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‘Dr. Doom’ Warns of ‘Massive Market Meltdown’

Nov. 13, 2012 11:14am Becket Adams

Mark Faber, noted investor and author of “The Gloom, Boom, & Doom Report,” during an interview on CNBC’s “Squawk Box” Tuesday warned that the global economy will experience a “massive market meltdown.”

“I don’t think markets are going down because of Greece, I don’t think markets are going down because of the ‘fiscal cliff’ — because there won’t be a ‘fiscal cliff,’ ” said Faber.

“The market is going down because corporate profits will begin to disappoint, the global economy will hardly grow next year or even contract, and that is the reason why stocks, from the highs of September of 1,470 on the S&P, will drop at least 20 percent, in my view,” he added.

Blaze readers who follow our daily “Market Roundup” know full well corporate earnings in FY2012 have been disappointing. Apple’s stock, for example, has fallen precipitously on its poor quarterly earnings and even McDonald’s has seen a decline in sales (the first in nine years).

“Dr. Doom” continued, arguing that the U.S.’ so-called “fiscal cliff” entails minor tax increases in “five years’ time” and spending cuts “in 100 years.”

His solution? Pain: eurozone style.

“There will be pain and there will be very substantial pain. The question is do we take less pain now through austerity or risk a complete collapse of society in five to 10 years’ time?” he said, noting the lack of progress Washington has made in tackling this issue.

The noted investor added: “In a democracy, they’re not going to take the pain, they’re going to kick down the problems and they’re going to get bigger and bigger.”

What, in Faber’s opinion, is retarding economic growth in the U.S.? Well, for starters, “Dr. Doom” thinks the U.S. real estate market has been “overbuilt.” He also expects “deleveraging” in the near future.

“In the Western world, including Japan, the problem we have is one of too much debt and that debt now will have to be somewhere, somehow repaid or it will slow down economic growth,” said Faber. “I think we lived beyond our means from 1980 to 2007, and now it’s payback period.”

The central bank stimulus, Faber argues, was ill-conceived and the markets should have been allowed to implode, allowing us to actually restructure our financial system.

“I think the whole global financial system will have to be reset and it won’t be reset by central bankers but by imploding markets — either the currency [markets, debt market or stock markets,” he said. “It will happen — it will happen one day and then we’ll be lucky if we still have 50 percent of the asset values that we have today.”

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Front page photos source courtesy the AP.

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Comments (55)

thibx
Posted on November 13, 2012 at 12:21pm
the only time the market went up was when they where printing money. it’s growth that will not stand. the market should grow to fit the economy. most of washington (especially democrats) is a bunch off idiots.

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- doomytram
  Posted on November 13, 2012 at 12:42pm
  Face it ridiculous Obozo’s you Obamunist drones need to understand that everything is going to get worse and worse with the re-election of Obozo. His real destruction started last Wednesday and will not end until it’s over. The Obamaunist’s are growing the Small business destruction police. The IRS and regulators are coming after you with loaded guns.
  
  Report this comment
- NeilChapin
  Posted on November 13, 2012 at 12:55pm
  I’m glad I hung onto those short options. Read fresh political commentary at:http://smallcraftadvisorychronicles.blogspot.com/
  
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- Thevoice
  Posted on November 13, 2012 at 8:22pm
  Here’s the problem with our economy and politics …And I am going to only state (1) example… there are thousands ..Which together make up the Web of Government….You have 6.5 Billion a month going into “Food assistance” Food stamps ..OK …Now you have 47,000,000 Million of the citizen dependent on the program ….But you also have every food retailer dependent on the program for sales …You have every food processor and food manufacturer dependent on the program for the sales to the retailer. You have the nations entire transportation industry reliant on movement of the product and you have the actual food producer (farmer) who’s market is now dependent on the entitlement….So what this says is we have a national economy so weak…It can now not cover on its own rewards of labor the 6.5 Billion a month the government is putting into supplying “food” to it’s citizens…The entire “Food” free market to supply and demand is totally distorted. And it has created a atmosphere for corruption in Washington for companies to get a bigger piece…I was not surprised at all when Walmart decided to support Obama ..They became the nations largest retailer on the back of the Government EDBT electronic food stamp…Hell they hope there’s more…Problem what really is a company like walmart worth if the food stamps were discontinued…See how this ONE (1) program in the web of government is distorting our free market…The collapse is coming prepare. Why ..because nothing is
  
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- G-WHIZ
  Posted on November 14, 2012 at 11:09am
  Soros and Builderburgs will make TRILLONS$$!!
  
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BoyScout_Mom
Posted on November 13, 2012 at 12:06pm
West Texas Oil Town – Boom Town. (My home town)
If you can drive a truck, they can’t hire you fast enough.

http://www.wfaa.com/news/texas-news/housing-in-short-supply-as-oil-boom-boosts-west-texas-economy-permian-basin-midland-odessa-179034481.html

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GrumpyCat
Posted on November 13, 2012 at 12:00pm
“Blaze readers who follow our daily “Market Roundup” know full well corporate earnings in FY2012 have been disappointing. Apple’s stock, for example, has fallen precipitously on its poor quarterly earnings …”

If we can’t trust The Blaze to get such facts straight then we are doomed. Guess we are doomed because Apple most certainly HAS NOT had poor quarterly earnings. The problem is that the quarterly GAINS have only exceeded Apple’s guidance, not the “analysts’” hype. http://www.google.com/finance?q=NASDAQ%3AAAPL&fstype=ii

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- mike_trivisonno
  Posted on November 13, 2012 at 12:08pm
  Apple Store sales are twice as efficient as Tiffany’s. Apple averages $6,000 per square foot and Tiffany’s around $3,000 per square foot or retail space.
  
  Even in the retail space, Apple, Inc. dominates.
  
  Report this comment
KeithOlberdink
Posted on November 13, 2012 at 11:58am
Forward!!!

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- hatchetjob
  Posted on November 13, 2012 at 4:24pm
  March!!
  
  Report this comment
Rothbardian_in_the_Cleve
Posted on November 13, 2012 at 11:56am
The oligarchs will create a global war before they’d let it all crumble uncontested. Hold onto your hats everyone.

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nostromo
Posted on November 13, 2012 at 11:52am
I have no idea if Faber’s predictions are correct. He is, after all, a noted Wall Street bear. I do know Americans voted for more free stuff.

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MFHorn3
Posted on November 13, 2012 at 11:49am
We are all passengers in a car driven by Toonces the cat.

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Nov_Cubed
Posted on November 13, 2012 at 11:47am
“I think we lived beyond our means from 1980 to 2007, and now it’s payback period.”

08,09,10,11,12. . .13? We were within our means then and will be next year?
Dr. Doom, this is not the time to be PC.

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AbrahamsSheepdog
Posted on November 13, 2012 at 11:46am
Its a small matter. We have a chaotic world about to switch on. She’s all warmed up.

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grownup
Posted on November 13, 2012 at 11:42am
I wish things were as good as he makes them sound!

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RANGER1965
Posted on November 13, 2012 at 11:41am
“There are two ways to conquer
and enslave a country.
One is by the sword.
The other is by debt.”

- John Adams

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AbrahamsSheepdog
Posted on November 13, 2012 at 11:41am
And people will turn to God in those days. Sorry maybe $atan is not happy. Maybe he is.

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- chucksue351
  Posted on November 13, 2012 at 12:06pm
  just like a foxhole, when it is all clear, they will go back to their vomit
  
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IMCHRISTIAN
Posted on November 13, 2012 at 11:39am
Well, that is what the voters for Obama wanted just to kick the can down the road for more debt for our future generation. People are investors and employers have to make money so who can blame them to be cautious as it takes a lot of work and investment in equipment, inc. to keep others working so they can continue to buy.

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johnpaulkuchtajr
Posted on November 13, 2012 at 11:37am
Mark Faber is a sharp guy and only a complete idiot, like those who voted for you-know-who, would believe that we can allow Mr. Bernanke to continue to print money out of thin air as he has been doing. In fact, Bernanke has promised unbridled increases in his whimsical injections into the money supply, even though the last four years should be ample proof that the injections just don’t work.

At $16 trillion in debt and the total projected at $ 20 trillion by 2016, the debt will eventually cause the dollar to collapse as a world currency. Naturally, the precipice may be reached sooner than later if a huge shock to the world’s financial system should occur like a spike in oil prices caused by a regional war. Gasoline at $10.00 per USG would still be blamed on Bush by you-know-who!

And to his credit, he seems to be able to make 50% of Americans believe his spiel. Oh, that’s right, that’s the 50% who are “Takers,” not the other half that I call “Makers.”

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ricckky
Posted on November 13, 2012 at 11:35am
This should of happened a long time ago–The stock market has been trumped up for many years now—expect at least a 30% drop to over 50% very soon—The liar won’t work with congress ever–and he has no idea how the economy works—-I guess no one else in his administration does either–Pathetic!!!!

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ares338
Posted on November 13, 2012 at 11:32am
Doesn’t take a genius to predict that…LOL.

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freenj
Posted on November 13, 2012 at 11:31am
Personally I am feeling the pain already. Should I liquidate IRA and cover business debt, or file bankruptcy and go off the grid with my customer base and work for cash only. And get on all types of public welfare, food stamps, free phone, utility assistance, etc and go for early s/s.
Damn I am not sure which way to move my chess piece, I feel like I am in check and are about to be checkmated.

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- chucksue351
  Posted on November 13, 2012 at 12:07pm
  join the club
  
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- backtoconstitution
  Posted on November 13, 2012 at 10:17pm
  You may give thought about what is to happen to our IRA’s and 401(k)’s. Do you think this government won’t want some of it to pay down the debt.
  
  http://www.senseoncents.com/2012/04/will-uncle-sam-takeover-your-ira-part-ii/#respond
  
  Report this comment
mrs.janet.murgatroid
Posted on November 13, 2012 at 11:28am
What, the market is going down 20% this year? My Lord I stand to lose several hundred dollars. Woe is me, what will I ever do with these catastrophic losses?

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Ironeagle
Posted on November 13, 2012 at 11:28am
And the markets go rolling along…onward and upward! Just keep on printing more money Bennie–it’ll never end…right?!

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environmentalandawake
Posted on November 13, 2012 at 11:28am
This is not the sort of thing you want to read when you are accessing your morning load of Social Injustice. It is true though. Be Afraid, be very afraid!

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- hatchetjob
  Posted on November 13, 2012 at 4:27pm
  Thanks for the chuckle.
  
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BlackCrow
Posted on November 13, 2012 at 11:27am
The only thing that is surprising is that it has not happened already.

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- michael48
  Posted on November 13, 2012 at 5:20pm
  agree..and with the pravda/manhatten lib/gov. gumba crowd ..it may well be happening as we speak..Just my opin..it already happened 12:00 AM election night…
  
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RJJinGadsden
Posted on November 13, 2012 at 11:26am
Anybody else think that he is just a bit too optimistic?

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- RANGER1965
  Posted on November 13, 2012 at 11:39am
  Yes. The picture he’s painting is still too rosy.
  
  He’s not considering how interdependent we are. Like a line of dominos, when things begin to fall it affects ten thousand things not even considered, creates massive reactive panic, which causes ten thousand more things to fall.
  
  Ultimately the problem is the nature of currency itself. It’s a faith based system without any intrinsic value of it’s own. Once that faith is eroded sufficiently, the currency falls rapidly. Economic collapse is just a matter of a few big investors and enough “regular” people getting rid of their currency, and starting the avalance. Once started it becomes an engine of economic destruction that nothing can stop.
  
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Cavallo
Posted on November 13, 2012 at 11:26am
Yup.. nothing will be done seriously about it. If they raise taxes (on the wealthy.. that includes small businesses) that will suck capital out of the market and crush any chance of recovery, and only be offset by token cuts. Tax increases have never been used to pay down debt or offset deficit. With the election of the Fascist Gay Dog Eating Autocrat, you can bet that no serious cuts in spending or regulation will occur. Dr Doom overplays his hand though. I think now it will be a continued slow decay, a rotting flesh eating gangrenous disease eating away at the edges of the American Economy. They’ll do gimmicks and temporary fixes here and there to fool you that they are fixing the problem, but ultimately the old girl is already dead.

USA RIP

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Uncurable wound
Posted on November 13, 2012 at 11:25am
This guy is crazy!
Doesnt he know we re-elected the magical obama!!
We will NEVER run out of magical bobo money!
He must be a racist!!!
TOTAL SARCASM !!!!

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Baddoggy
Posted on November 13, 2012 at 11:23am
We don’t even have enough speed to get to the fiscal cliff. We are going to be destroyed before we go off the cliff in a giant ball of flames.

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- Cavallo
  Posted on November 13, 2012 at 11:34am
  At least that would be a bang.. I think it’ll be more of a slowly curl up in a corner and die. A slow painful demise rather than a quick sudden collapse. A bang would be more fun though, and easier to fight through and start over.
  
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- Gonzo
  Posted on November 13, 2012 at 11:36am
  Long time no see Doggy.
  
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