In a more sober manner from his appearances in Montreal and London, speaking from Zurich, a few hours prior to a formal announcement to the conclusion of the latest and endless emergency EU summits, Marc Faber told CNBC Thusday he expects the ECB and the Fed to make inflation a permanent feature of monetary policy in response to the global financial crisis.“. . . What I think will happen eventually . . . the same will happen as in the United States, the ECB will print money one way or the other,” he told CNBC's Carl Quintanilla. “And, the debts that should be essentially written down to realistic value will continue to be carried on the books of banks at unrealistic values.”
“So the end crisis will be postponed until the sovereigns go bankrupt,” he said with Cheshire Cat smile.
And, of course, Faber, was right when the matter comes to a push-and-shove. Hours later, Associated Press release the following headline: EU official: Eurozone reaches deal for private creditors to take 50 pct cut on Greek bonds
When CNBC's David Faber asked Marc Faber (no relation) to elaborate, he said, “Well, before they [sovereigns] go bankrupt they'll print money, and they can print endless money, and as long as we have Ben Bernanke and Janet Yellen at the Fed, they will also print money, and they can postpone the endgame endlessly, endlessly not, but say for another five to 10 years.”
And of course, money printing translates to higher food and energy costs, as the result of the EU agreement prompted monstrous moves in oil, precious metals (especially the silver price) along with stocks on all global exchanges—with bank stocks soaring across the board somewhere in the five percent bracket. Oil was up more than $3 per barrel, while silver nearly rose $2.
In response to David Faber, Marc Faber noted an article he just read that indicated that education costs in the US rose 8 percent this year, serving as an example of the “unintended consequences” of money printing at the Fed and ECB. If central banks continue layering debt onto debt, the average American household won't be able to service the debt, he said.
That's when the “hour of truth” approaches, Faber added, bumbling another metaphor on top of a previous misstated metaphor, “the closets are bare”, a few years back in another CNBC interview. It's all in good fun and is half the reason for catching a Faber interview. But CNBC's Simon Hobbs was in one of his nasty moods as he reminded Faber of his 'Faber Shocker' at the World Commodities Conference in London on Tuesday, when the Swiss money manager end his presentation with another 'Faber Shocker', as reported by the Wall Street Journal:
“You should not only diversify your asset holdings, but also diversify where you hold those assets, in case they’re seized by politicians as the welfare state enters its death throes. The governments, they’re going to f— you all, that’s for sure.”
Hobbs asked Faber in a his characteristic stoic posture, “That's quite an negative view, don't you think?” Faber, still laughing from hearing his quote read back to him, said, “I said it differently.” How disappointing, if true.
Faber went on to explain that the US and EU governments are not looking out for its constituencies, but, instead, politicians are increasingly only looking out for themselves.
Hobbs then issued the zinger question to the Gloom Boom Doom publisher, turning the interview into the subject of Marc Faber.
“In Steve Jobs' new autobiography, Walt Isaacson talks about a conversation he had with Rupert Murdoch, and Steve Jobs says, 'For commentary and analysis today, the axis today is not liberal or conservative, the axis now is constructive versus destructive.' Which side of that line do you think you fall on?” asked the steely-eyed Hobbs.
“Well, I think I'm very constructive and I'm a great optimist in life, otherwise I would commit suicide in view of the kinds of governments we have now-a-days,” Faber retorted. “Because, for sure, they will take wealth away from the well-to-do people one way or the other, and from the middle class, they will take it away through inflating the economy and lowering the standard of living.”
In that environment, Marc Faber added, “I rather own equities than government bonds for the next 10 years,”
Carl Quintanilla, then, wraps up the interview by thanking Faber for his appearance. Faber responds, “It's my pleasure. It's my pleasure to be so optimistic,” beaming for having the last word with the sourpuss Hobbs.
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