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Oct 05, 2009, 11.11 AM IST | Source: CNBC-TV18

No revival in US; big economic crisis ahead: Marc Faber

The US markets ended lower for the second session yesterday on the back of mixed global cues and disturbing job loss data. Does this mean we’re still not out of the woods?

Marc Faber

Director, Marc Faber Ltd

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The US markets ended lower for the second session yesterday on the back of mixed global cues and disturbing job loss data. Does this mean we’re still not out of the woods? Marc Faber, Editor and Publisher of the Gloom, Boom & Doom Report feels nothing has been solved in the US in the last 6-9 months and that a big economic crisis was still to be seen ahead. “The policy makers in the US, are still in-charge and if you look at what has happened in the US over the last 6-9 months, nothing has been solved. It has been postponed through fiscal and monetary measures, precisely the measures that brought about the crisis in the first place. So enjoy your ride in asset classes as long as it lasts but I think we are seeding the next crisis and it may happen in the next three months, maybe tomorrow, maybe five years, maybe only in 10 years but I think the big crisis is still ahead of us.” He said that the markets were overbought and that the economic news was still not good.

Here is a verbatim transcript of the exclusive interview with Marc Faber on CNBC-TV18. Also watch the accompanying video.
Q: The concerns that the market and market participants seem to be grappling with is, is this looking like it is approaching bubble like territory or looking overbought?

A: Basically we have had huge fiscal stimulus packages and we had quantitative easing in basically all countries around the world. So, asset prices have recovered strongly after March 6 of this year, with stocks rising, commodity prices rising, and the dollar weakening again. And each time the dollar weakens it is kind of a symptom of some inflation in the system and excess liquidity building up. What we have is large cash positions around the world and zero interest rates. So, the zero interest rates and also the policy by the Federal Reserve to keep the matter very low level for a very long time, as was the case after 2001. With this in mind, money goes out of cash balances into something, either consumption or into some kind of assets such as equities or commodities or bonds or art or real estate.
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