SubscribeMarc Faber says $250 billion dollar bailout is meaningless
CNBC:
U.S. Treasury Secretary Henry Paulson’s sweeping measures to bailout the financial system will probably fail, Marc Faber, editor & publisher of the Gloom, Boom and Doom Report, tells CNBC’s Asia Squawk Box.
"What I object to in all the bailout plans in the Western world is (that) they do not address the fundamental problem. And the fundamental problem is overleveraging,” Faber comments
Faber believes the U.S. budget deficit is going to stay at or above $1 trillion level because the government needs to print money in order to meet all the obligations they’ve made to rescue the financial system.
"U.S. government bonds should be rated as a junk bond," quips Faber.
My comment: Dr. Faber’s comments echo what I said yesterday about the deficits. It will affect the US ability to borrow at these current low rates. Junk bonds always have to have a higher rate to attract and compensate investors for the additional risk.
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