Tags: Faber | Global | Debt | Crisis | Dollar

Faber: Global Debt Crisis to Help Dollar but Nothing Else

Tuesday, 11 Oct 2011 01:52 PM

Debt woes in Europe and the United States will push investors to the dollar, making the greenback the only winner of the world's major asset classes in the near future, says Marc Faber author of the Gloom, Boom and Doom report.

Crushing debt burdens in the U.S. and Europe are fueling wild market swings and recessionary fears, and when that happens investors flee to safety, which normally means they buy dollar-denominated assets like Treasurys and other instruments due to their liquidity.

Even if European monetary policy authorities pump money into their economies to stave off collapse, investors are going to view the dollar as safer that the euro anyway.
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"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," Faber tells CNBC.

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Marc Faber
(Newsmax file photo)
"Whenever global liquidity is tightening it is bad for asset prices but good for the U.S. dollar, as was the case in 2008," Faber said.

Since August, the dollar has gained 7 percent against the euro thanks to worries that Greece may default and disrupt the financial sector there.
That strengthening trend came even when Standard & Poor's decided to strip the U.S. of its AAA rating.

European policymakers have propped up Greece in the past, but default fears normally return and end up bruising the currency.

"[The] combination of continued eurozone financial stress as European policy makers continue to fail to get ahead of the crisis and the potential for the eurozone to slip back into recession" are creating "strong headwinds" against the euro, says Marc Chandler, global head of currency strategy for Brown Brothers Harriman, CNNMoney reports.

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Debt woes in Europe and the United States will push investors to the dollar, making the greenback the only winner of the world's major asset classes in the near future, says Marc Faber author of the Gloom, Boom and Doom report. Crushing debt burdens in the U.S. and Europe...
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Tuesday, 11 Oct 2011 01:52 PM
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