Marc Faber, also known as “Dr. Doom” by the press, lived up to his name while talking to CNBC this morning about what’s in store for the U.S. economy. From the CNBC website:

Liquidity will dry up even more, volatility will stay high and financial assets are going to suffer as the crisis continues to unfold. The bailout plan is unlikely to work and the global economy will take the hit, he predicted.

“People rely on the people in Congress, at the Fed, at the Treasury, people that brought us into this trouble, to take us out of trouble. I don’t think they will succeed,” Faber said. “We can have recovery rallies but a new high on the S&P is practically out of the question for a very long time. In real terms, equities are still very high and economically, I think the world will go into a slump.”

Dr. Faber, who publishes the monthly investment newsletter The Gloom Boom & Doom Report and is the author of several books, talked more about where he sees financial assets going. From the piece:

“Next year, if the economy in the U.S. is as weak as I think it would be, the trade and the current account deficit will continue to contract,” Faber said. “When global liquidity contracts, it’s not a good time for financial assets.”

Other sources of funding, such as foreign reserves of resources-rich countries, are also likely to dry up, Faber said. “I think sovereign wealth funds are going to be very busy supporting their own markets, they won’t have much money to buy assets around the world.”

The head of Marc Faber Limited also shared a disturbing prediction with CNBC viewers. The Swiss-born investor said:

The next emergency measure will be that Americans are not allowed to buy foreign currency and transfer money overseas, and the next measure will be not permitting Americans to buy gold and so on and so forth… It creates even more uncertainty in the market place when you continually change the rules.

Evangelos Vlasopoulos, stock.xchng

Source:

“Fed Acted Like a Liquidity Drug Dealer: Economist”
CNBC, September 23, 2008

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