April 15, 2013

Faber: Cyprus Catastrophe 'Can Happen Anywhere in the World'

The banking catastrophe in Cyprus could be repeated in the United States and elsewhere, according to Marc Faber, the editor and publisher of the Gloom Boom & Doom Report.

“It can happen anywhere in the world, in Western democracies, because you have more people that vote for a living than people that work for a living,” Faber told CNBC.

Therefore, the wealthy in the United States should “be prepared to lose 20 to 30 percent. I think you’re lucky if you don’t lose your life,” he noted.

“If you look at what happened in Cyprus … people with money, they will lose part of their wealth either through expropriation or higher taxation.”

Despite equity markets reaching all-time highs, Faber is “very cautious” about the U.S. market.

"What concerns me really is that most foreign markets have performed very badly since January — emerging markets are down 10 percent and European markets have grossly underperformed the U.S. In other words, the U.S. is the only game in town," he stated.

"Each time there was only one game in town … it ended badly. So I am very cautious about the U.S. market. We could very well first rise and then have a crash from summer onward," Faber explained.

“We have this money printing, which obviously will lead to misallocation of capital.”

He cited concern over a “narrow leadership” concentrated in consumer stocks, such as Johnson & Johnson and Procter & Gamble.

But, Faber noted, 92 percent of financial wealth is owned by 5 percent of the population.

“The majority of people don’t own meaningful stock positions and they don’t benefit from a rise in the stock market,” he said. “But they are being hurt by rising costs of living and we all know that the real income of the median household is going down for the last few years.”

Marc Faber is a great contrarian investor and publisher of the Gloom Boom & Doom Report. He is well known for his accurace predictions of stock market crashes and other correct calls on different investment assets.