Faber thinks that the U.S. needs a lot more money than the Paulson Economic Patriot Act suggests. I agree 100%. His figure is $5 trillion! That’s a lot of dosh.
Here is how he is quoted on Bloomberg:
“The $700 billion is really nothing,” Faber said in a television interview. “The treasury is just giving out this figure when the end figure may be $5 trillion.”
Republican lawmakers offered a plan calling for Wall Street firms to purchase insurance on mortgage-backed securities and advocating tax cuts and relaxed regulations. Treasury officials had previously rejected an insurance approach in favor of one that purchased troubled assets, Virginia Republican Eric Cantor said.
President George W. Bush said Sept. 24 the U.S. faces “a long and painful” recession and will suffer “financial panic” unless the plan is approved.
“The decline in home prices of 20 percent is a relatively minor decline so far and it has created so many problems,” Faber added. “The U.S. is in much worse shape” than Japan was when its stock market crash ushered in a decade-long slump in 1990.
Faber is right about the Treasury just randomly picking the $700 Billion number. Yesterday I reported that a treasury spokesman said the pulled the number out of thin air:
“It’s not based on any particular data point,” a Treasury spokeswoman told Forbes.com Tuesday. “We just wanted to choose a really large number.”
–Forbes 23 Sep 2008
The $700 billion plan is the first of many trips to the trough. You have been warned.