Stocks Beat Bonds Over Next 10 Years

Marc Faber : "When you print money everything goes up at different times, different asset classes,"

"I think that stocks may still continue to go up, and I would rather own equities than government bonds for the next 10 years." - in CNBC

The U.S. monetary policy focuses too much on boosting consumption

Marc Faber : U.S. monetary policy focuses too much on boosting consumption. This is a short-term fix, but benefits often accrue elsewhere, namely in China, which provides the goods to feed American consumerism. The negative real interest rates and boost to Chinese incomes and investment also push up commodities prices, which then counteracts the stimulative effect for U.S. consumers by acting as a tax on income. Mr. Faber calculates the world’s bill for oil went from $250 billion in 1998 to $2 trillion in 2006 before doubling again by 2008 as the Fed started cutting rates towards zero. - Marc Faber said at World Commodities Week in London on Tuesday morning - via The Wall Street journal Blog

Diversify your asset holdings & where you hold those assets

You should not only diversify your asset holdings, but also diversify where you hold those assets, in case they’re seized by politicians as the welfare state enters its death throes. said Marc Faber who ends with an alarming prediction : “The governments, they’re going to f— you all, that’s for sure.” Marc Faber said at the World Commodities Week in London on Tuesday - via the Wall Street journal

When the Chinese bubble burst it will have devastating consequences for the global economy

Marc Faber : well, I think that the super bulls and super bears will be disappointed that we're in a trading range between 900 on the S&P and say1350, something like this. I don't think we will make a new high above the may 2nd high on the S&P which was 1370 , but I'd like to make the following observation , if you print money in the US it does not mean that it creates bubbles in the US , it can create bubble in your neighboring region , say, Latin America or Asia or it can create bubbles in precious metals or in commodities or in home prices somewhere else in the world or say, for instance, in China. and if the Chinese bubble burst one day which inevitably will happen, maybe not tomorrow but may be in three months,may be in three years, when it happens, it will have devastating consequences for the global economy. - in CNBC -  Click Here to watch the Interview >>>>

I rather own Equities than government Bonds for the next ten years

Marc Faber : well, I think that I am very constructive and a great optimist in life otherwise I would commit suicide in view of the kind of governments we have nowadays because for sure they will take wealth away from the well to do people one way or the other. and from the middle class they will take it away through inflating the economy and lowering the standards of living , the typical household in western Europe in the U.S,. has lower standards of living today than, say, 20, 30 years ago. there's no question about this. and so I think that we are in a very difficult situation and that deleveraging must occur the governments don't want to recognize that. and so the fiscal deficits are out of hand. but it doesn't mean that stocks will go down when you print money. everything goes up at different times, different asset classes. and I think that stocks may still continue to go up and I rather own equities than government bonds for the next ten years. - in CNBC -  Click Here to watch the Interview >>>>

I think Obama has good chance to be re-elected by simply distributing money

Marc Faber : ....Exactly what I mean, I think the governments today are no more representing the interest of the communities but they are defending their personal interests and essentially you can buy votes by voting for people who hand out money such as Mr Obama , I think he has good chance to be re-elected by simply distributing money, 48% of Americans today, they get some kind of government subsidy and the problem is, in Italy, in Greece, in Spain, everywhere, entitlements should be cut now and not in 2026. that will be far too late. but nobody wants to accept the reality. - in CNBC -  Click Here to watch the Interview >>>>

Eventually the hour of truth will happen

Marc Faber : Well before they'll go bankrupt they'll print money and they can print endless money and as long as we have Ben Bernanke and Janet Yellen at the FED they will also print money ,and so they can postpone the end game endlessly, endlessly not, but say for another five to ten years. but each money printing exercise brings about unintended consequences and these unintended consequences are partly higher inflation rates than would have been had no money been printed , I just read today that education cost this year will rise by 8 percent and that you know the typical household cannot afford anymore good education so the students have to get student loans now the student loans almost exceed consumer credit outstanding. so you essentially create more borrowings on top of an over leveraged society and eventually the hour of truth will happen - in CNBC -  Click Here to watch the Interview >>>>

The ECB will print money one way or the other

An outlook on the economy, with Marc Faber, Gloom, Boom and Doom Report editor/publisher.

Marc Faber : well, I don't know what other people think but what I think will happen eventually and there are so many contradictory statements coming out that nobody really knows ,But eventually the same will happen as i the United States the ECB will print money one way or the other and the debts that essentially should be written down to a realistic value will continue to be carried on the books of banks at unrealistic values so the end crisis will be postponed until the sovereigns go bankrupt.

Marc Faber latest video Interview - CNBC 26 October 2011

Dr Marc Faber The author publisher and editor of the Gloom, Boom & Doom newsletter, in a CNBC interview, gives his outlook on the global economy, Marc Faber says that "When you print money everything goes up at different times, different asset classes,"

. "I think that stocks may still continue to go up, and I would rather own equities than government bonds for the next 10 years."

Marc Faber: Greece is bankrupt & bond investors should have to take losses of 90 percent on their holdings

Greece is bankrupt, whether they want to admit it publicly or not,

it will need a 90 percent writedown, but that’s not going to happen. What will probably happen is a 50 percent write-down. - Marc Faber said in an interview with Bloomberg today in Zurich today. “I

The gap between federal spending and taxation means the U.S. government debt will double in the next five to 10 years.

Marc Faber : It took the U.S. 200 years to get to a federal debt of $1 trillion in 1980, another six years to get to $2 trillion, and now it’s north of $15 trillion. Referring to a chart showing the ballooning debt-to-GDP ratio, Faber says adding in the unfunded liabilities of Medicare et al. would mean extending the chart up to “the fifth floor of this building”. The conference is being held in the basement. The gap between federal spending (more than 70% of it mandatory) and taxation means the U.S. government’s debt will double in the next five to 10 years.- in The WSJ

China rise has been fueled by a Credit bubble that will go bust

Marc Faber : China’s rise has been fueled since 2007 by a bubble in credit there.

it would burst — now or in three years? — but it’s unsustainable. What’s more, foreigners should beware investing in China’s ongoing construction boom. Faber pointed to virtually all U.S. canal and railroad companies going bust in the 19th century, ruining many a foreign investor but leaving North America with an enviable set of infrastructure. He said the Chinese don’t issue shares in companies to “enrich foreigners” but to “impoverish foreigners.” If a foreigner wants to make money in China, Faber said, they should go work there. - In the WSJ

The West wont simply accept China’s rise

Marc Faber : One way Western powers will seek leverage over China will be to gain greater control over the Middle East, which supplies the bulk of China’s oil imports. Marc Faber sees conflicts like NATO’s Libya intervention as part of a broader strategy to do this. Meanwhile, with western governments due to go bust at some point, World War III beckons along with “the complete breakdown of society.” Makes you wonder whether attending a conference on commodities or indeed anything is worthwhile if that’s our future. - in The Wall street Journal

Rising living standards in the Emerging Economies will support demand for Commodities

Marc Faber : Rising living standards in the emerging world will support demand for commodities — and keep us paying through the nose.

if you double someone’s income from $1 million to $2 million, their spending on raw materials “except maybe cocaine” doesn’t rise. Not so for someone on a few thousand dollars a year. They buy cars and the other trappings of middle-class living. - Marc Faber said at World Commodities Week in London on Tuesday morning - via the Wall street journal

You are cheated out if you have savings in a bank.

Marc Faber : Look, I think that consumer confidence indices are low for a very specific reason. Just before I came on, there was a report that the sales of small businesses in America has been increasing. Yes, I believe that because a lot of the sales increase has to do with price increases. In other words, the cost of living of the average American is going up by much more than what Mr. Bernanke looks at, namely core CPI, which is essentially a consumer price index that excludes energy and food. Everybody I talk to has cost of living increases in America of more than five percent per annum. But the Federal Reserve and other agencies and governments, they do not believe that inflation is five percent. They think - they assume that inflation is say two or three percent, interest rates on deposits are zero, so you are cheated out if you have actually savings in a bank.

Equities will make you money on a long term perspective

Marc Faber : Well, I think that if you look at say stocks on a ten year space, we are on the S&P say around 1,200 today. And we were at 1,550 in the year 2000, at 1,576 on October 12, 2007. So we had ten miserable years. In Europe, it is even worse. And I think that if you take a long term perspective to buy equities will make you money, but maybe not as much as you expect I think, that the returns for the next five to ten years - okay, one year stocks will be up 30 percent. They are up 100 percent from the lows on March 6, 2009. But, in general, I believe we will have a trading range and, at worse, we could be in a situation like Japan, where the market essentially is still down 70 percent from the highs in 1989.- in Bloomberg

The problem with government is that over time, it becomes very polarized and it moves into the hands of powerful business interests

Marc Faber : Well, basically, the problem with government is that the original intention of especially a democracy is very good. Everybody has a say in how societies should be structured, but over time, it becomes very polarized and it moves into the hands of powerful business interests, and also interest groups like the military complex, or say the welfare recipients and so forth. So you end up with kind of on the one hand a tyranny of the masses where you distribute all kinds of goodies to people. Like in America roughly 50 percent of the population gets a handout one way or the other from the government. So by continuing to support these people, you get their votes. And at the other side of the spectrum, you have the people that pay the tax, the big corporations, and the well-to-do people, and they also want to maintain their interests, which is natural. And so you have a completely dysfunctional political system.

I would rather play Agriculture by owning farms than by speculating in wheat futures and corn futures

Marc Faber : Well, I think we have to distinguish between different commodities. We have agricultural commodities, and I think the long term outlook for agriculture in the world is probably rather favorable. I would rather play it by owning farms than by speculating in wheat futures and corn futures because the average investor will find it very difficult to trade these markets. And then we have industrial commodities, and this is an important signal for the market. They collapsed. They did not collapse because of Greece. They are down 30 percent because it is very likely that the Chinese economy is now decelerating very rapidly. And that on the world would have a far greater impact than say Greece. And so I think investors who all focus on the banking crisis in Europe, they overlook the next shoe to drop, which could be China.

Consumer Confidence indices are low for a very specific reason

Marc Faber : Look, I think that consumer confidence indices are low for a very specific reason. Just before I came on, there was a report that the sales of small businesses in America has been increasing. Yes, I believe that because a lot of the sales increase has to do with price increases. In other words, the cost of living of the average American is going up by much more than what Mr. Bernanke looks at, namely core CPI, which is essentially a consumer price index that excludes energy and food. Everybody I talk to has cost of living increases in America of more than five percent per annum. But the Federal Reserve and other agencies and governments, they do not believe that inflation is five percent. They think - they assume that inflation is say two or three percent, interest rates on deposits are zero, so you are cheated out if you have actually savings in a bank. - in Bloomberg Surveillance

A Recession in China would affect the resource producing regions of the world

Marc Faber : Well, I think if China had much slower growth or even a recession, which very few people talk about, but it is conceivable if you look at the U.S. 1800 to 2000, we had many recessions and we kept from growing. But basically, if that happens, then the demand for raw materials would go down. So it would affect all the resource producing regions of the world, including Latin America, Africa, the Middle East, central Asia, Russia, Australasia, and it would affect their currencies. And then these countries would have less money to buy goods that come from China, and we could have a downward spiral in the world which would be very vicious. - in Bloomberg Surveillance

There is a lot of uncertainty and the markets move according

Marc Faber : Well, I think we have a lot of volatility in markets and they are, as far as I am concerned, fairly unpredictable because we have a lot of government intervention. We do not know whether QE3 will come about in America, some form is likely. We do not know about the bailout of banks in Europe, some bailout is likely. So there is a lot of uncertainty and the markets move according to momentum. For instance, is it possible for me that the euro just strengthened in the last couple of days as much as it has because the outlook for Europe is probably worse than for the U.S. So we have a lot of uncertainty and all I can say is the best for investors is to stay diversified. - in Bloomberg Surveillance

We cannot blame Wall Street and well-to-do people for the mishap

Marc Faber : I think normal is very difficult to define, but very clearly it is not normal where we are now. But we cannot blame Wall Street and well-to-do people for the mishap, for this ratio to have exploded on the upside. We have to blame essentially expansionary monetary policies that favor assets. So you have low consumer price inflation, you have no wage inflation. In fact, the problem in America is that real wages, real compensation has been down since the 1970s. But at the same time, asset prices, equities, real estate and so forth have gone up dramatically, and that favors people who have these assets. And so the ratio expanded and you have now a record wealth, inequality, and income inequality. - In Bloomberg Surveillance

The American banks are actually a very good investment opportunity at the present depressed level

Marc Faber : Well, it is very difficult to really assess the quality of earnings of banks. But I am told by experts here in the U.S. that the auditors have become very, very tough and that banks basically are at their lows recently. JPMorgan was at less than $27. That $27 now is $32. And at their lows, basically the banks were selling below book value. So some people say that American banks are actually a very good investment opportunity at the present depressed level. - in Bloomberg Surveillance

The Banks stress tests in Europe were not properly conducted

Marc Faber : Well, basically, we had the stress test in Europe and out of 90 banks, only six or seven were deemed to be unsafe. The safe banks, including Dexia, are not safe because the stress test was not properly conducted. - in Bloomberg Surveillance

The next shoe to drop, which could be China

MARK FABER : Well, I think we have to distinguish between different commodities. We have agricultural commodities, and I think the long term outlook for agriculture in the world is probably rather favorable. I would rather play it by owning farms than by speculating in wheat futures and corn futures because the average investor will find it very difficult to trade these markets. And then we have industrial commodities, and this is an important signal for the market. They collapsed. They did not collapse because of Greece. They are down 30 percent because it is very likely that the Chinese economy is now decelerating very rapidly. And that on the world would have a far greater impact than say Greece. And so I think investors who all focus on the banking crisis in Europe, they overlook the next shoe to drop, which could be China.  in Bloomberg Surveillance

We have a lot of volatility in markets

Marc Faber : : Well, I think we have a lot of volatility in markets and they are, as far as I am concerned, fairly unpredictable because we have a lot of government intervention. We do not know whether QE3 will come about in America, some form is likely. We do not know about the bailout of banks in Europe, some bailout is likely. So there is a lot of uncertainty and the markets move according to momentum. For instance, is it possible for me that the euro just strengthened in the last couple of days as much as it has because the outlook for Europe is probably worse than for the U.S. So we have a lot of uncertainty and all I can say is the best for investors is to stay diversified. - in Bloomberg Surveillance

Banks should not act like hedge funds

Marc Faber : I think it is a very good move that banks become far more conservative because banks, when you think of it, your salary is probably paid into a bank account and you expect that money to be available to you at any time. So the bank has a fiduciary function, and it has a certain social function. And with your deposit, the banks should not go and speculate. So my proposal is basically to ring fence the depositors, and the domestic operation that is the traditional bank, and then farm out into separate entity what the bank does with money in terms of hedge fund activity. There are a lot of banks they are just like hedge funds. They take huge positions here and there, and then we have losses - as occurred for UBS in London, that basically should not be your concern as a depositor. - in Bloomberg Surveillance

Our restrictive regulatory policies curtail any initiative by the small businessman

Marc Faber : "We have expansionary fiscal policies, we have expansionary monetary policies but we have restrictive regulatory policies and it curtails any initiative by the small businessman and the large businessman,"

"He doesn't employ and invest capital in the U.S. He does that in China or somewhere else in the world where the regulatory environment is more favorable." - in CNBC

No one wants to work in the UK

Marc Faber : “Yes, because no one wants to work in the UK,” Marc Faber told CNBC studio, recently when one guest told him that David Cameron is telling the United Kingdom that they should tighten their bells work harder and for less and it doesn’t seem to be working too well, so far

The governments in the western world have grown like a cancer

Marc Faber : not necessarily for the corporations. for themselves. The problem is, governments in the western world -- and I'm not singling out the US -- they have grown like a cancer. And now they protect themselves to stay in power and they have a variety of alliances, like, for instance Mr. Obama he has no clue, but when he sees the protesters in Wall Street he immediately says yes, yes, yes that’s a good idea so he can target the minority so he can buy a few more votes. And of course the well to do people want to protect what they worked for and also what they're paying for because as you know in the US roughly 50% of the people don't pay any federal income tax. So actually to say that the rich have not contributed anything is actually wrong. - in CNBC

The US needs a Lee Kuan Yew

Marc Faber : I tell you what the u.s. needs. the u.s. needs a Lee Kuan Yew who stands in front of the u.s. and tells them, listen you lazy buggers , Now you have to tighten your belts, you have to save more,you have to work more for lower salaries and only through that will we get out of the current dilemma that essentially prevents the economy from growing - in CNBC

A flat tax on everybody would be a good measure in The US

Marc Faber : Well I tell what you to do. I think a flat tax on everybody would be actually a good measure and I think to reduce the regulatory environment in the u.s. and create again an environment. we have expansionary fiscal and monetary policies. but we have restrictive regulatory policies. and it curtails any initiative by the small businessmen. and the large businessmen, he doesn't employ and invest capital in the u.s. does he that in china or somewhere else in the world where the regulatory environment is more favorable. if you look at net investments in the u.s., it's gone down for the last 20 years. and it's now negative. in other words, basically the capital stock of America is not being replenished. but it's being replenished somewhere else. and at the same time, the policies ofthe Keynesians have always encouraged spending. we're not going to get out of recession by savings. spend, spend, spend. that is wrong. the lack of saving is the problem of the united states - in CNBC

Protesters should occupy the FED not Wall Street

Marc Faber : well, my view is and you just heard the interview of the gentleman before, Basically we have the Keynesians and we have the democrats and I am not saying that all democrats are equal, but they want interventions and we had far too many interventions in the western world where the share of the total economy that goes to government and is government sponsored has grown. and that essentially makes it very difficult for the western world to grow substantially. add to that huge level of debts, I don't see how the western world, including the U.S., Japan, and western Europe can actually grow. they're going to stagnate. and when you have stagnation over a longer period of time, then people start to ask questions and then they go after minorities, and Wall Street is a minority they are a minority that anyone else would have done the same. they used the system. but they didn't create the system. the system was created by the lobbyists and by Washington. so they should actually go to Washington and also occupy the federal reserve on the way. - in CNBC 11th Oct 2011

Liquidity Tightening is bad for asset prices but good for the U.S. Dollar

Marc Faber : yes. well, I think the volatility arises because we had the NASDAQ bubble and then we had the housing bubble and the stock market bubble and then a commodities bubble. and usually when the bubble bursts like after 29 or like after the late '60s you have a period of very high volatility for about 10 to 15 years before the markets settle down and then reignite the uptrend. And as far as the dollar is concerned , the reason I am actually quite positive is that global liquidity, despite of the fact that the ECB and the European governments will flood the market with liquidity to bail themselves out that, global liquidity is tightening. and whenever global liquidity is tightening, it's bad for asset prices but it's good for the U.S.. dollar as was the case in 2008. - in CNBC 11th Oct 2011

Marc Faber Video Interview - CNBC - 11 October 2011

Dr. Marc Faber of the Gloom, Doom & Boom Report, talks about his outlook for the global economy with Squawk Masters of the CNBC this morning 11th October 201 ha said that he expects volatility in the market to continue , and that he is bullish on the US Dollar because the global liquidity is tightening Despite of the fact the ECB and European governments will flood the markets with liquidity to bail themselves out, global liquidity is tightening," he says. "It's bad for asset prices but it's good for the US dollar.

Steve Keen & Max Keiser on Occupy wall street

Professor Steve Keen with Max Keiser's on The Edge to discuss Occupy Wall Street Movement his newest book Debunking Economics 2 and the Australian Housing Bubble . This mind-capped political/financial analysts doom-saying that gold bubble is gonna burst... LoL. First gold isn't a bubble, it's the dollar that's losing power... And second gold is undervalued currently by thousands of dollars. If the market wasn't manipulated by these financial terrorists, an ounce of gold would be around $5k at least by now, just judging by inflation since fiat money was introduced.Let the banks fail.It wont hurt anyone , but people with over 250k in the banks in the u.s. All this bank bail out crap is only bad for average people. The inflation is going to kill you in the end.Better to lose your Job, government,etc then to allow these bailouts.That is why the wealthy is calling occupy wall street people communist . They only giver a damn about their own capital in the bank..

Dr. Doom Düstere Prognosen für die Weltwirtschaft - 06.10.11

Dr. Doom: Düstere Prognosen für die Weltwirtschaft . Der Schweizer Marc Faber gilt als einer der renommiertesten Börsenexperten der Welt. Weil er schon eine ganze Reihe von Börsencrashs und Wirtschaftskrisen voraussah, trägt er den Übernamen "Dr. Doom". Christoph Romer und Claudio Zanetti sprechen mit Marc Faber und Nationalrat Alfred Heer (SVP, ZH) über die aktuellen Finanz-, Währungs- und Wirtschaftskrisen, sowie über deren Folgen für die Schweiz.

Global liquidity is contracting but do not sell your Gold

Marc Faber : I think Gold has had a big move , and recently became very overbought , an dollar strength means like in 2008 that global liquidity is contracting and when you have a contraction in global liquidity it hits says industrial commodities a lot strengthens the dollar it hits assets prices and in 2008 the gold prices did not go down but the gold shares went down a lot and so it is conceivable that somebody will say copper is down this much gold is still relatively high I am going to take some profits on my gold positions , I am not selling mu gold because I think in the long run they will print money as soon as the markets in the world are down another ten twenty percent even the republicans will write a letter to the FED 'you have to ease' you understand ? now they can set back and say do not ease you have done enough but as soon as asset prices go down and the economy is weak everybody will again applaud the FED if the print money ....- in Reuters

If you are a long-term investor, each time the market drops 40 percent from the peak, you should start buying.

Marc Faber : "But if you're a long-term investor, each time the market drops 40 percent from the peak, you should start buying. You will then have satisfactory returns in the long run. Not huge, but satisfactory returns,"

Some China Real Estate Market could fall 40% - 50%

Marc Faber : I think some real estate market in China will blow up amd massively so where prices could easily drop 40-50 percent - in Reuters

Industrial commodities will get hit hard if China goes into a Recession

Marc Faber : ...and if the Recession occurs obviously all the industrial commodities will get hit hard very hard , and other countries in the world that benefited from rising commodity prices , the Middle East Central Asia Africa Latin America Australasia they are going to get hit very hard and then they are going to have less money to buy goods from Porsche and Mercedes and Ferrari and so forth so it then generates a downturn in global trade- in Reuters

The 30 year US Government Bonds are completely unattractive

Marc Faber : I would not take the risk to be long 30 year Government Bond in the US for another 3 weeks unless I am a trader , from an investment point of view I regard them to be completely unattractive , but as a trader as I said may be you can make some money in the next ten days or so I wouldn't take the risk and I would prefer to actually bet that we have a repeat of October 2008 to March 2009 when bonds peaked out the dollar dropped out and eventually asset market bottomed out in March 2009 , so I think that from here onwards the downside in Asia I'll be inclined to accumulate shares ...- in CNBC-TV18

Industrial Commodities are vulnerable and still remain vulnerable

Marc Faber : If you look at the environment we are in , there are a lot of similarities with 2008 where basically the financing for the exploration companies dried up the global liquidity shrunk asset prices collapsed but the US Dollar and the US government bonds were strong , and we have a repeat here of that situation ,my saying is that industrial commodities are vulnerable and still remain vulnerable . In the case of Gold and Silver I think increasingly they will be perceived as cash and increasingly they will move in strong hands- in CNBC-TV18

Stay away from the Emerging Markets at all costs

Emerging Markets--Stay away from these at all costs. All emerging markets are falling and making new lows. Even though Faber likes these longer term, they could still fall another 20%-30% before they would be good buys. These markets could even fall to their 2009 lows. However, this will represent a good buying opportunity because these markets will be the first to bottom. - in Seeking Alpha, from the Gloom, Boom & Doom Newsletter

Dr. Marc Faber zum Rettungsschirm und Untergang des EUROs

Dr. Marc Faber zum Rettungsschirm und Untergang des EUROs. Die Billionenbombe Staatsanleihen wird platzen. Der Schuldentsunami und die Inflation kommt. Ein Bilck auf die aktuelle Wirtschafts- und Finanzlage mit dem renommierten Börsenexperten und Herausgeber des Finanzmagazins "The Gloom, Boom & Doom Report" Dr. Marc Faber.

Economist John Williams : Hyperinflation Delayed but Still Coming

Economist John Williams of shadow stats on the Financial Sense NewsHour Oct/04/2011 : the economy is no so strong , consumer confidence is at the lowest , unemployment is still rising the banking system is insolvent US is still stuck in a recession , and hyperinflation was delayed but still coming

Long the Dollar , For Now

It's true that the dollar has no intrinsic value and is being printed into infinity, but the US dollar will be your best friend for the next few months. As global liquidity contracts on EU debt concerns and a possible hard landing in China - Dr Marc Faber wrote in the latest issue of his Gloom, Boom and Doom Report Dr Marc Faber advises investors to long the Dollar For Now , as he believes that for the long term the dollar is going to zero

Gold price could fall 40%

Marc Faber : gold could undergo a significant correction similar to what happened between 1974-1976, when gold fell 40% - in the latest issue of the Gloom, Boom and Doom Report

The prospects for the Indian stock market

Marc Faber : I think we have a bear market in India, and it will go lower. But if you’re a long-term investor, each time the market drops 40 percent from the peak, you should start buying. You will then have satisfactory returns in the long run. Not huge, but satisfactory returns. The Indian economy, like the Chinese economy, has very favourable prospects in the long run. We’re starting from a very low GDP per capita in India – some $1,200 against $40,000 in the US. To go from $1,200 to $5000 is not difficult. But from $40,000, it’s hard to go much farther unless you print money.- in www.firstpost.com

Eurozone crisis effect

Marc Faber : We had a bank failure in 2008 and the financial system in the western world went bankrupt. It was bailed out by governments, but the banks have learnt nothing. This is partly driven by artificially low interest rates and zero deposit rates. The banks continue to speculate on all kinds of products. What happened to UBS in London (where a rogue trader caused huge losses) can happen to any other bank.I have lots of clients and readers of my newsletters, and I don’t know anyone who owns Greek bonds. So why do the banks – particularly French banks — hold Greek bonds and Portuguese bonds and Spanish bonds and Italian bonds? This shows the banks have learnt nothing. There has to be a separation of banking activity. They can have, on one side, investment banking activity – they can call themselves UBS Giant Hedge Fund; on the other side, the banking sector has to be ring-fenced for depositors and made 100 percent safe. They shouldn’t use that to speculate – as is happening at present. - in www.firstpost.com

China credit bubble going bust

Marc Faber : Don’t forget the Chinese invented paper; they are very good at printing money as well. (Economist and commentator) Paul Krugman argues that the overall level of debt doesn’t matter because one man’s debt is another man’s asset. But the problem arises when one man’s debt cannot be repaid. That is going to happen in China because the underground lending market is larger than people perceive. That is a potential problem. In China, for sure you will see a setback: in fact, it’s already started. Small companies are finding it difficult to get credit, and in the underground market, the lending rates are over 60 percent. That tells you something. The price of copper too is telling you something is not right… The problem is that the local Chinese are selling and buying properties in Vancouver and in Singapore. They are shifting money outside. So, the insiders are selling and the stupid foreigners have been buying Chinese shares. It’s very difficult to measure GDP growth in China. We essentially add up goods and services and we calculate an inflation indicator – say, the CPI. The nominal growth less the CPI gives you the real growth. But it’s not only in America that leaders are lying about the true cost of living increases. In China, the rate of cost increases is of the order of 10 to 15 percent a year. Pork prices have doubled over the past 12 months; rice prices are up; energy prices are up. I believe that China’s GDP figures are overstated. - in www.firstpost.com

A Lehman Brothers event not likely in Asia

Marc Faber : There is, for sure. In 2008, the financial sector went bust. In the future, the governments will go bust. However, Asian governments’ finances are in a much better position than those of governments in the Western world, which have – aside from the published fiscal deficits, unfunded liabilities that are coming due. That will become a huge problem as the population is ageing, and fewer workers support more retirees. Asia reacted well to the 1997-98 crisis. A period of deleveraging followed: businessmen became conservative, they paid down debt. And banks became cautious in their lending. Asian banks are any day safer than banks in the Western world. I would deposit money in a Thai bank, no problem. They don’t know what a derivative is — because the derivative salesman was stuck in traffic in Bangkok! - in http://www.firstpost.com

Marc Faber recommendation for asset allocation

Marc Faber : Nobody knows what the world will look like in 10 years. I’m always asked ‘where will the markets go?’ But there’s so much intervention through monetary and fiscal policies that it’s hard to say. My advice is for investors to be diversified: 25 percent in Asian real estate; 25 percent in equities; 25 percent in cash; and 25 percent in gold. - in http://www.firstpost.com

The problem of Underground lending in China

Marc Faber : ...the problem with China is that we do not have precise insights into the size of local lending and underground lending , because a lot of lending in China is unofficial lending that is essentially not carried on the books of Banks and that interest rates on this unofficial lending has been trending much higher recently indicating that market has tightened and that something is not well....I think some real estate markets in China will blow up and massively so we have prices could easily drop 40 , 50 percent - in Reuters...