Thursday, 22 January 2009

Prominent Economist: Crisis Caused By Government Interventions

A prominent PhD economist has slammed the latest round of bank bailouts and argued that they will not work because the financial crisis was caused and prolonged by such activity in the first place.

Marc Faber, founder and managing director of Hong Kong-based Marc Faber Ltd., has argued that propping up weak companies with taxpayer money is foolhardy.

"The financial crisis has occurred because of government interventions," Faber told CNBC’s "Squawk Box Europe."

"Specifically central banks, or specifically the US Fed, by keeping interest rates artificially low for too long, they created a huge leverage in the system. So the people who created the problem now are in charge to bail out the system and that’s why I am very skeptical that it would work," Faber explained.

[Posted at the SpookyWeather blog, January 22nd, 2009.]

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