deposited in bank accounts. Thus, every unbanked local that subscribed to Asiacell must open a bank account. Once a person becomes integrated in modern capital markets, they rarely return to their former unbanked status. The first implication could be a catalyst for undervalued stocks to rise in price as greater local demand for equities emerges over time. The second implication will directly benefit bank balance sheets and profitability. In this regard, consider the example of Iraq Middle East Investment Bank (hereafter BIME), the first bank to release full year 2012 financials (see Tables 1 & 2). BIME knocked the cover off the ball in 2012. Compared to 2011, revenues grew 73% and net income grew 143%. But the market value of its stock only rose 18%, badly lagging earnings growth and resulting in the sharp de-rerating of its stock from 8.7 times trailing earnings to 4.3. Looking back a bit farther to 2006, the divergence between BIMEs operational performance and its stock market value is sharper still. From 20062012 earnings increased 825% while the market value of BIMEs stock increased just 71%. The banks return on equity, a solid 22.6% in 2011, jumped to 34.1% in 2012, yet the market chose not to reward, but punish BIMEs more profitable use of its equity by assigning the stock a lower indeed a discounted price-to-book multiple. The de-rating of BIME is representative of a general trend observed throughout the Iraq Stock Exchange. We believe this

Table 2

Iraq Middle East Investment Bank Summary Metrics

is symptomatic of a market in need of a catalyst. The Asiacell IPO, insofar as it attracts more Iraqis to local equities, could be just what the doctor ordered. The national transition now underway in Iraq that was further accelerated by the Asiacell IPO from an unbanked to a banked country has profound implications for the size of bank balance sheets and ultimately, bank profitability. Chart 2 illustrates the growth of a representative sample of private bank assets from 2005 to 2012. This asset growth is a result of banking penetration rising from
Chart 2

about 8% to 15% of the Iraqi population. Most mainstream emerging markets have banking penetration above 80%. The real growth of Iraqi banks is still ahead. As equity investors in banks, our primary concern is whether management can harness this asset growth profitably. Asset growth and the extension of credit only matter for investors if they are profitable activities. On this score, we are seeing signs that asset growth is indeed driving profits at Iraqi banks and more importantly it appears based on recent results that Iraqi banks are learning how to

Source: Euphrates Advisors Research; Company Quarterly and Annual Report, Various Issues

March 2013 The Gloom, Boom & Doom Report 17

translate asset growth into profits more efficiently i.e., the nominal profit from each incremental growth in assets is increasing. This profit trajectory also underscores the scale of growth that is unique to banks in early stage frontier markets where, like Iraq, there is a growing money supply and rising personal incomes and a relatively low asset base. Unless equity performance can match this growth in profits, multiples will contract and the market will derate. With identifiable catalysts just beginning to positively influence the market, we would not be surprised if the days of the ISX continuously derating are near their end.

Chart 3

Source: Euphrates Advisors Research; Company Reports. Profits are billions of IQD

The Gloom, Boom & Doom Report

Marc Faber, 2013
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