– Marc Faber: The asset bubble has begun to burst (CNBC, July 8, 2014):
It’s the question investors everywhere are wrestling with: Are asset prices in a bubble, or do they simply reflect the fact that the global economy is growing once again?
For Marc Faber, editor of the Gloom, Boom & Doom Report, the answer is clear. In fact, he says the bubble may already be bursting.
“I think it’s a colossal bubble in all asset prices, and eventually it will burst, and maybe it has begun to burst already,” Faber said Tuesday on CNBC’s ‘Futures Now’ as the S&P 500 lost ground for the second-straight session.
Of course, Faber has long been expecting a market decline. But for the precise reason that stocks have simply continued to rise, he’s now become even more bearish.
“Obviously I’ve been wrong in the sense that I expected a correction to occur over the last two years, and it hasn’t happened since October 2011, when the S&P was at 1,074. We’ve gone up in a straight line, without a larger correction than 11 percent, and I think we’re not going to have a correction, but we’re going to have a bear market,” he said.
The first issue is that, Thursday’s big jobs number aside, Faber doesn’t believe that the economy is actually improving.
“I don’t believe that the global economy is strengthening; I rather think the global economy is weakening,” he said. And “there are other issues that may put the weight on the markets that will push prices lower. A, I think that we have in the White House, a very poor president, and that may lead to some political issues in the U.S. domestically. B, we have numberous political issues to consider, And C, we could have, potentially, a much higher oil price.”
All in all, Faber is looking for a 30 percent drop in the S&P 500.
Meanwhile, it is worth nothing that while few are as bearish as Faber, several strategists have similarly been calling for a correction.
Jeffrey Saut, the generally bullish chief market strategist at Raymond James, called on Monday for a “decent pullback” in mid-July or early August. And Canaccord Genuity chief equity strategist Tony Dwyer, who has the highest year-end S&P target on the Street at 2,185, continues to foresee a 5 to 10 percent correction in the near-term.
They don’t seem to get it. A correction? No, it is fraud, and the truth of the matter is that there is far less money than anyone can imagine.
About a year ago, I went to the Social Security website to review their investments. They claimed to have $7.4 billion…….all in US treasury bonds…..Debt. The assets the US treasury bills used to represent are long gone; they are all debt, no assets involved.
This is the big elephant in the room.
When corrupt politicians are allowed to borrow and borrow and borrow against their future, the future of their children and grandchildren, great-grandchildren……..the verdict is obvious.
There is nothing left to the US but debt. We have a few illicit markets left, pot growing and sale, but most of it has been offshored. We used to build beautiful furniture, but that has all gone away, too. Every furniture store needs an Asian plan in order to survive. Same with automakers, appliances, everything one can imagine.
When nothing is built here, no wealth created beyond the fiction on paper in the financial community……the outcome is obvious.
In 1995, 16% of our GDP was in financials. In 2005, it was 63%. That is mighty top heavy, and all is on paper, nothing can be seen.
There is a school of thought in history an empire can offer a clear picture of it’s financial position based on the quality of the money. When I was a child, into adulthood silver dollars were still used as currency. Gold and silver backed currency was readily available.
Now, try and find a dollar with silver behind it……you can sell it for $15.00+ on Ebay; gold backed sells for about $100.00. Our currency changes every few months, just like 3rd world countries and lies are told again and again as the reason. The fact is they are trying desperately to get as much money into circulation as possible, there is a global disaster hungering for real cash.
Enron accounting, instead of being outlawed, became the method of the money changers. Enron would take a $100 million dollar debt, move it off their books into a shell corporation. They would list the debt as an asset of the shell. Next, they would have this shell give Enron a fictitious requisition for energy, say of $99 million. Not only did they get rid of a $100 million dollar debt, they picked up an income of $99 million.
When the market went south, so did Enron, and the rest is history. Hundreds of thousands of people lost their portfolios, jobs, homes………yet all the craven crooks still walk free. Jeff Skilling was given 14 years in a federal lockdown but was able to buy his way out with a few million dollars. He now walks free, less than four years after conviction.
Take this terrible accounting, and go global, and you see what happened. There is far less money in reality than claimed. For months, I have been saying that when people start asking for their money, things are going to get bad. That is precisely what is happening now.
We are a few steps from runs on banks and brokerage houses. It is really bad, and this ought to teach everyone why money changers should have zero control over the markets. Their greedy drive is disgusting, and they don’t care how many are hurt, as long as they get their’s.
You need to work with people who are credible, and none of the money changers can be trusted with a plug nickel.
They took down much of the world in 2007-08, myself included, now governments and major players are using the same methods, so this time, it will take down the entire global economy.