"The Gloom, Boom and Doom Report" publisher Marc Faber says analyst Robert Prechter is right about a lot of things, but a rising dollar isn't one of them.
Prechter, who forecasts markets using Elliot Waves, Fibonacci numbers and socioeconomic trends, says the Dow could hit 1,000.
"Prechter is right when says that when manias come to an end, prices tend to retreat to where the mania started,” Faber told CNBC. “So from this point of view, a Dow Jones at 1,000 should not be excluded."
However, Faber takes issue with Prechter's view that surviving "dollars and dollar credits, representing the denominator of the DJIA, will rise in value, and the Dow — along with everything else used as money — will fall in dollar price."
"The question here is really, with the Dow below 1,000, what kind of dollars — and especially what kind of dollar credits — will survive," Faber said.
"It is safe to assume that almost all banks in the world, and almost all governments, will be bust."
Faber concurs with Prechter that a complete credit collapse is in the offing, but differs from him on when this will happen.
"It is likely that if the Dow where to fall by more than 20 percent from the present level there would be further massive fiscal and monetary stimulus packages — not just in the U.S. but worldwide," says Faber.
"These economic policy measures would likely fail to boost economic activity in the U.S. but could support asset markets.”
Former Federal Reserve Chairman Alan Greenspan said the slowing economic recovery in the U.S. feels like a “quasi-recession” and the economy might contract again if home prices decline, Bloomberg reports.
“We’re in a pause in a recovery, a modest recovery, but a pause in the modest recovery feels like a quasi-recession,” Greenspan said in an interview on NBC’s “Meet the Press.”
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