Dr. Doom: The US Economy Is Terminally Sick
Marc Faber appeared on CNBC Futures Now recently to talk about the impending pop of the stock market bubble. “Dr. Doom” has predicted a 20% to 40% stock market selloff in the near future.The show’s host, along will Scott Nations, pressed Faber on the surging stock market. “If someone piled into stocks in 2012, 2013, 2014 or 2015 they’ve done pretty well. Why were you so wrong then, and why should we think you’re so right now?” Nations asked.
Faber insisted investors need to look at the underlying economic fundamentals, not the latest stock market numbers.
“I think the US economy, and western economies in general, are terminally sick. And we have, since 2007 before the crisis, essentially almost doubled global debt as a percentage of GDP. We have a huge debt-load. The US has run a deficit for as long as the eye can see. The conditions today are more fragile than they were ever before. And unless somebody comes and introduces minus 5% interest rates, which is a tax on the wealthy people, I think the economy is really not in such a great shape. I’m actually amazed that people are so optimistic.”
It’s hard to argue against Faber’s contention that the economy is terminally sick. GDP in the first quarter grew just 0.7%, and there are numerous other ominous signs in recent economic data. In fact, there seems to be a huge disconnect between market perception and economic reality.
Faber said there is no way to know when the market will crack, and he reminded the audience that he predicted a surge in the markets with the election of Trump. But he reiterated it can’t last forever.
“The point I want to make is we are in the euphoric stage. People are piling into stock. I want to pile into stocks when people are piling out of stocks.”
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