Marc Faber Says Global Economic Expansion Coming To End
Bloomberg caught up with Marc Faber, aka “Dr. Doom,” at an investment forum in Sydney earlier today. Reporter Shani Raja wrote:
Marc Faber, who told investors to bail out of U.S. stocks before 1987’s so-called Black Monday crash, said oil prices may fall to $100 a barrel as demand slows in a global economy at the “tail end” of its expansion.
Accelerating inflation and rising interest rates worldwide are likely to dent the value of commodities including oil, said Faber, who publishes the Gloom, Boom & Doom Report, at an investment forum in Sydney today.
“Global liquidity is under some relative tightening, and that is unfavorable for all asset classes,” said Faber, 62. There will be “sharp corrections’” in commodities prices.
According to the Swiss-born investor, the global economy has experienced a synchronized boom since 2001. Dr. Faber noted:
In the history of capitalism this is most unusual. When it comes to an end it should affect all countries.
Bloomberg’s Raja pointed out global stock markets losses have amounted to nearly $12 trillion so far this year, while financial institutions have been hit with $447.6 billion in credit-related losses.
Dr. Faber told the forum that he prefers holding physical commodities rather than shares or futures, and that real estate in India and Cambodia were among his favored Asian investments, according to Raja.
Cambodian Beach
Such pessimism extends to the financial sector as well. According to India’s Moneycontrol.com (home of CNBC-TV18):
Marc Faber, Editor & Publisher, The Gloom, Boom & Doom Report said, “We had expanding credit growth in the period 2001-2007. We had this credit bubble built up after 1982.” So in other words, for 25 years now credit growth is slowing down and the fundamentals of the financial sector have worsened and they will stay unfavourable for a very long time, he added.
The peak earnings of finance companies ain’t going to come back. “I don’t think that Citigroup, or UBS or any other finance stock will go back to their peak level they had reached in 2007.”
Sources:
“Faber Says Oil May Decline as Global Growth Weakens (Update3)”
Shani Raja
Bloomberg, July 21, 2008
“See long-term negative cues for fin sector: Marc Faber”
Moneycontrol.com (India), July 21, 2008
July 24th, 2008 at 4:30 am
His comments are certainly true because we are seeing no hope of improvement.
July 24th, 2008 at 8:25 am
Thanks for the comment backing tracks.
“His comments are certainly true because we are seeing no hope of improvement.”
Ah, but I’m a big believer in cycles. The global expansion may be ending, and I’m convinced we’ll see a lot of economic pain during the contraction, but I see no reason as to why the expansion won’t be back again.