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Marc Faber:Prepare for a Massive Market Meltdown
Published: Tuesday, 13 Nov 2012 | 7:54 AM ET
The markets are going to go into meltdown soon, so expect stocks to lose 20
percent of their value, Marc Faber, author of the Gloom, Boom and Doom
report told CNBC on Tuesday.
“I don’t think markets are going down because of Greece, I don’t think
markets are going down because of the ‘fiscal cliff’ — because there won
’t be a ‘fiscal cliff,’ ” Faber told CNBC’s “Squawk Box.” “The
market is going down because corporate profits will begin to disappoint, the
global economy will hardly grow next year or even contract, and that is the
reason why stocks, from the highs of September of 1,470 on the S&P, will
drop at least 20 percent, in my view.”
Faber, who is known for his bearish views, cited tech giant Apple, a company
whose disappointing earnings have caused its stock to fall 20 percent from
its September highs and 14 percent in the past month.
A series of poor quarterly earnings from corporate giants such as Amazon.com
McDonald's and Google have hurt investor sentiment in recent weeks.
Faber argued that the “fiscal cliff,” a rise in taxes and automatic
spending cuts, would actually involve some minor tax increases in “five
years’ time” and some spending cuts “in 100 years.”
What the U.S. needed was some pain, he said, aptly demonstrated by the euro
zone’s austerity measures that are attempting, with a mixed measure of
success, to curb gaping budget deficits.
“There will be pain and there will be very substantial pain. The question
is do we take less pain now through austerity or risk a complete collapse of
society in five to 10 years’ time?” he said, adding that there was a lack
of political will to tackle the U.S. budget.
Faber added: “In a democracy, they’re not going to take the pain, they’re
going to kick down the problems and they’re going to get bigger and bigger
.”
Payback Time
Faber identified several issues curbing an economic recovery, such as the
real estate market, which he said had never been so “overbuilt.” He also
said there was lots more deleveraging ahead.
“In the Western world, including Japan, the problem we have is one of too
much debt and that debt now will have to be somewhere, somehow repaid or it
will slow down economic growth,” Faber said. “I think we lived beyond our
means from 1980 to 2007, and now it’s payback period.”
Faber told CNBC that central bank stimulus was useless and the implosion of
markets was the only way to restructure the financial system.
“I think the whole global financial system will have to be reset and it won
’t be reset by central bankers but by imploding markets — either the
currency [markets, debt market or stock markets,” he said. “It will happen
— it will happen one day and then we’ll be lucky if we still have 50
percent of the asset values that we have today.”
—By CNBC’s Holly Ellyatt
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发表于 2012-11-13 09:55 PM
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