Monday, June 30, 2008

Marc Faber on CNBC

We're going to start off this week with a recent clip of Marc Faber on CNBC (Thanks to reader Domenico for the heads up on this video).

You'll hear everything straight from Marc for yourself, but let me just briefly outlilne some of the main points he made to CNBC in this interview from last week.

1. Investors should stop listening to the Fed. They are misleading the people with claims of strong dollar policies and their worry over inflation. Their actions have shown the opposite to be true (the Fed is not really concerned about inflation), and ordinary Americans have suffered from the central bank's inflationary policies.

Also, Marc notes again that the Fed is trying to pump the financial system full of liquidity, while the private sector is trying to tighten lending standards and credit conditions. For now, the private sector is winning.

2. The Federal Reserve should have let investment banks fail. As Marc says, "If I'm a bad businessman, who's going to help me?". He feels bailouts are a very questionable practice, especially in the case of the recent Bear Stearns buyout, where a once-prosperous and well-connected bank is bailed out/purchased with taxpayer money.

He also feels that many banks are essentially bankrupt, and that the financial sector is in worse shape than the investment community perceives.

3. Faber feels that oil and commodities may correct to the downside in the second half of the year. He has lately seen a noticeable slowdown in business across the globe, and says the slowdown will affect demand for commodities in China, India, and elsewhere.

While he notes that the commodities bull run may still be intact for years to come, Marc would rather buy gold than oil, as higher gold prices will be supported through continued money printing from the world's central banks.

We'll have more on the historical inflation theme as the week develops. Tune in for these upcoming posts. Until then, enjoy the clip!