Dr Faber is predicting a 1987-type stock market crash this year only it will be worse.
The US technology-heavy Nasdaq plummeted by 3.1 per cent on Thursday night (US time), its biggest one-day drop since November 2011.
Dr Faber, the editor of the Gloom, Boom & Doom Report, has already called for growth stocks to decline this year. He said ridiculous stock valuations were not the crash catalysts, saying the Federal Reserve was also to blame.
“This year, for sure – maybe from a higher diving board – the S&P will drop 20 per cent,” Dr Faber said.
CNBC noted that Dr Faber predicted in August last year a 1987-type crash was looming.
Since then the S&P 500 has risen about 9 per cent.
Mr Grantham said the bust would be particularly painful because “the Fed and other central banks around the world have taken on all this leverage that was out there and put it on their balance sheets.”They will become cheap again. That’s how we will pay for this. It’s going to be very painful for investors,”
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Europe’s leaders argue that only deep budget cuts will revive the economy and inspire the necessary confidence among investors.
The deal represents a major milestone for Greece, which was effectively shut out of the markets in 2010 when the debt crisis left it dependent on international bailouts to stay afloat.The bond sale reflects increased optimism that Greece and other wobbly euro zone countries have turned a corner. In recent months, borrowing costs dropped significantly for Ireland, Portugal, Spain and Italy, as the investors deemed them less risky.
Unemployment in Greece rising at 27 percent. The bonds of both Portugal and Ireland have been in strong demand since those countries returned to the markets earlier
As a result, borrowing costs among the most troubled euro zone economies have been falling fast.fears are gone. The economy is stabilizing, with the International Monetary Fund recently raising its forecast for growth this year, to 0.6 percent. Greece has met a number of fiscal targets, and the government recently announced a primary surplus — a surplus before debt payments — of about €2.5 billion.
But Greece still has numerous economic hurdles to overcome, including a mountain of debt that will take decades to repay. Economists said Greece would need annual economic growth of nearly 5 percent over the next decade to make progress in paying off what it owes creditors. Greece also needs an export-driven recovery.
The European Debt Crisis Visualized http://www.bloomberg.com/
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