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Today's quote:

Wednesday, July 22, 2009

The future will not be what it used to be!

An interview with Dr. Doom, Marc Faber, whose website is at www.gloomboomdoom.com.

Dr. Faber hasn't exactly been guzzling down the 'happy juice.' His presentation contained predictions of dire future consequences of the terrible economic decisions being taken today. He forecasts a collapse in US commercial real estate, higher inflation, a further devaluation of the US dollar and a 'dirty war' waged by the Chinese.

Dr. Faber said, "Mr. Greenspan and Mr. Bernanke have achieved something which no-one had ever before achieve;, they created a bubble in everything." The one exception, he noted, was the US dollar. The value of which, Greenspan and Bernanke have helped to destroy.

What does the good Dr. have to say about China? "China is encircled by US military bases in the Pacific. This will lead to increased tensions. The next war won't be in trenches or tanks lined up, it will be a 'dirty war' - internet viruses, pandemics, etc..." He went on, "Rising commodities prices lead to international tensions - wars lead to soaring prices." The battleground, he believes will be over oil: "The US imports 73% of its oil requirements... 95% of Asia's oil comes from the Middle East. That makes China very vulnerable to oil shocks. The aim of China is to get the US out of the Middle East."

A rose-tinted view of the future? Hardly. But as Dr. Faber also pointed out, "You need to hold physical commodities, not derivatives with Citibank and UBS." But despite this, Dr. Faber is bullish on the Chinese and Asian economies. Reading between the lines the endgame seems to be a Chinese win and a US loss. He said, "The Chinese currency could easily double in value over the next 5-10 years... Once you get a stronger Chinese currency you will get a stronger Malaysian Ringgit, Singapore dollar, etc..." And this is indirectly good for Australia - not the war bit of course, but the rest of it. Anyway, it certainly confirms the view that South East Asia is the best place to invest in.

And if you can't invest in those economies directly, then investing in Australian resources stocks is the next best thing.