Obama 'makes Bush look like a genius': Marc Faber

RELATED NEWS Banks may shed private equity assets in Obama plan

Noted financial guru and contrarian investor Marc Faber, author and publisher of the Gloom, Boom and Doom report, has slammed US President Barack Obama for intervening in the markets over his proposal to regulate banks and said such a move won't solve the US economy's problems.

In an interview with CNBC, the outspoken Faber said Obama's proposal to set new limits on the size on banks and to curtail their activities "may be disastrous".

Attacking the US president, he said, "I don't have a very high opinion of Mr. Obama. I was negative of [former president] George Bush but I think Mr Obama makes him look like a genius."

Faber, a proponent of the Austrian school of economics, which believes in minimal government intervention in businesses, said, "Everybody agrees that in an economic system, the market solves the problems best."

Faber has also been highly critical of the US government's bailout programmes and has, in the past, said the best way to solve the financial crisis was to let bad banks fail.

"When someone tells me the government should regulate the banks, they shouldn't. It's a disaster," he said, adding that such moves have unintended consequences.

He also criticized the US Federal Reserve's monetary policy of slashing interest rates to boost demand - "they should have interest rates that are high to curtail speculation," he said.

He cited the example of the Fed slashing rates in mid 2007 to near 0% in a bid to boost slumping demand, a move that he said led to surging oil prices as investors looked to other asset classes to invest money in. International crude oil prices had hit a record high of USD 147 per barrel by mid 2008.

"The annual expenditures for oil of the US increased... you had another USD 500 billion tax on the consumer. That pushed the consumer down even more in his reduction of consumption," Faber said.

"Most people don't have money left after the policies implemented in US. These people, they should all send a thank-you note to [Fed chairman] Ben Bernanke for printing money because it didn't benefit the US, it benefited emerging countries."

- Report by Nazim Khan