A View That Captures My Own Pessimism

Here's a Bloomberg interview with Mark Faber, publisher of the "The Gloom Boom & Doom Report."

Some key points from Faber:

• 2009 will be an economic catastrophe. It could be 5-10 years before we see a recovery, as at the moment, there is no apparent catalyst for one.
• The monetary policies of the past 10 years are responsible for the present financial crisis.
• Big mistakes were made in bailing out Mexico in 1994 and Long Term Capital Management in 1998 because they set a precedent that encouraged excessive risk-taking.
• The Fed exacerbated the credit bubble by keeping the Federal Funds rate at 1% for nearly three years (2001-04). When savers are confronted with interest rates that are less than the rate of inflation, "they do stupid things."
• The Fed's current policy is having the effect of creating another bubble, this one in Treasury bonds.
  
• Inflation will eventually accelerate, forcing the Fed to raise interest rates.
• The current stock market will remain extremely volatile, offering opportunities for traders, but not for investors.
• The U.S. government is running a Ponzi scheme massively larger than Madoff's.
• The Zero Interest Rate Policy of the Fed will lead to weakness in the dollar and possibly to competitive devaluations among currencies. "The dollar is a disastrous currency, but the others aren't much better."