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Marc Faber: Long The Dollar, But Occupy The Federal Reserve
By EconMatters
Marc Faber, asset manager at the Gloom, Doom & Boom Report, popped in at CNBC (Clip Here) on Oct. 11 while visiting in Montreal, Canada (He is usually based in Thailand.)
Faber expects volatility to continue (not necessarily means a downside to the markets), but dollar should be a long trade as whenever there's a bubble, e.g. tech bubble, housing bubble, stocks bubble, and commodities bubble, usually after the bubble bursts, there typically will be a 10-15 years of volatility before markets settle down to reignite an uptrend.
"Despite the fact that the [European Central Bank] and the European government will flood the market with liquidity to bail themselves out, global liquidity is tightening.....Whenever global liquidity is tightening it is bad for asset prices but good for the U.S. dollar, as was the case in 2008."
He thinks there had been far too many "interventions" by the Western governments, where the total share of the economy that's government owned or sponsored have grown tremendously,. Add to that, the high levels of debt, it is almost impossible for the developed countries including Japan, the U.S. and Western Europe to grow.
When the economy stagnates over a long period of time, people ("the 99%") seeking answers start to go after the "top 1%" minority like Wall Street, which took advantage of the system for profits. However, it was Washington and the lobbyists who created the system to begin with. So from that perspective, Occupy Wall Street should move to DC and Occupy the Federal Reserve on the way, Faber laments.
His solution for the U.S. economy - Flat tax on everybody "would be a good measure", and reducing the restrictive regulatory environment to encourage business to start investing again. Moreover, the lack of savings is the biggest problem of the U.S. Essentially, the U.S. will have to work more, and get paid less to get out of this mess. Faber also says that Cameron austerity measures have not worked is because "people in the UK don't want to work."
EconMatters Commentary
Dollar, despite the Federal Reserve's continuous QEs and twist, is still holing up well attesting to the dangerous state of the world's finance and economy. So in the near term, dollar could be still king, but with a high degree of uncertainty longer term, depending on how the Euro, the closest competing currency, will come out from this seemingly ever expanding EU sovereign debt crisis.
As to the economic and fiscal state of the U.S., we are not as pessimistic as Faber, but have written many times that the U.S. has many structural issues in the labor market, the decades-long anti-jobs policies, and that the vital decisions of the country are and will be made based on politics, and by politicians who can't walk the talk. If the U.S. does not start to make some fundamental changes, it could eventually prove Faber right.
Towards the end of the interview, Faber made reference to Lee Kuan Yew, the first Prime Minister of the Republic of Singapore for three decades. Lee Kuan Yew retired in May 2011, but has remained one of the most influential political figures in South-East Asia.
In the three decades during Lee's tenure as PM, Singapore has been transformed from a developing economy to one that's the most developed in Asia. However, the "Singapore Model" is based partly on a socialistic structure (e.g., single political party, state planning, and state-owned enterprises).
Dr. Doom Roubini, in an interview with Business Day less than a month ago, also noted Singapore could be one country that he was not averse to state involvement in the economy and held up Singapore as an economy that might be shielded from global shocks.
So we find it quite interesting that as a result of the global financial crisis, more and more Western economists are now moving towards socialism, while the more socialist countries such as China are becoming more capitalistic. Could this be the New World Order underway? .
Further Reading:
Wall Street Bailout: Fed's $1.2 Trillion Secret Loans
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financial and economic truth...
Falak Pema,
MF may provide the truth, but don't ZHers have the ability to do it just as well.
Faber also popped up on Bloomberg today and was a as close to being bullish on JPM et al without coming out and saying it, instead he quoted Wall Street types and left it dangling
http://media.bloomberg.com/bb/avfile/News/Surveillance/vTF3nJzo11eI.mp3
at the end of 2010 he said that treasuries would rally hard- check. Said the dollar would rally- check. Called for a 15% correction in equities- check. Said Asia would slow down emphasizing China- check. Said that gold would decline and that he would buy on the dip- check. Predicted QE2 and said the FED would wait before launching QE3- check. Of course his best call of all nailing the rock bottom of equities back in March 2009, those that went long had the opportunity to double their money.
Yeah, I would say betting against his advice is not a wise decision.
) :
It doesn't redeem him from laying the blame for America's woes at the feet of workers. I used to be a big fan of Faber until he went globalist and called for Americans to compete with Chinese child laborer's and prisoners (read slaves). Fuck him and fuck the globalist wage arbitrage bullshit. I don't see any of those bastards taking a pay cut, why should the actual producers of real stuff? The problem is the banks and by extension Wall Steet and D.C. The banks own D.C. not the other way around. His partisan rhetoric of late is also utter tripe as Rethugs and Demopubs are two heads of the same fiat fractional reserve bank. I don't care if he calls the next lotto number, blaming the poor and middle class is first rate class warfare rhetoric and he can go fuck himself. I've lost all respect for Faber.
He doesn't blame workers in general for America's woes, just the looters and leeches. You think he _wants_ to see the American middle class suffer? He's expressing reality, not his wishes.
You don't have to like the guy to respect the fact that he understands the ebbs and flows of the global economy, including the likely political pertubations, better than just about anybody.
I pity anyone who bets against Dr. Faber.
I pity anyone who bets against Blankfein but that guy is a piece of shit. No doubt Faber gets calls right consistently, heck that's why I admired the guy that and some of his stances seemed reasonable until the past week. This recent interview twice now put up on zero hedge does not make the guy look good at all. If he thinks there WILL be austerity that is one thing but his quote wasn't just talking about it, he was blatantly endorsing it. He also was singling out the Democrats as though the "opposition" party has a better track record since 1981. Puhleeze, anyone who is talking about it as if there are two freaking parties is just being divisive. We need to stick to that which really matters. There is common cause here, but too often people revert to old ideological gridlock when the common cause is SOOOO much more important.
he is rite knowing full well he is stinkin rong... that's what makes this crazy age smell so strong.
The fat fuck was selling austerity a week ago. The singapore living asshole can go take a bath with buffy and STFU.
I think he lives in Thailand. You must be confusing him with Jim Rogers.
0/10 on the ad hominem.
Nothing like a filling dinner of rotten meat.
The bailout was right? You can say that now because the next bailout hasn't crashed the entire fabric of society. The fall of Lehman and crash of the banks without that bailout would have hurt but it wouldn't have killed.
Marc Faber's initial is MotherFucker. It seems like he's a tool as well.
he called 2008.
you bite the hand that feeds.
In retrospect, the collapse of Lehman was artifically engineered and before that was the installation of Hank Paulson. Faber was right, so was the bailout? Fuck him.
if you're gonna troll, you might as well try to be funny. is that all you got?