Tags: faber | banks | bubble

Faber: Central Banks Blowing New Bubble

By    |   Thursday, 13 Aug 2009 11:54 AM

Investing guru and publisher of the Gloom, Boom and Doom Report Marc Faber remains a bear, predicting a stronger dollar, tightening in global liquidity and another correction in asset prices.

When the S&P bottomed in March, the dollar was weak, notes Faber, who expects the next few months will be a period of dollar recovery and “a correction time in asset markets” as the dollar strengthens.

“The strong dollar means global liquidity tightening,” Faber told CNBC.

“In a scenario where growth will be disappointing, I think emerging markets will be kind of vulnerable.”

The worse the global economy, the more stocks could go up, Faber says, because the world’s central bankers have become nothing more than money printers.

“They’re dangerous to the health of the global economy,” Faber says.

“They created the Nasdaq bubble, the housing bubble, and now they want to create another bubble to bail them out.”

Financial crises, Faber points out, usually lead to some fundamental change that purges the excesses that went before.

But, he says, the Obama administration chose instead to bail out financial firms at the taxpayers’ expense, leaving the country vulnerable to a bigger crisis in the next few years.

Sentiment in currency markets seems to be lining up behind the dollar, but if the Fed provides some indication that its quantitative easing and stimulus program will end, the pace of the dollar's acceleration will slow, says Greg Salvaggio, vice president at Tempus Consulting.

"Should that wording emerge, I think you're going to see people quickly run for the exits on short dollar positions," Salvaggio told The Wall Street Journal.

The Fed on Wednesday extended its extraordinary efforts to support the economy through October. It had planned to end them in September. It left the benchmark rate near zero, as expected.

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Investing guru and publisher of the Gloom, Boom and Doom Report Marc Faber remains a bear, predicting a stronger dollar, tightening in global liquidity and another correction in asset prices.When the S&P bottomed in March, the dollar was weak, notes Faber, who expects the...
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2009-54-13
Thursday, 13 Aug 2009 11:54 AM
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