Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
Ravencoin RVN About to EXPLODE to NEW HIGHS! Last Chance to Buy Before it goes to the MOON! - 21st Oct 21
Stock Market Animal Spirits Returning - 21st Oct 21
Inflation Advances, and So Does Gold — Except That It Doesn’t - 21st Oct 21
Why A.I. Is About To Trigger The Next Great Medical Breakthrough - 21st Oct 21
Gold Price Slowly Going Nowhere - 20th Oct 21
Shocking Numbers Show Government Crowding Out Real Economy - 20th Oct 21
Crude Oil Is in the Fast Lane, But Where Is It Going? - 20th Oct 21
3 Tech Stocks That Could Change The World - 20th Oct 21
Best AI Tech Stocks ETF and Investment Trusts - 19th Oct 21
Gold Mining Stocks: Will Investors Dump the Laggards? - 19th Oct 21
The Most Exciting Medical Breakthrough Of The Decade? - 19th Oct 21
Prices Rising as New Dangers Point to Hard Assets - 19th Oct 21
It’s not just Copper; GYX indicated cyclical the whole time - 19th Oct 21
Chinese Tech Stocks CCP Paranoia, VIES - Variable Interest Entities - 19th Oct 21
Inflation Peaked Again, Right? - 19th Oct 21
Gold Stocks Bouncing Hard - 19th Oct 21
Stock Market New Intermediate Bottom Forming? - 19th Oct 21
Beware, Gold Bulls — That’s the Beginning of the End - 18th Oct 21
Gold Price Flag Suggests A Big Rally May Start Soon - 18th Oct 21
Inflation Or Deflation – End Result Is Still Depression - 18th Oct 21
A.I. Breakthrough Could Disrupt the $11 Trillion Medical Sector - 18th Oct 21
US Economy and Stock Market Addicted to Deficit Spending - 17th Oct 21
The Gold Price And Inflation - 17th Oct 21
Went Long the Crude Oil? Beware of the Headwinds Ahead… - 17th Oct 21
Watch These Next-gen Cloud Computing Stocks - 17th Oct 21
Overclockers UK Custom Built PC 1 YEAR Use Review Verdict - Does it Still Work? - 16th Oct 21
Altonville Mine Tours Maze at Alton Towers Scarefest 2021 - 16th Oct 21
How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
The Only way to Crush Inflation (not stocks) - 14th Oct 21
Why "Losses Are the Norm" in the Stock Market - 14th Oct 21
Sub Species Castle Maze at Alton Towers Scarefest 2021 - 14th Oct 21
Which Wallet is Best for Storing NFTs? - 14th Oct 21
Ailing UK Pound Has Global Effects - 14th Oct 21
How to Get 6 Years Life Out of Your Overclocked PC System, Optimum GPU, CPU and MB Performance - 13th Oct 21
The Demand Shock of 2022 - 12th Oct 21
4 Reasons Why NFTs Could Be The Future - 12th Oct 21
Crimex Silver: Murder Most Foul - 12th Oct 21
Bitcoin Rockets In Preparation For Liftoff To $100,000 - 12th Oct 21
INTEL Tech Stock to the MOON! INTC 2000 vs 2021 Market Bubble WARNING - 11th Oct 21
AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
Stock Market Wall of Worry Meets NFPs - 11th Oct 21
Stock Market Intermediate Correction Continues - 11th Oct 21
China / US Stock Markets Divergence - 10th Oct 21
Can US Save Taiwan From China? Taiwan Strait Naval Battle - PLA vs 7th Fleet War Game Simulation - 10th Oct 21
Gold Price Outlook: The Inflation Chasm Between Europe and the US - 10th Oct 21
US Real Estate ETFs React To Rising Housing Market Mortgage Interest Rates - 10th Oct 21
US China War over Taiwan Simulation 2021, Invasion Forecast - Who Will Win? - 9th Oct 21
When Will the Fed Taper? - 9th Oct 21
Dancing with Ghouls and Ghosts at Alton Towers Scarefest 2021 - 9th Oct 21
Stock Market FOMO Going into Crash Season - 8th Oct 21
Scan Computers - Custom Build PC 6 Months Later, Reliability, Issues, Quality of Tech Support Review - 8th Oct 21
Gold and Silver: Your Financial Main Battle Tanks - 8th Oct 21
How to handle the “Twin Crises” Evergrande and Debt Ceiling Threatening Stocks - 8th Oct 21
Why a Peak in US Home Prices May Be Approaching - 8th Oct 21
Alton Towers Scarefest is BACK! Post Pandemic Frights Begin, What it's Like to Enter Scarefest 2021 - 8th Oct 21
AJ Bell vs II Interactive Investor - Which Platform is Best for Buying US FAANG Stocks UK Investing - 7th Oct 21
Gold: Evergrande Investors' Savior - 7th Oct 21
Here's What Really Sets Interest Rates (Not Central Banks) - 7th Oct 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Marc Faber - Greece is Basically Bankrupt

Stock-Markets / Eurozone Debt Crisis Jun 30, 2015 - 10:04 AM GMT

By: Bloomberg

Stock-Markets

Marc Faber, Editor of the Gloom, Boom & Doom Report, spoke with Bloomberg Television's Stephanie Ruhle, Joe Weisenthal and Scarlet Fu about the U.S. economy, financial markets and the Greek debt crisis.

Describing the situation in Greece, Faber said: "My sense is that they will come to some kind of an agreement in the last minute. But I don't think that's any positive because Greece is basically bankrupt. The debt should be written down by 50 percent or more. However, I have this to say. I don't believe that stocks are going down because of Greece. I believe that the market has been weakening internally for a long time."


When asked what kind of investor will profit the most off the weakness brought on by the Greek debt crisis, Faber said: "The investors who are in cash, they benefit the most, because asset prices have gone down substantially in the last couple of weeks. In the case of China within two weeks the market is down 20 percent. The bond market has given up all the gains since the beginning of the year, and there are losses in bonds...And the big losers are people who just vote on the advice of some media into stock months ago."

Highlights:

*Faber Sees Some Kind Of Greece Agreement At Last Minute
*Markets Going Down Aren't Due To Greece
*Have Been Weakness In Markets For Some Time
*Investors Who Are In Cash To Benefit The Most
*Still Likes Precious Metals
*Says Chinese Economy Has Weakened Substantially
*China Stock Market Down 20%, Likely 20% More To Go
*Doubts Fed Will Boost Interest Rates This Year
*Sees Economy 'Badly Disappointing' Within 6 Months

STEPHANIE RUHLE: For more reaction on the evolving situation in Greece, I want to bring in Marc Faber. He's the editor of the "Gloom, Boom and Doom Report." He joins us now over the phone. Marc, give us your assessment. What is the Greek situation really like right now?

MARC FABER.: Well my sense is that they will come to some kind of an agreement in the last minute. But I don't think that's any positive because Greece is basically bankrupt. The debt should be written down by 50 percent or more. However, I have this to say. I don't believe that stocks are going down because of Greece.

I believe that the market has been weakening internally for a long time. On Friday there were almost 200 new 12-month lows on the New York Stock Exchange. The Chinese stock market, the Shanghai index is now down 20 percent from the highs. So Greece is a side play, but it's used by people as an excuse to sell stock.

JOE WIESENTHAL: Marc, should people in Europe feel confident that what's happening in Greece stays in Greece, or do you think we could see contagion spread and similar concerns re-arise in Spain and Italy?

FABER: Well I think a lot of Europeans don't like the EU, and the bureaucrats in Brussels. They hate them because the bureaucrats in Brussels are like the IMF and the World Bank, basically a corrupt organization that do not pay taxes, but then impose taxes on other people and so forth. And I strongly believe that the typical European would prefer not to have or be a member of the EU.

SCARLET FU: Marc, I want to get your perspective on who and by what, I mean, what kind of investor is going to profit the most off this weakness that we're seeing this morning brought on by the Greek debt crisis, brought on by the negative headlines on Puerto Rico, brought on by the selloff in China, what kind of investor?

FABER: I will tell you precisely. The investors who are in cash, they benefit the most, because asset prices have gone down substantially in the last couple of weeks. In the case of China within two weeks the market is down 20 percent. The bond market has given up all the gains since the beginning of the year, and there are losses in bonds.

So people who are in cash, they are not totally wrong. And the big losers are people who just vote on the advice of some media into stock months ago. They are the big losers because many stocks -- Micron is down 46 percent from its high earlier this year. There are many stocks that have lost a lot of money.

WIESENTHAL: Marc, besides cash, is there anything else that you like right now?

FABER: Yes. I like my Bloomberg terminal.

RUHLE: I like that.

WIESENTHAL: And perfect answer.

FABER: No. I still like the price of metals. They may still come under some pressure, who knows, but in general the debt, the world is indebted and the debt burden is so high that there won't be any substantial economic growth. Now Japan with Abenomics, they just reported for May that the industrial production was down two percent. So money printing doesn't solve all the problems.

FU: Money printing doesn't solve all the problems. Yet China is trying to do what it can to bolster its economy. We heard about the interest rate cut, the surprise cut over the weekend. What is your interpretation of that move? Was it aimed at keeping the rally going? Was it aimed at addressing a liquidity shortage?

FABER: My sense is that the Chinese economy has weakened very substantially. The stock market went up from a year ago by more than 100 percent. I have maintained that the market would correct at least 40 percent. I think we are down 20 percent. I think another 20 percent is likely. But longer term, as you know, the U.S. since 1800s to today have so many recessions, and the Civil Wars and World Wars and so forth, and was still growing.

I'm still reasonably optimistic that the Chinese economy after a slump will come out okay. But they need to lessen in terms of borrowing less, in terms of reducing debt and leverage, as do all the other countries too. But you understand, following the 2008 crisis the central banks allowed governments to borrow even more because of their artificial low interest rates. So basically, global debt as a percent of global GDP is up 30 percent from the 2007 level.

FU: Right, right, right. Well --

FABER: It's not going to end well. That's for sure. Whether Greece is the catalyst, who knows. But definitely the markets are reacting on the downside, and largely because corporate earnings will disappoint. First of all, wages are going up. They will squeeze corporate profits.

Number two, interest rates won't go much lower. So as they don't go any lower it also squeezes corporate profits. And number three, the most important economy for emerging markets was China. And China is now growing at maximum three percent to four percent per annum.

FU: Three to four percent, according to Marc Faber. So given all of that, Marc, do we presume that the Federal Reserve is unable to move ahead with its September timetable for an interest rate increase?

FABER: It's my view the Fed under its (INAUDIBLE) Mrs. Yellen will not increase interest rates for a very long time. And if they do it will be by an eighth or a quarter percent just to see what the market reaction is. But I personally doubt she will do it this year. They'll find an excuse not to do it.

RUHLE: But should they? I mean what are the unintended consequences of keeping rates where they are? If the U.S. economy is doing well, shouldn't we focus on that, or shouldn't she, excuse me.

FABER: Do you really think that the U.S. economy is doing well? I -- that's not my impression. I think the typical household is squeezed very badly. I was recently in a limousine, and then we talked about this and that. And the limousine driver told me his health care premium was -- and I mean the insurance premium this year will go up 39 percent. So I believe that actually most households are struggling, but they're borrowing again. Most households in the U.S. have no savings. I believe that the U.S. economy will badly disappoint within six months.

RUHLE: Marc, you just carry an umbrella all day, every day, just always rains in Marc's town. Marc, thank you so much for joining us this morning, the one and only Marc Faber. He's the editor of the "Gloom --

FABER: Actually in Thailand we have a shortage of rain. We have a cloud.

RUHLE: Well, Marc, I love when you join us, and Marc Faber. He's the Executive Editor of "Gloom, Boom and Doom Report" and, Joe, no one better in the house than you.

**CREDIT: BLOOMBERG TELEVISION**

**For more on Greece and the biggest news in financial markets, 'What'd You Miss?' featuring Joe Weisenthal and Alix Steel debuts today at 4:00 pm ET. Watch on Bloomberg Television or on livestream here: www.bloomberg.com/live

bloomberg.com

Copyright © 2015 Bloomberg - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

Bloomberg Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in