Jan 14, 2010

Thoughts on Marc Faber's "The Gloom, Boom and Doom Report"

Disclaimer: The material written on this site are entirely opinions of my own and is not meant to be taken as investment advice of any sort. Please read my full disclaimer at the bottom of the page before proceeding.

I was watching a video by Dr. Marc Faber who publishes a monthly newsletter titled "The Gloom, Boom and Doom Report". Here's the video:

My opinion?

I believe that the US government has not handled this crisis in the best possible manner with TARP and the bailouts simply because repaying debt with new debts will not work as the new debts carry with it costs of financing as well.

Theoretically, at the end of the day when push comes to shove, the only way to "repay" such debts will be through defaulting.  Which brings us to the other side of the fence, the people that say that US is "too big to fail" (sounds familiar?). The amount of corporations and countries dependent on the US dollar is huge simply due to the fact that USD is the choice currency for trade due to its "stability". This means that if the US fails, many other countries will also be in trouble as they hold US reserves. Therefore, in a way it is in their best interests to not let the US  fail. Question is, will there be one day where these countries no longer want to bear the burden of holding US debt? China has already instructed their banks last year to stop lending money to US banks.

Another alternative for the US that is the least desired would be finding a country to go to war with. During war time, the US will be flooded with massive contracts ranging from the purchase of weapons, ammunition, the rebuilding of buildings and infrastructures, security, fire fighting, food, supplies etc. Besides the billions of dollars of contracts during wartime, it also serves as a distraction for the people's economic woes.

Will US President Barack Obama carry the country through this tough period? Honestly I don't know but for the sake of many people, I do hope so. Til then, I recommend that you and I arm ourselves with some knowledge of what to do just in case something unexpected happens.



Trader32 said...

It is interesting to see how, since this post back in 2010, the euro crisis has completely overshadowed problems in America. Maybe 2012 will see the US return to the front pages.


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