Fri, May 26, 2017
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Industry Updates

Dr Doom thinks everybody in the world has become a Keynesian

Thursday, August 11, 2011

Marc Faber on Bloomberg
Opalesque Industry Update – On Tuesday, Marc Faber (aka Dr Doom), publisher of the Gloom, Boom & Doom report, told Bloomberg, when discussing the U.S. Federal Reserve’s decision to keep the interest rates down through 2013, that the Fed had been right in not announcing QE3 “so they can watch the reaction” (video here).

But we should get a QE3 announcement, ultimately. “I think the Fed is underestimating the severity of the coming economic downturn here,” he added. However, with gold prices going up and the dollar weakening, there would be unintended consequences in implementing QE3 right now.

“The best thing would be for markets to collectively resign,” he quipped. “Everybody in the world has become a Keynesian. Everybody thinks the government should do this, the Fed should do that, the Treasury should do that. I think sometimes the best is to do nothing.” He added that QE1 and QE2 had done nothing for the labour and the housing markets. The U.S. should save more and spend less, he believes.

John Maynard Keynes, a British economist who died in 1946, advocated the use of fiscal and monetary measures to mitigate the adverse effects of economic recessions and depressions.

Faber does not think investing in treasuries is a good idea: “I think the treasuries market is another example of a gigantic bubble,” he went on. The long-dated treasuries are the short of the centuries, he says.

Longer-dated U.S. Treasury prices fell on Thursday (August 11th) in choppy trading as bond dealers tried to prepare for a 30-year bond auction amid more worries about Europe, Reuters reported.

As for gold, the straight-talking take-no-prisoners Dr Doom thinks a correction is overdue. However, he maintains that “every responsible adult should gradually accumulate gold,” because not owning any gold is to trust governments.

Gold prices edged lower, as lingering concerns about Europe struggled to balance selling pressure sparked by higher trading margin requirements, said The Wall Street Journal. The most actively traded contract, for December delivery, was down $25.80, or 1.4%, at $1,758.50 a troy ounce early in New York (on August 11th).

Faber sees opportunities in emerging economies, as their fundamentals are better than European and U.S.’s. This is consistent with his usual preferences.

“The market has sold off in such a rapid way with so much momentum that I am smelling as if something really wrong will happen in the next two or three months,” he concluded. “Because the market is a discounting mechanism… in March 2009, the market went up and people were baffled by that. And now it goes down, and maybe in three months, people will wake up scratch their head and understand why…”

In a recent interview with Swiss daily paper Le Temps, he said that he expects the market to rebound and then to go down again in October or November, when the S&P should reach around 1,100 points (it is currently at 1,120 points and down almost 11% YTD). This is when QE3 may be announced.

He does not invest in China even if he feels optimistic about it, due to a lack of trust in Chinese companies. He prefers exposure to China via Hong Kong.

With regards to Portugal, Ireland, Spain an Italy, he thinks that those countries should be let to go bankrupt and the banking systems with them – although savings should be protected. It is much better than using the taxpayers’ money to save them and then realise two years later that bankers have received top bonuses. “Bankers must be punished,” he said. “The banking sector has become too big, compared with the real economy.”
B. Gravrand


See our June-2010 article on Marc Faber:
Opalesque Exclusive: Dr Doom recommends investing in Asia, agriculture, water, precious metals, as "the crisis has yet to come" Source

What do you think?

   Use "anonymous" as my name    |   Alert me via email on new comments   |   
Today's Exclusives Today's Other Voices More Exclusives
Previous Opalesque Exclusives                                  
More Other Voices
Previous Other Voices                                               
Access Alternative Market Briefing

 



  • Top Forwarded
  • Top Tracked
  • Top Searched
  1. Investing - Tudor Jones backs AI hedge funds, Massive hedge fund trades highlight insider buying: GE, Pentair, Tempur Sealy, Apollo Global and more, Hedge funds big wigs are buying consumer and selling tech, here's the stocks[more]

    Tudor Jones backs AI hedge funds From FT.com: Hedge fund magnate Paul Tudor Jones has invested in a brace of artificial-intelligence powered "quantitative" hedge funds, underscoring the increasing acceptance that the industry will need to turn more to technology and away from traditional

  2. Soon hedge fund investors won't bet on a man, they will bet on a machine[more]

    From Forexlive.com: The Wall Street Journal is in the midst of a 17-part series that looks at the rise of quant funds. The AUM and money invested in quant funds still trails traditional asset managers but the gap is closing. What's truly amazing is volume. Quant funds make up 27% of trading vo

  3. Investing - China's HNA wants to invest in Value Partners, Risk parity investors reap rewards from rebalancing act, SoftBank's $100 billion tech fund rankles VCs as valuations soar[more]

    China's HNA wants to invest in Value Partners From Reuters.com: HNA Group has alighted on a logical, if pricey, target in Hong Kong. The deal-hungry Chinese travel conglomerate known for overpaying wants to invest in Value Partners, one of Asia's few sizeable independent asset managers,

  4. Opalesque Exclusive: Investors warm to ESG, but seek standardization[more]

    Bailey McCann, Opalesque New York: Asset managers and asset owners plan to double their investment in Environmental, Social and Governance (ESG) driven strategies over the next two years, according to a survey from BNP Paribas Securities Services. The report, "Great Expectations: ESG - what's nex

  5. J.P. Morgan Asset Management launches ultra-short income ETF[more]

    Komfie Manalo, Opalesque Asia: J.P. Morgan Asset Management, the $1.5tln investment management arm of JPMorgan Chase & Co., has launched the JPMorgan Ultra-Short Income ETF (JPST), an actively managed ETF that seeks to provide current incom