Marc Faber: "The Best Thing The Fed Could Do For Markets Wold Be To Collectively Resign"

Highlighted on ZH:

Faber on whether he thinks the Fed did the right thing by keeping rates low:

"I think they did the right thing that they didn't allow QE3. They can watch the reaction of assets, whether they will go lower. I think the market is more likely to move still lower. We are very oversold. We can have a rebound like we did today, maybe we'll have a rebound next week or so, but in general I think we will test the July lows of last year, the S&P at 1,010. After that, probably we'll get probably a QE3 announcement."

On why he thinks the Fed is waiting on QE3:

"I think the Fed is underestimating the severity of the coming economic downturn. Essentially they spent their bullets. It is very difficult to follow through with QE3 right here, because you have gold prices going ballistic, and you have the dollar being very weak, and so there are unintended consequences with implementing QE3 right here."

On what Faber thinks the Fed should do:

"The best [the Fed] could do for markets would be to collectively resign…I think sometimes the best is to do nothing. I welcome the decision, at least today, that they aren't doing anything worse than what they have already done."

On whether it makes sense to provide any kind of stimulus:

"What has QE1 and QE2 done for the labor markets? Nothing at all. It's done nothing for the housing markets. It's lifted stocks and it created wider wealth inequality in a sense that people who own assets have done very well, and people that are the lower-income recipients groups, they are hurt by rising energy prices and food prices."

On what should be done for the U.S. economy:

"From 1981 to 2007, we have an economy that was living beyond its means. As a result of continued debt accumulation, GDP was higher than would otherwise have been the case. Now we have a period of sub-par growth that can last for quite some time now, and like in the case of Japan after 1989, people instead of being encouraged to spend, they should be encouraged to save more, and the U.S. should save more and spend less. And then capital spending will essentially pick up."

On the manic behavior in markets:

"I personally think the Treasury market, the long-dated, are a bubble and it will be one of the worst investments for the longer term if you buy a 10-year, a 30-year U.S. Treasury so I'm a bit puzzled that Treasuries are now yielding, are essentially near record lows. I would rather sell Treasuries."

"The stock market peaked out on the 2nd of May on the S&P at 1370. So we're now around 1010. For many stocks we're down 20% or so. We're very oversold. I think a rebound is coming but you can forget about a new high. That is out of the question. Because the technical picture is horrible, horrible. "

On why investors are continuing to move to Treasuries:

"I've been in this business for 40 years and on many occasions, nothing made sense to me….I think the Treasury market is another example of a gigantic bubble. The problem with the Federal Reserve policy of essentially zero interest rates is that they are essentially throwing money at the system, but they don't control where the money will flow to. It can flow at some point into commodity-related stocks. It can flow into gold, oil, treasuries, but it doesn't flow evenly into these assets. In my opinion, the Treasury, the long-dated Treasuries are essentially the short of the century thing here."

On whether gold is a bubble:

"I don't think it is a bubble, but I think the gold market has exploded to the upside recently and the correction is overdue. But as I have always maintained for the last 12 years, every responsible adult should gradually accumulate gold, because not owning any gold is the trouble with government. I don't understand. People of Bloomberg, I hardly know anyone who owns any gold physically. All of the Bloomberg employees are intelligent people. They listen to the news every day. They make the news every day. Hardly anyone owns any gold.”

On what you can do with gold:

"I disagree [that you can't do anything with gold.] You give your girlfriend copper rings and I give them gold rings and I keep them longer."

On how Faber would play the markets right now:

"I think right now the technical picture is so horrible that I would use a rebound as a lightning up opportunity. I think [equities] will move lower. I mean, some say you should move back into emerging economies because the fundamentals of emerging economies are far better than the fundamentals of European countries and the fundamentals of the United States. This is something I will consider."

"The only thing I have to say, basically the market has sold off in such a rapid way and with so much momentum that I am smelling as if something really wrong happens in the next two or three months, because the market is a discounting mechanism. Like March 2009 the market started to go up and people were baffled why it started to go up. Now it starts to go down, and maybe after three months people will wake up and scratch their heads and say now, we know why it started to go down, because maybe there is geo political problems, maybe the Middle East blows up, maybe the economy is horrible."

Why Marc Faber Is Such a Bear

Nice article on CNBC: Why Marc Faber Is Such a Bear

Why Marc Faber Is Such a Bear
Published: Friday, 1 Apr 2011 | 3:10 AM ET Text Size By: Alex Frew McMillan
Special to CNBC.com

The thing about predictions is that if you make enough of them, eventually they’ll start to come true. Being a good enough prognosticator to hold the investor community’s attention most of the time is an entirely different matter.


That’s what economist and market forecaster Marc Faber has clearly become. But even he isn’t perfect. His best prediction of all time, he says, was also the worst investment call he’s ever made.

“That was the prediction that the tech bubble would burst,” which he made in 1998. “But it came two years too early.”

Like good comedy, the secret of forecasting is timing – only less funny if you’re the butt of the joke. The Nasdaq more than doubled after he made the call, before crashing in March 2000, so Faber still lost money shorting tech stocks.

Identifying market lows is much easier than calling market highs, Faber believes. Bubbles always seem to blow up further than expected. “I have always underestimated the madness of the investment community,” he says.

In terms of timing, his best bet was to recommend selling stocks a week before the 1987 crash. But even that had more than an element of luck. “It was a coincidence that it happened a week later,” he admits.

Still, it’s those kinds of calls that have made Faber a favorite board member, panelist and prognosticator. Subscriptions to his monthly “Gloom, Boom & Doom Report” run as high as $1,500 per year, or $300 for an abbreviated market commentary.

“He sometimes gets it wrong,” Hong Kong-based writer Nury Vittachi notes, “but one doesn’t mind someone getting it wrong as long as they have taken a stance. It’s the people that don’t take a risk who don’t get any respect.”

Plenty of Risk

Faber, 65, takes plenty of risk. He writes the newsletter and runs the Hong Kong-based company Marc Faber Ltd., which he says manages around $300 million in assets but hasn’t taken in fresh capital for years. He set up his own shop in 1990 after his previous employer, junk bond specialists Drexel Burham Lambert, went bust.

Although Faber has called Hong Kong home since 1973, he now lives mainly in Chiang Mai, in Thailand’s northern hill country, a city preferred by many long-time expatriates for its mild climate. He moved to the city nine years ago, having married a Thai national, Supatra, 30 years back.

They met in Hong Kong, where Supatra was running a Thai restaurant of the same name in the then-fledging bar area of Lan Kwai Fong, having left Cathay Pacific, where she was a flight attendant. They have a daughter, Nantamada Faber, 28, a former shoe model who now works in shoe wholesale, shuttling between Germany and Switzerland.

Besides making strong calls, Faber is also known for his love of the nightlife in Wan Chai – Hong Kong’s former red-light district, known for its low-rent bars, and equally low-rent girls. Faber himself says that from 1990 through 2000, when he was mainly working as a broker trading U.S. markets, his nocturnal schedule would see him clock off at 4 or 5 in the morning and head to dives like Neptune or Strawberries.

How did that go down at home? “In general I have been a reasonably loyal husband,” he says. “I suppose every marriage has its problems.”

His outspoken nature, and deep knowledge of the history of financial markets, have made him a popular speaker. TV anchor Bernie Lo, who has interviewed him since the early 1990s, says he is one of the most anticipated guests, generating a flood of emails and inquiries ahead of any appearance.

“I’ve heard everything from him, and some of the most outrageous predictions,” Lo says. “He doesn’t toe the line.”

Faber is one of the few Asia-based experts who command worldwide attention. He ranks along with investment gurus Mark Mobius and Jim Rogers in terms of the attention his predictions get, Lo says, noting it’s standing-room-only to hear his addresses at investment conferences.

“People love him,” Lo says. “He is entertainment and historical perspective, all in one package.”

Four Motorbikes

Given a hectic travel schedule, Faber spends only a week out of every month at home, and three weeks on the road. At home, he’ll write, read and take a daily Thai lesson, wrapping that up with a beer at a local bar. Then he roars home on one of his four motorbikes. He has a pair of BMW road bikes and racing bikes from Kawasaki and Suzuki.

“People say I’m a pessimist,” Faber notes. “I always say no – if you drive motorcycles in Thailand, you have to be an optimist.”

Faber was born in Zurich, and grew up as a crack skier – he competed in two Universiades, the world student games, at Sestriere, Italy in 1966 and Innsbruck, Austria, in 1968.

His stark market calls and love of dangerous sports demonstrate a pleasure in taking great risk. But Faber says each risk he takes is calculated, based on practice and experience. He would love to hang glide, or race motorcycles, or get into base jumping.

But beyond giving bungee jumping a try, he’s not about to embark on such potentially deadly pursuits unless he can carve out the time to perfect them. Risk is a fabric of life, Faber feels. He’ll take ones that are backed by experience – and that make life an interesting experience.

“I know I will die, but I’m still living,” Faber says. “What do you want me to do about it? Should I kill myself in anticipation of certain death in 10 or 15 years time?”

The same kind of logic applied to his run on Wall Street, which began in 1970 at the firm White Weld & Co. with a role summarizing economic research to send to overseas offices, in the pre-Internet days. He got to know future U.S. Federal Reserve Chairman Alan Greenspan, who gave a briefing to the firm every two weeks.

“At the end I was the only person attending because all he did was summarize the Wall Street Journal of the previous day,” Faber says.

White Weld moved him to Hong Kong.

But Faber left in 1978 when the firm was bought by Merrill Lynch, and he decamped for Drexel. He started managing portfolios of U.S. bonds for overseas charities, churches and foundations, setting up their operations in Singapore and Hong Kong.

“I said to myself the day I joined Drexel, ‘This is a company that will go bankrupt,’" he says now. “It was a Middle Eastern bazaar — like fiefdoms, each department was independent, and there were extremely lax controls.”

The Ponytail Incident

But its operations suited his independent streak. He says he turned negative about junk bonds in 1986 and advised his clients to steer clear. Still, despite such perfect hindsight now, he was as taken aback as the market and regulators alike when Drexel did collapse – Faber spent hours on the phone with regulators persuading them his client’s funds were in segregated accounts.

The incident left him sure he wanted to eschew office politics forever. “I have responsibilities, but I am free,” he says of running his own company. “And that relieves you of a lot of tensions in life.”

Author and journalist Nury Vittachi got to know Faber well while writing his business-gossip column Lai See for the South China Morning Post. Faber featured in Lai See frequently until Vittachi was forced to give up the column in 1997.

The author recalls a meeting with Faber on November 5, 1992, when Faber predicted the Hang Seng index [.HSI 23801.90 274.38 (+1.17%)] would fall – and pledged to cut a centimeter off the ponytail he then wore for every 50 points it went up.

He had to go through with a trim after the market duly rose by 50 points the next week. Faber got celebrity hairdresser Andre Norman to give him a trim. But it then did plummet, saving his blushes, and most of his locks.

“He didn’t have that much hair left, so he was putting one of his favorite body parts on the line,” Vittachi says. “The thing that impressed me is that he made genuine predictions — he never hedged his bets.”

Vittachi went on to write a book about Faber, “Doctor Doom – Riding the Millennial Storm” that came out in the aftermath of the Asian financial crisis in 1998 – its subtitle is “Marc Faber’s Path to Profit in the Financial Crisis.”

“His decisions are always based on analysis, although I think he has got instinct by this time,” Vittachi says. “He won respect for being right, but he also won respect for being wrong because he gave you his reasons, and admitted he was wrong.”

Faber predicts now that the financial system will ultimately break down, and even forecasts that the current fad of printing money in the West will lead to World War III. In the meantime, own stocks, real estate and commodities, not bonds and cash, he recommends.

Among his favorite current calls: invest in natural gas, now very cheap, and Japanese stocks. Beware the U.S. stock market, particularly small- and mid-cap stocks. Gradually buy gold. Real estate is a bargain, though not in China and Hong Kong. Emerging markets are likely to continue to correct, and the U.S. dollar should gain.

What made Faber always want to run against the grain? “Some people are born with a hard head, and patience,” he says with a chuckle.

Marc Faber: They Will Just Print More!

On CNBC: If Market Keeps Falling, Fed Will Keep Printing: 'Dr. Doom'

• Falling stock prices will be met only with more money injections from the Federal Reserve, Marc Faber, the so-called "Dr. Doom," told CNBC.
  
  Speaking as global markets fell violently lower in the wake of the Japan earthquake and fears of a nuclear meltdown, Faber said a stock correction actually is healthy in view of how far equities have come from the March 2009 lows.
  
  He also expects weakness to persist and the Standard & Poor's 500 to drop as much as 15 percent. Further, Fed Chairman Ben Bernanke will likely give the green light to another round of Treasurys purchases, which have come to be known as quantitative easing, he said.
  
  "We may drop 10 to 15 percent. Then QE 2 will come, (then) QE 4, QE 5, QE 6, QE 7—whatever you want. The money printer will continue to print, that I'm sure," said the author of the Gloom, Boom and Doom Report. Later in the interview, he added, "Actually I made a mistake. I meant to say QE 18."
  
  As for the situation with Japan specifically, he said the end result of rebuilding after the quake would be inflation and a positive for stocks, while Japanese Government Bonds, or JGBs as they are often called, would suffer.
  
  "This huge selloff is an investment opportunity in Japanese equities, but if a meltdown occurs then all bets are off," he said.
  

Marc Faber: Mirror, Mirror on the Wall, When is the Next AIG to Fall?

Dr. Marc Faber Talks On Bloomberg About China And Yuan

Here's the recent (OLD - since the video is dated 3rd May 2010) video where Dr. Marc Faber talks on Bloomberg about Greece and China's Economy May Crash in Next 12 Months ( See Dr. Marc Faber Warns That China 'May' Crash )

And on CNBC news another Feber talks: Faber Report: Why Investors Should Watch China

• China has not been foremost in investors’ minds of late given the turbulence in Europe.
  But data released on Tuesday shows a torrid pace of economic growth in the country. Property prices are up 12.8 percent, retail sales are up 18.5 percent, industrial production is up 17.8 percent and fixed asset investment is up 26.1 percent.
  
  Those figures may concentrate investors, once again, on the question of whether China’s economy is in a bubble or simply a cyclical upswing.
  
  I will leave it to others to debate the merits of either argument. But there seems little doubt, given China’s very strong growth, that the government will likely try to apply the brakes a bit and stem inflation through higher interest rates, perhaps even more restrictions on bank lending and the possibility of allowing the Chinese currency to trade in a higher band.
  
  
  
  The fear of one or both of those moves has helped send the major Chinese stock market down sharply since November.
  
  China may not be the top story today, but investors would do well to keep it in their sights given that some would say the Shanghai Composite Index (SSE Composite Index), now in bear territory, could be a forerunner of what we could expect here in our markets.

Dr. Marc Faber Warns That China 'May' Crash

On Bloomber News.

• China May ‘Crash’ in Next 9 to 12 Months, Faber Says (Update3)
  
  By Shiyin Chen and Haslinda Amin
  
  May 3 (Bloomberg) -- Investor Marc Faber said China’s economy will slow and possibly “crash” within a year as declines in stock and commodity prices signal the nation’s property bubble is set to burst.
  
  The Shanghai Composite Index has failed to regain its 2009 high while industrial commodities and shares of Australian resource exporters are acting “heavy,” Faber said. The opening of the World Expo in Shanghai last week is “not a particularly good omen,” he said, citing a property bust and depression that followed the 1873 World Exhibition in Vienna.
  
  “The market is telling you that something is not quite right,” Faber, the publisher of the Gloom, Boom & Doom report, said in a Bloomberg Television interview in Hong Kong today. “The Chinese economy is going to slow down regardless. It is more likely that we will even have a crash sometime in the next nine to 12 months.”
  
  An index tracking Chinese stocks traded in Hong Kong dropped 1.8 percent today, the most in two weeks, after the central bank raised reserve requirements for the third time this year. The Shanghai Composite has slumped 12 percent this year, Asia’s worst performer, as policy makers seek to rein in a lending boom that’s spurred record gains in property prices. China’s markets are shut for a holiday today.
  
  Copper touched a seven-week low and BHP Billiton Ltd., the world’s biggest mining company, fell the most since February on concern spending in the world’s third-largest economy will slow and after Australia boosted taxes on commodities producers. Rio Tinto Ltd., the third-largest, slid as much as 6 percent.
  
  Chanos, Rogoff
  
  Faber joins hedge fund manager Jim Chanos and Harvard University’s Kenneth Rogoff in warning of a crash in China.
  
  China is “on a treadmill to hell” because it’s hooked on property development for driving growth, Chanos said in an interview last month. As much as 60 percent of the country’s gross domestic product relies on construction, he said. Rogoff said in February a debt-fueled bubble in China may trigger a regional recession within a decade.
  
  The government has banned loans for third homes and raised mortgage rates and down-payment requirements for second-home purchases. Prices rose 11.7 percent across 70 cities in March from a year earlier, the most since data began in 2005.
  
  The government has stopped short of raising interest rates to contain property prices. Within an hour of the central bank announcement on reserve ratios, Finance Minister Xie Xuren said that officials remained committed to expansionary policies to cement the nation’s recovery.
  
  Stocks ‘Fully Priced’
  
  The nation’s economy grew 11.9 percent in the first quarter, the fastest pace in almost three years. The government projects gross domestic product growth for the year of about 8 percent.
  
  The clampdown on property speculation may prompt investors to turn to the nation’s stock market, Faber said. Still, shares are “fully priced” and Chinese investors may instead become “big buyers” of gold, he said.
  
  BlackRock Inc. is among money managers reducing their holdings on Chinese stocks on expectations that economic growth has peaked. The BlackRock Emerging Markets Fund has widened its “underweight” position for China versus the MSCI Emerging Markets Index to about 7.5 percent from 4.6 percent at the end of March, the fund’s London-based co-manager Dan Tubbs said.
  
  Industrial & Commercial Bank of China Ltd., China Construction Bank Corp. and Bank of China Ltd, the nation’s three largest banks are trading near their lowest valuations on record as rising profits are eclipsed by concern bad loans will increase.
  
  Local Governments
  
  Citigroup Inc. warned in March that in a “worst case scenario,” the non-performing loans of local-government investment vehicles, used to channel money to stimulus projects, could swell to 2.4 trillion yuan by 2011.
  
  Housing prices nationwide may fall as much as 20 percent in the second half of the year on government measures to curb speculation, BNP Paribas said April 23. Under a stress test conducted by the Shanghai branch of the China Banking Regulatory Commission in February, local banks’ ratio of delinquent mortgages would triple should home prices in the country’s commercial center decline 10 percent.
  
  Shanghai is projecting as many as 70 million visitors to the $44 billion World Expo, more than 10 times the number who traveled to the 2008 Beijing Olympics. More than 433,000 people visited the 5.3 square-kilometer (3.3 square-mile) park on its first weekend.

http://www.businessweek.com/news/2010-05-03/china-may-crash-in-next-9-to-12-months-faber-says-update3-.html

Dr. Marc Faber: China Will Drag Down US Stocks By 20%

On CNBC:

• ... Specifically, Dr. Faber is concerned about the way in which Beijing’s decided to slam the brakes on growth -- via a sharp reduction in lending.
  
  That he says, will drag down any and every company that soared higher during the recent China boom.
  
  "I would not buy Chinese stocks here," Faber tells the Fast Money desk.
  
  If you agree with Faber’s thesis you might want to short ACH or some of the refineries in China, adds Tim Seymour.
  
  But it's not just China-based companies that will get hit.
  
  "I would be careful of any asset that benefited greatly from the China boom in 2009 because (their earnings) are not sustainable," he tells Fast Money.
  
  That includes a slew of US multi-nationals.
  
  And to make matters worse, Faber thinks as growth slows in China "we will see a lot of excess capacities," and as a result the market could be flooded with excess supply. "Industrial commodities have become quite vulnerable."
  
  Faber expects to see the Dow and S&P “fall 20% from the January highs” in the near-term and perhaps more than that as developments unfold.

Dr. Marc Faber Investment Suggestions For 2010

Some latest comments from Dr. Marc Faber: Investors likely to choose US over emerging mkts: Faber

• MUMBAI: Smart investors who made money in 2009 may sell emerging market stocks and start buying the S&P in the US as it may outperform because of a rally in the US dollar, says investment guru Marc Faber, the publisher of the Gloom Boom & Doom report, who predicted a stocks rally in early 2009 when it was gloom all around.
  
  “There are people who made a lot of money in 2009 and this category is concerned that the markets have overshot,” Faber said in an interview with ET. “So, some of them have taken profits and some of them are inclined to do so. In theory, it is possible that there is a dollar rally and an outperformance in the S&P vis-à-vis emerging markets.”
  
  Global stocks, commodities and precious metals have rallied sharply this year following an unprecedented easing of monetary policy by central banks across the globe to avert a 1930s-like depression. The rally has pushed mainly emerging market stocks to high valuations which may not be backed by a corresponding earnings growth. Hence, western investors who were borrowing cheap and investing in emerging markets may get back to buying assets in developed markets which are recovering and partly in anticipation of higher interest rates too.
  
  He ruled out yet another year of stellar performance for stocks. “I don’t think the S&P or any market would go up significantly after rising 50-100% in the last 8 months and I don’t see the markets rising the same way over the next 8 months,” Faber said. “Now, can they correct or go up 20-30%? The answer is yes.”
  
  The ‘risk-reward’ to invest in equities now is not as favourable as it was in March 2009, says Marc Faber, global investor and publisher of the Gloom, Boom & Doom report . In a chat with ET , he speaks about the US dollar and gold rather than equities. Excerpts:
  
  Stock markets have been indifferent to all the events, positive or negative, happening around of late. What is your take on this situation?
  
  There are two types of investors. There are investors, who read that markets were incredibly oversold at the end of 2008 and early 2009. Given the oversold nature of the markets, they invested in equities, commodities and went short on the dollar.
  
  These are the people who made a lot of money in 2009 and this category is concerned that the markets have overshot. So, some of them have taken profits and some of them are inclined to do so. Some people, who got it right in 2009, will now reduce their positions in emerging markets and go long on the S&P because, in theory, it is possible that there is a dollar rally and an outperformance in the S&P vis-a-vis emerging markets.
  
  The other type of investors got in totally wrong. They bought US government bonds at the end of 2008 and early 2009; they were in dollars and they could not get into equities at the right time because they thought it was a bear market rally. So, we still have a lot of cash on the sidelines.
  
  Now, I think these people will be forced to buy equities, especially that cash at zero interest rate and government bonds are not attractive investment options because if the economy recovers there could be pressure on interest rates sooner or later and inflation expectations will go up, government bonds will go down.
  
  So, where is the balance between equities and the dollar tilted in the coming months?
  
  In the long run, the dollar has to weaken. I started to talk about the equation of weak dollar-strong asset markets and vice-versa several years ago. Now this has become such an accepted rule that everybody knows it’s a strong dollar-weak asset market.
  
  The rules of the game might have changed somewhat and what you could get is six months of a strong dollar and strong US stock markets, relatively speaking. I don’t think the S&P or any market will go up significantly after rising 50-100% in the past eight months. I don’t see the markets rising the same way over the next eight months. The risk-reward is not as favourable as it was in March 2009.
  
  What can go wrong for equities in 2010?
  
  The geopolitical situation around has deteriorated very badly. When you think of it, nobody is interested in solving the problems, but a lot of money is being channelled into these issues. These issues may not have an immediate impact on equities, but if the situation escalates, it can have a serious impact.
  
  Secondly, without the intervention of the Fed, US mortgage rates will be much higher and also the interest rates on treasury bonds. So, we will have to see how far the quantitative easing will proceed to support the market. If it stops, the bond market, will seem quite vulnerable.
  
  So, if the 10-year treasury goes above 5.0-5.5% and the BBB, say 7%, then it will be quite a competition to equities.
  
  A section of the market believes that gold is overpriced and a lot of speculative money has entered it. Being an ardent supporter of gold as an asset class, how do you counter these arguments?
  
  In general, there is very little money in gold compared to bonds, forex and equities. Now, there has been some speculation, but please tell me any market where there hasn’t been any speculation. That’s the problem with zero-interest rates, people just value anything, even a stock paying 1% dividend is very valuable.
  
  Now, if I look at the growth in quantity of money worldwide, then gold around this level is not overpriced. Well, it’s not as much as a bargain as it was in 1999 to 2001, but I would believe that it’s not very expensive still now. When gold broke above $1,030, I said we have to wait to see a few days, whether it’s a genuine or false breakout. And it rose to the $1,200.
  
  Now, I suppose the $1,000-level, the level between $950 and $1,030, which was a resistance level, is the support. And central banks in the world will continue to print more money and there will be more quantitative easing and stimulus packages in the US. The fiscal deficit there will not come down much, so on that basis, gold has a place in every portfolio.
  
  What is your investment theme for 2010?
  
  In 2010, I would be just happy to preserve what I have made in 2009. You can make money here and there, but risks have increased and valuations are not as compelling as they were a year ago. In India, one has to focus on individual sectors. John Thorn, who runs the India Capital Fund where I am the chairman, is very optimistic about banks. So, that will be a sector to look at.

Marc Faber: US Dollar Worth Less Or Worthless?!

Marc Faber sees US dollar becoming worthless on fiscal policy 'disaster'

• INTERNATIONAL. Marc Faber the Swiss fund manager and Gloom Boom & Doom editor said the US dollar will become worthless when people eventually realise the fiscal situation in the US is a "disaster".
  
  Speaking today in an interview on Bloomberg TV, Faber said: "It will go to a value of zero eventually, but not right now".
  
  "I think it will take about 10 years until people realise that the fiscal situation of the US is a complete disaster," Faber added.
  
  The famed investor reiterated his long-held views that the Federal Reserve’s expansionist monetary policies are the causes of the financial crisis by creating a large amount of leverage in the system and creating a credit-addicted economy.
  
  "In my opinion, about 50% of tax revenues will be used just to cover the interest payments on the government debt. That is unsustainable. Then you'll really be forced to print money."
  
  The best investments right now are foreign currencies, commodities and equities, Faber said. Stocks will continue to benefit from the actions of Federal Reserve Chairman Ben Bernanke, he said.
  
  "As soon as the S&P drops to 900 or 800, he will print money again," Faber said.
  
  Referring to the Fed Chairman, Faber said: "He's a money printer. He's nothing else."
  
  While the dollar may rebound in the short term because it's been oversold, a rally won't last because the US will be forced to print more money to pay its debt, he said.
  
  Faber blames previous Fed Chairman Greenspan’s decision to hold interest rates at artificially low levels for precipitating the housing bubble and sees current Fed Chief Ben Bernanke repeating the mistake in the current crisis.
  
  "The Fed seems to ignore the fact that one of the causes of this crisis was the amount of leverage in the system. This is a credit-addicted economy," Faber told the European Investment Conference in Frankfurt on Thursday.
  
  He sees central bankers as having become hostage to inflated asset markets and questions how sustainable the next boom would be given that it was simply storing up more debt.
  
  Total US debt to GDP is now at 375%, without including the contingent liabilities from Medicare and Medicaid, he said.
  
  Faber sees this having serious implications for inflation.
  
  In his September issue of The The Gloom, Boom & Doom Report Faber wrote: "The future will be a total disaster, with a collapse of our capitalistic system as we know it today, wars, massive government debt defaults and the impoverishment of large segments of Western society."
  
  The years 2006 and 2007 were "the peak of prosperity" and the world economy is not likely to return soon to that level, he recently said.
  
  Unless the system is cleaned out of losses, "the way communism collapsed, capitalism will collapse".
  
  "The best way to deal with any economic problem is to let the market work it through."
  

Dr. Marc Faber: Worse Is To Come

Marc Faber: This Crisis Is Just The Appetizer

Just for the record, published on CNBC: This Crisis Was Just the Appetizer: Marc Faber

• "It's a total and complete disaster and the crisis we had is just the appetizer to the big total breakdown of financial markets and of governments in five or 10 years time when the whole system goes bust," Faber told "Worldwide Exchange."
  
  The G20 meeting is not likely to find a solution that would prevent a future meltdown, as the people who are supposed to implement the new measures are the same people who were unable to foresee this crisis, he said.
  
  The issues of excessive leverage and the "uncontrolled, unbound credit growth," as well as the bulging deficits and interest rates at zero are not being addressed, he added.
  
  "My view is that this G20 meeting is a complete and total waste of time," he said. "Nothing will be achieved except that they will implement regulations that are even worse than the regulations that brought us all these problems."
  
  Starting with 2002, former Federal Reserve chairman Alan Greenspan and current chairman Ben Bernanke "managed to create a bubble in everything." But inflation pressures are building up, and the Fed's measure of inflation, which excludes volatile food and energy prices, is not relevant, according to Faber.
  
  "If you have interest rates at zero essentially you discourage people to save and encourage them to speculate," he said. "I look at the US dollar. Whenever a currency is weak, it's weak because of some inflationary pressures."
  
  Emerging markets are the place to be in the long term, because their economies are gaining importance in the world, bit this will lead to geopolitical tensions, Faber warned.
  
  "I think that people will have to rethink the world and that they should have little money in the US and have 50 percent of their funds in emerging economies," he said.
  

Dr.Marc Faber: The US Dollar Will Rise And Punish Assets

On CNBC.

• A period of weak stock markets and strong dollar is likely to come after the strong rally in developed and emerging markets alike, Marc Faber, the author of "The Gloom, Doom and Boom Report," told CNBC.
  
  Between 2002 and 2007 we had a bull market in assets and stocks and a weak dollar, while in 2008 the opposite was true, Faber said Wednesday. This year, we bottomed out on the S&P 500 index but the dollar was weak.
  
  Emerging markets have seen even stronger moves since the lows hit last year and in the spring of this year, Faber said.
  
  China's stock market bottomed out in October last year and has recently shown signs of weakness, while Russia is down 20 percent from the peak, he added.
  
  "I expect now for the next couple of months a period of a recovering dollar and weak assets," Faber said. "A strong dollar means global liquidity tightening."
  
  The dollar will strengthen because the US economy is the least cyclical, but developing countries are more exposed.
  
  "In a scenario where growth will be disappointing, I think emerging markets are vulnerable. I think we had huge increases in stock prices, a lot of markets have doubled in price," he said. ( source: http://www.cnbc.com/id/32384159 )

ps: Don't shoot the messenger. LOL!

ps/ps: Heard from a grabbing forex trading pro yesterday to long the USD?

ps/ps/ps: Is it me or has the ringgit moved the opposite direction again?

Dr.Marc Faber: China Is NOT Growing AT 7.8% As Claims

On Moneynews.com Faber: China Really Growing At 2 Percent

• Faber: China Really Growing At 2 Percent
  
  Thursday, July 30, 2009 11:47 AM
  
  By: Julie Crawshaw Article Font Size
  
  China's economy is growing at 2 percent, not the 7.8 percent its government claims, says economist Marc Faber, publisher of the Gloom, Boom and Doom report.
  
  “The Chinese government is one of the few governments in the world that knows its GDP numbers three years in advance,” Faber told CNBC.
  
  “I’d be a bit careful about China.”
  
  A growing number of investors turned bullish on China after its markets began to rise last March, Faber notes, adding that it’s possible Chinese markets will continue to rise for a while.
  
  “If you throw money at the system, lots of things go up in value — but maybe they go up for the wrong reasons. What disturbs me today … is that the lows in March and late last year, sentiment was incredibly bearish about everything.”
  
  Now, Faber observes, “there’s this incredibly bullish sentiment when insiders are actually selling and the technical picture of the market doesn’t look that great.”
  
  Faber believes the market faces headwinds because there’s a huge supply of available shares and a record number of new issues, which dampens share-price increases.
  
  “My sense is that, near term, we could still have disappointments because now the mood is very optimistic. I don’t think we’ll make new market lows in Asia, but I do think we’ll have a meaningful correction.”
  
  On Monday, China’s first initial public offering in nearly a year rose so high and so fast that regulators were forced to halt trading twice, The Washington Post reports. The Hang Seng index rose to double its low point last fall.
  
  

Dr. Faber Warns That US Government Will Go Bust!

Strong warning from Dr. Marc Faber.

• "The US government for sure will go bust. That I guarantee you. Not tomorrow, but it will go bust," he added.
  
  US government bond yields bottomed out in December 2008, he said.
  
  "I think this is the beginning of a long-term bear market. And I think the government will have to keep interest rates artificially low because deficits will be too high," Faber said.
  
  "People said fundamentals are bad and markets are going up for no reason. But money printing is a reason," he said, explaining why quantitative easing will continue.
  
  "The worse the statistics will be, the more money will be printed. Believe me, globally all the central banks will print money like there's no tomorrow."
  

Source: here

The Printers Did It!

The printers did it!

That's what caused the stocks to soar! Fundamentals???? LOL!

So says Dr. Marc Faber.

• Major central banks' efforts to lift the world economy by printing money has boosted asset prices, so stocks are unlikely to hit their lows from November and March, Marc Faber, the author of "The Gloom, Boom & Doom Report," wrote in his latest research report.
  
  "I have explained repeatedly in the past that if a government is really determined to try and postpone an inevitable collapse by 'printing money' in order to lift or support asset prices, it can be done," Faber wrote.
  
  "This is not to say that the global economy is about to embark on a strong and sustainable growth phase. It also doesn't mean that a new bull market in global equities a la 1982-2000 has begun," he said.
  
  "But I think that, at least in nominal terms (inflation-adjusted), the global printing presses being run by the world's central banks and fiscal deficits have begun to impact asset prices positively," Faber wrote.
  
  Many investors did not take advantage of the recent rally because they thought it was a bear-market rally, so they stayed on the sidelined, hoarding cash. But stocks are not likely to collapse, as more players take courage to dip into the market, he said.
  
  "Put yourself in the shoes of a fund manager who, in the last 18 months, has lost 50 percent of his clients' money and missed the recent rally," Faber wrote.
  
  "What is he likely to do? I would think he would be inclined to purchase equities as they correct the sharp advance since early March, especially as the economic news in the near term becomes less negative," he said.
  
  But very high volatility and "price fluctuations that don't appear to make any sense" will be the new dominant characteristic of the market, he warned.
  
  The lows reached by resource and mining stocks, as well as Asian equities and most emerging markets, are likely to hold for now, according to Faber. But the US long-term government bond market "has the highest probability" of having reached a high, he said.

Source: http://www.cnbc.com/id/30742936

Marc Faber : Do not Underestimate the Power of Printing Money Mar9 2009 !!

Dr. Marc Faber On Financial Sense Newshour

If you like Dr. Marc Faber views, then do give the following podcast a listen. Dr. Marc Faber appears on a guest on Jim Puplava's Financial Sense Newshour

RealPlayer WinAmp Windows Media Mp3

( Here is a link to the transcript of last year's interview "What's Ahead in 2008" )

Dr. Marc Faber Comments On Barron's Roundtable

Blogged yesterday: To Buy Or To Sell Gold Now?

Now on Barron's Roundtable, buried in the middle, there are some interesting comments from Dr. Marc Faber.

• Faber: One day the price of gold will be higher than the Dow Jones. The CRB, a broad index of commodities, fell for 20 years in nominal terms, from 1980 to 1999. It is now up 12% and is still inexpensive. The Dow and the S&P are up substantially from the 1980s or early 1990s. Everyone thinks fiscal and monetary measures will work to fix the financial system. I don't. They will be disastrous and fuel inflation. But the supply of oil, gas and copper is relatively limited compared to paper money you can print.
  
  Recently I bought some U.S. stocks for the first time in a long time. If you buy Intel , Cisco , Yahoo! , Oracle and Microsoft , you will do much better in the next 10 years than you would with Treasuries. These stocks will double and even triple -- before going to zero.

Source: http://online.barrons.com/article/SB123276613972012603.html?page=5

These Bank Bailouts Just Won't Work!

So says Dr. Marc Faber.

• "The financial crisis has occurred because of government interventions," Faber told "Squawk Box Europe."
  
  "Specifically central banks, or specifically the US Fed, by keeping interest rates artificially low for too long, they created a huge leverage in the system. So the people who created the problem now are in charge to bail out the system and that's why I am very skeptical that it would work," he added.
  
  The governments' efforts to pour money into certain businesses to keep them afloat while letting others fail were arbitrary and increased volatility, he said.
  
  "I think it was good that Lehman went bankrupt but I can't see any reason why AIG
  
  has been supported. Either you bail out everybody or nobody," said Faber.
  
  "The contractions actually serve to build for the future growth, because the weak competitors are eliminated. If you support the weak competitors you essentially penalize the strong competitors and therefore I am very much against these bailout packages."
  
  There is a chance that the second half of this year may be worse than the first half, but markets, which were oversold in November last year, may go a little higher, according to Faber.

And Faber isn't all that bearish against the US dollar!

• "I have shares in Asia, mining stock, exploration companies, physical gold," Faber said.
  
  "As far as currencies are concerned, I think the dollar is a disastrous currency but the others are even worse. I am leaning more towards the view that the dollar could strengthen even more."

Source: http://www.cnbc.com/id/28730368

Dr.Marc Faber Reckons Global Markets Rally Still Has Legs!

Transcript of interview between Dr.Marc Faber broadcasted on India's CNBC-TV18.

• Q: How have you read the big rally that came into many global equity markets in early parts of January and do you think that’s now coming apart?
  
  A: We were oversold when the S&P in the US reached 741 on November 21. We had a rally of around 25% and some markets rallied even more. We can still rally a bit more because there is a huge liquidity injection into the market by all the Central Banks around the world. But in general I feel it’s a bear market rally and that after this rally we will test the lows or exceed the lows again.
  
  Q: Is that how you are seeing 2009 that the Q1 may not be too bad but by the time we get over that we go back and retest October lows for most markets including India?
  
  A: The consensus is that 2009 will be better than 2008 and I do not think it will be much worse. I do not think we will drop another 50%. But the contrarian view would be to think that all the monetary and fiscal injections by government fail and that they run out of ammunition and the market will drift lower.
  
  Q: In this kind of an environment since both those commodities have turned quite volatile crude and gold how would you map them for this year?
  
  A: I do not think that gold will rise a lot in the near future because compared to the CRB (Commodity Research Bureau), a broad index of commodities gold is very overvalued as compared to nickel, copper and oil. In the near-term, industrial commodities which are more oversold than the stock market two months ago could rally somewhat.I would position myself as a trader in some commodities.
  
  Q: You had mentioned earlier that you expect to see global markets go back to the lows we saw last year. Would you say there is a fear of overshooting that target and markets might actually see lows lower than what we saw in October?
  
  A: Yes, I think that’s absolutely possible and likely. The global economy is in deep trouble. The big question is we are in depression but is this depression is going to be inflationary or deflationary? In both cases the markets will not perform particularly well because in a deflationary depression all asset prices will continue to go down. In an inflationary depression interest rates will go up and so on the both assumption equity prices are not particularly inexpensive.

You can watch the video clip here