Bailouts won't help; cheap credit won't help
A market watcher who gets it right: Dr. Doom: Bailout Won't Help Markets Much - CNBC
The $700 billion US financial rescue plan might give the market a temporary boost, but eventually stocks will fall again, Marc Faber, the analyst know as "Dr. Doom," told CNBC.
Faber, editor & publisher of “The Gloom, Boom & Doom Report”, said he doesn’t believe that the recent efforts to ease the global credit crisis will help.
He's right. Market need to correct, not to be meddled with.
“It will work temporarily in the sense that some confidence is coming back into the market,” Faber said about the bailout plan. “First we’ll get the bounce from an oversold level and I suppose afterwards it will drift because the global economy is decelerating at an unprecedented pace, and the governments in the Western world, they try to reignite credit growth, and I think it will fail.”
It will, for sure. Real credit growth comes from the pool of real savings, not from the central bank's credit spigot. Turning on the central banks' credit spigot doesn't increase that shrinking pool, it further denudes it -- a fact of which Alan Bollard has just shown himself to be utterly ignorant.
[Faber] didn’t have anything positive to say about the coordinated moves by foreign countries to inject liquidity in their banks.
“In general, I believe market led solutions are better than government interventions and there is no evidence that government interventions bring an improvement,” he said.
None anywhere. Not one example. None at all.