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Another crisis likely in 3-5 years: Mark Faber

By BS Bureau
Last updated on: September 21, 2009 12:11 IST
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Mark Faber Investment expert Mark Faber says he's bearish on the world economy. Excerpts:

Can one safely take a call that the worst is behind us?

The fiscal stimulus packages and the quantitative easing supported certain markets, but there is hardly any growth. I think we will have another crisis, may be in three or five years, that may force governments to really think about minting money like crazy.

Are you saying credit markets are not at risk in the shorter to medium term?

That is in terms of stock markets. I don't see a huge downside risk for the simple reason that if the S&P goes down to around 1,030 or 900 or 800, fiscal stimulus packages would be enacted and more quantitative easing will be applied.

In terms of bond markets, we have to differentiate between corporate bonds and government bonds. I think US government bonds are, by and large, very ineffective, because the government stake in the US is going up very dramatically and will continue to go up. So, the quality of outstanding debt is diminishing.

Do you think interest rates, both in developed as well as developing economies, are set to rise?

Fed governors in the US and other central bankers will keep short term interest rates low. Normally, a country would increase interest rates if the currency is very weak. The US will not do that.

I think in the shorter term, interest rates will stay very low because quantitative easing and money printing will continue... it is just creating another bubble. The problem is, there is too much of leveraging in the system.

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BS Bureau in New Delhi
Source: source
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