Repent, the end is nigh.
It’s a message Marc Faber has been preaching for almost three decades, ever since his correct call on the ’87 market crash launched him into the stratosphere among prophets of market doom. Indeed, his official title is publisher of the “Gloom, Boom & Doom Report,” and prognostications of misery have paid off well.
Faber told Bloomberg Television on Monday that in today’s market “there is no safe haven.”
On the debt ceiling debate in Washington, Faber said, “it’s basically a dysfunctional government that we have that is far too large that is essentially wasting money left, right and center.”
On how he sees the debt ceiling debate playing out:
“If they don’t agree by the 17th, I think what can happen is that the Fed will actually finance the Treasury independently so the interest payments are being met. If the interest payments are not being met, I think it will cause quite a bit disruption to the financial market. I am not that concerned about that. I think this larger issue is like the euro issue a year ago where people were very negative and it was debated and so forth. In the end it is a political decision. I think both parties want to spend. It’s just on different items that they want to spend money.”
On whether what’s going on across equities, bonds currencies and commodities, along with the events in United States, can be compared to other idiocies by governments in previous decades:
“Yes, idiocies by governments. That is exactly the word. It’s basically a dysfunctional government that we have that is far too large that is essentially wasting money left, right and center. The Republicans are wasting money on the military complex and the Democrats are basically buying votes with transfer payments, with entitlement programs, it goes on. It is a huge waste. The problem is that I don’t see a solution. I think the current debate about the debt ceiling and the budget is more a symptom of a problem than a problem itself. The problem is really that the government, not just in the U.S. but other countries as well, has grown disproportionally large and that retards economic growth.”
On whether there’s a safe haven left:
“There is no safe haven. Bank deposits are not safe, which used to be safe. Money in treasury bills is not 100% safe because there is inflation in the system and you hardly get any interest. Bonds are not very safe anymore because eventually interest rates will go up. Equities in the U.S. are relatively expensive by any valuation metrics you might use. I don’t see anything particularly safe. The best you can hope for is that you have a diversified portfolio of different assets and that they don’t all collapse at the same time.”
“We have a strong rally from the lows at $1,180 to over $1,400, and now we are backing off. I think between around $1,200 and $1,250 it is getting into buying range. The sentiment about gold is very negative, but if you look at everything considered — the monetization of debt, the debt ceiling, which sooner or later will be increased because both Republicans and Democrats are big spenders and the government’s debt has expanded from $1 trillion in 1980 to $5 trillion in 1999, now we are at $16 trillion. Both Democrats and Republicans have been big, big spenders because a lot of money flows through the government.”