Dr. Doom: US Bailout Plan Will Probably Fail

CNBC.com
Tuesday, Oct 14, 2008

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.

The proposed $250 billion infusion into financials is meaningless — merely a drop of water on a hot stove, Faber, popularly known as Dr. Doom says. These measures do not address the fundamental problem.

“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.

He adds that the high gearing needs to be brought down, similar to what the Asian financial system had to go through after the 1997 financial crisis.

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“The U.S. economy’s debt to GDP has grown from 130 percent in 1980, to 350 percent at the present time,” notes Faber. “The leverage has been under the supervision of the Federal Reserve and the Treasury and everybody encouraged it.”

He adds that these unfunded liabilities, which will surface over the next 20 to 30 years, do not deserve a AAA rating.

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.

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5 Responses to “Dr. Doom: US Bailout Plan Will Probably Fail”

Concerned Citizen Says:
October 14th, 2008 at 4:20 am
Marc Faber brings out some great points. We are in trouble! Not only is debt hurting us, but but massive trade deficits and the loss of wages and jobs and factories are hindering any “recovery”. We have lost most of our former tax base. Our economy, in terms of real items of production, has been contracting for the last thirty years. Now is the time to continue spreading the word on what is really happening with our economy and government so that worse things don’t happen. “Blessed are those who suffer for doing what is right, The kingdom of heaven belongs to them.” (The Bible, Matthew 5:10)
the remnant Says:
October 14th, 2008 at 6:34 am
Great article and yes, it will fail as the illuminati have planned. Great 222nd birthday america. Real news NOW whatdoesitmean.com willthomasonline.net uaff.us and check out my chemtrail photos stevequayle nibiru and 2012 ronald weinland……….the biters/global elite are on a ticking time bomb for Pentecost 2012…….game is up pals, hugs, your worst nightmare, elohim, one of the remnant…………..
"C" Says:
October 14th, 2008 at 7:09 am
“A false balance is an abomination to the LORD: but a just weight is his delight.”
[proverbs 11:1]
This whole world-wide economic colaspe is conducted by those who worship the ‘all-seeing eye’ of the Illuminati. and they are an “Abomination to the LORD”
Those of Us who understand are “HIS DELIGHT”
are job is to inform our bothers and sisters..this is the truth in my opinion!
Together We Stand as One..alone we fall..one at a time!
josh Says:
October 14th, 2008 at 10:36 am
Lord, His. Its all about She and the Goddess mate. Forget religion, Its up to us to sort this crap out.
Robert Says:
October 14th, 2008 at 11:24 am
If the U.S. budget deficit is above $1 trillion it means the U.S. Government is borrowing that much each year. It will be paying interest on that amount. It will have to operate on the remainder.

The problem is that the remainder may not be enough to fund what we currently have now, like Ron Paul said, “how do we intend to pay for this?” I don’t see any cutbacks happening.

Note that if the interest exceeds revenue then you are bankrupt! At that point the crooks in Washington will steal everything from Social Security, if they are not already doing that, and not just from our children who are the real silent victims here now. We better help our kids!