A Global Systemic Collapse Would in Relative Terms Benefit the US, Says Marc Faber

Monday, March 7, 2011
By Paul Martin

Business Intelligence Middle East

Marc Faber the Swiss fund manager and Gloom Boom & Doom editor suggested that in a very negative environment where everything collapses, the US would outperform many emerging markets as it is still a relatively self contained economy that produces enough food and has the resources to produce enough energy, if it wants to.

Speaking with Tom Keene on Bloomberg Television’s “Surveillance Midday” on Thursday, Faber said a correction period has begun where all markets will go lower, the dollar would rally and bonds would rally.

“In general, if you are very bearish about emerging economies, you shouldn’t be bullish about the US. What I am saying is that the US would go down less than emerging markets”.

“I am suggesting that America will outperform it doesn’t mean it will go up, Faber stressed.

Clarifying his outlook for global stocks, the Gloom Boom & Doom editor says he doesn’t think that emerging markets have bottomed out and predicts US stocks could be set for a difficult year.

“The correction in emerging markets begun in November and will go lower,” Faber told Keene, adding “the US will go lower”.

On the US economy and particularly on the reasons he remains gloomy despite some recent good news on growth and employment, Faber said: “Maybe statistically the US is growing, but relative to the rest of the world…..today America is nothing.”

Faber added: “For the first time in the history of Capitalism, the Emerging World is now more powerful than the Western world, and that is a huge change…which brings huge tensions”.

“If I had to make a bet for the next ten years in terms of equity markets, I would seriously consider a very strong weighting here in Japan,” Faber said yesterday at the CLSA Asia-Pacific Markets’ annual conference in Tokyo. “Once the debt market starts to go down, the yen will begin to weaken and that will lift equity prices. I would buy equities at the present time.”

“If I look at the next five to ten years, the interest payments on the government debt in Japan and the fiscal deficits will become very burdensome and that will necessitate monetization,” Faber said. “That will bring about a huge shift of money out of cash and bonds into equities.”

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