(“Cyber war?”) ~ Marc Faber: ‘World War III Will Occur in the Next Five Years,’ but Relax, Equities Will Not Collapse
Dr. Marc Faber the Swiss fund manager and Gloom Boom & Doom editor has taken ultra bearishness to a new level. He remains negative about the outlook for the world because policy makers in Europe and the US are trying to solve the crisis created by too much debt and leverage with even more credit and leverage. Eventually when interest rates go up, he says, the cost of financing the failed monetary policies will become burdensome and will ultimately bring a big bust.
He sees a shift in economic and military power from West to East and is increasingly convinced that the end game will be war. But, so far, he had avoided giving a time frame to the war scenario. Not any longer.
Dr. Faber was amongst 10 investment experts assembled by Barron’s last week at the Harvard Club of New York for the Barron’s 2012 Roundtable. The members of the Roundtable discussed the economy, China, Europe, market volatility, investment picks and World War III.
“On an optimistic note, World War III will occur in the next five years,” Faber announced to the other members of the Roundtable, in his characteristic contrarian manner.
“That means the Middle East will blow up,” he said, without providing any details about specific countries.
When this happens, “new regimes there will be less Western-friendly,” he reckons.
“The West has figured out it can’t contain China, which is rising rapidly and will have more military and naval power in Southeast Asia,” he explains.
The only way for the West to contain China is to control the oil tap in the Middle East, Faber argued.
The prelude to war will be a “big bust that will see the end of credit expansion,” he said in a recent interview. But before this happens, “governments will continue printing money which in time will lead to a very high inflation rate, and the economy will not respond to stimulus”.
“This war will be different from World War I where troops faced each other in trenches or World War II where tank divisions faced each other, he said. This will be Cyber War. A war where you can turn a switch and turn the London electricity supply off. This will be a war where you can stop airplanes from flying and bring the whole financial system of a country to a halt,” Faber said in an August 2011 interview.
And during war times, “commodities go up strongly,” he argued.
“If you want to hedge against war, you don’t want to own derivatives in UBS and AIG, but you have to own them physically, like farmland and agricultural commodities. That is something to consider for you as a personal safety and hedge. You have to own some commodities,” he stressed.