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marmar Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Dec-08-11 07:34 PM
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Gloom, Boom & Doom's Faber expects global economic collapse
 
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Posted on YouTube: December 08, 2011
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Posted on DU: December 09, 2011
By DU Member: marmar
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Dec. 8 - Marc Faber, publisher of the Gloom, Boom and Doom Report, says there will be a global market collapse and the entire derivatives market will one day cease to exist.


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Warpy Donating Member (1000+ posts) Send PM | Profile | Ignore Thu Dec-08-11 07:44 PM
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1. Well, he's right about that
but it might be a little less apocalyptic than he thinks. It will certainly rearrange the financial landscape, though, as well as bust a few of the highest flying billionaires back to being mere millionaires.

Even now, a lot of funds that are using derivatives to suck money out of equities and commodities markets are finding their rates of return starting to roll off a bit. Since a lot of those investors think the early high rates of return are normal and that any fund that no longer generates them is slacking off and getting lazy, they're starting to panic. Many of them will turn into Ponzi schemes as they try to satisfy the oldest clients. Many of them will simply dwindle away. A very few will go bust in some spectacular way.

Panic at the top always translates into screams for austerity at the bottom to free up more resources for them to grab, but even that is falling on deaf ears as the bottom 80% have seen increasing austerity since the 70s as wages failed to keep pace with inflation, even back before Greenspan when they weren't lying about the yearly rate. If they try to punish the bottom, they're going to reap the whirlwind. Starving the bottom is about the only thing I see leading to a complete collapse.

We are going to be living in some very interesting times, that much is certain.

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JDPriestly Donating Member (1000+ posts) Send PM | Profile | Ignore Fri Dec-09-11 01:29 AM
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2. The problem is too much production from low-wage countries,
pay that is too low in developed countries and therefore not enough demand to keep things going.

Trade barriers have been lowered too fast. That is the problem. The recession will probably spread across the world, and as it spreads countries will, in subtle ways such as VAT taxes, impose tariffs that encourage local industry, local employment and return some balance to international trade.

Right now, poor countries with low wage structures and no middle, consuming classes are producing a surplus of goods that the increasingly unemployed and impoverished formerly middle-class people in what used to be the high-wage countries can no longer afford.

Prices of manufactured goods other than pharmaceuticals and a few other things are declining but people still don't can't afford to buy them.

The rich have money and don't understand the extent to which the not-so-rich are struggling.

This "expert" is a perfect example of a person who doesn't fathom what is going on. He blames governments spending beyond revenues. But that is not the problem. The problem is that revenues in developed countries have declined compared to the needs of the increasingly impoverished people.

The more governments cut back on expenditures, the worse the situation will become.
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