Why Faber thinks Obama win is a disaster for business

Did the global markets really price in a Barack Obama win?

Investment guru and publisher of the Gloom, Boom & Doom report, Marc Faber thinks not. According to him, Wednesday’s huge sell-off can be easily attributed to the president’s re-election, all thanks to his tax policies, the impending “fiscal cliff” and the current slow recovery.

And it is precisely because of this he said the re-election of Obama is a disaster not just for that country but for business and stocks in general.

Obama’s policy is bad for business

In an interview with Bloomberg UTV, Faber said that Obama’s economic policies are not very good for economic expansion since it means more debt, higher taxes and more printing of money. Moreover, since most Wall Street investors were betting on a Romney winlargely because of his plan to cut taxes on capital gains and dividend, Obama’s re-election surprised many investors and heightened the concerns over fiscal cliff.

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[caption id=“attachment_519023” align=“alignleft” width=“380”]  Faber thinks the Federal Reserve will eventually destroy the world economy because it creates a bubble and give investors an easy way to get rich. Reuters[/caption]

Stocks began to be sold off as the markets are expecting a hard time for corporate profit and essentially economic weakness, which is reflected in a strong bond market and weak stocks, he added.

“I think from the peak, the market will drop at least 20 percent. I think we will revisit the lows of June at 1,266 on the S&P.”

Faber blames Bernanke for piling debt

Faber thinks the Federal Reserve will eventually destroy the world economy because it creates a bubble and give investors an easy way to get rich.

This is essentially because money flows don’t actually go down the system but rather into other financial institutions.

Obama’s re-election means Bernanke will continue as Federal Reserve chairman, which will result in more quantitative easing through more printing of money.

“Artificially low interest rates enable the debt to essentially escalate endlessly,” said Faber.