Banks have become Hedge Funds: Faber

Noting that central bank experts have become “imprisoned” by inflated asset markets, financial adviser Marc Faber said: “When necessary, we should look at whether tight monetary policies are still applicable. A short-term boom stemming from expansionary fiscal and monetary policies is also a possibility. But how long it can be sustained? This poses a question. The current crisis has failed to clear the system. Policies introduced as a measure to combat the turmoil have the same content as the ones implemented after 2001.”

Replying to a question on hedge funds, he said the hedge fund industry itself is not very large but “banks have become hedge funds.”

“Nothing has been solved. The Fed wants to have more credit growth and again more leverage. That’s why I believe the final crisis will only occur when everything breaks down,” he said.

During his presentation, Faber said the slowdown in growth of international reserves is tightening global liquidity. He also forecasted “faster growth in emerging economies,” underlining high gasoline and oil consumption in these countries.

Responding to a question on Turkey’s future, Faber said Europe and the United States will become less important. “Especially the countries in the Middle East will have to make a choice: Are they more Europe- and American-centric or are they Middle Eastern- and Asian-centric? My advice will be to become more Middle Eastern-centric and Asian-centric and less Western-centric. Geopolitically, Turkey will likely be less supportive of U.S. policies in the future.”

Source: Hurriyet Daily News and Economic Review

« PREVIOUSNEXT »