WILL GLOBAL ECONOMIC ANDFINANCIAL CONNECTIVITY LEAD

TO A GLOBAL SLUMP?

Marc Faber LimitedSuite 3311-3313Two International Finance Centre8 Finance Street, CentralHong KongTel:(852) 2801 5411/10Fax: (852) 2845 9192Email:mafaber@attglobal.netWebsite:www.gloomboomdoom.com

www.gloomboomdoom.com

Dr Marc Faber 2008Presentation for Enam Securities Pvt Ltd14.00, September 30, 2008By telephone conference

“Really catastrophic depression … is likely to occur when there

is profound monetary instability

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when the rot in the monetary

system goes very deep.”

J R Hicks

TOPICS FOR DISCUSSION

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Threats

Credit crisis is very serious. The Fed can cut rates and pursue even more expansionary monetary policies.Also fiscal measures can be expanded further. However, in the current conditions such policy measureswill increase the rate of inflation and accelerate the monetary depreciation of the U.S. dollar.Regardless of policies followed by the U.S. government and its agencies, the consumer is in recession andthe recession will deepen. Trade and current account deficits will shrink further and diminish internationalliquidity. The shrinkage of global liquidity is bad for asset prices, including commodities. Also, deleveragingis occurring among financial intermediaries. This is extremely negative for an economy addicted to credit growth.We had an unprecedented global economic boom. A global bust is likely to happen.Inflation shifted in the early 1980s from rising consumer prices to asset prices, which subsequently soaredin value. Now, the opposite seems to be occurring. Most asset prices may no longer be rising whileconsumer price increases accelerate. This will have a negative impact on the valuation of equities. Itshould also be very negative for long dated bonds.Geopolitical tensions are on the rise. Balance of power has shifted to the resource producers of the world.Commodity shortages lead to increased international tensions and to resource nationalism.A likely scenario is that we are in a water torture bear market in asset prices, which will deflate one assetclass after another.

Opportunities

We have a modern day John Law at the Fed. This is favourable

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or relatively favourable

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for everything wherethe supply cannot be increased at the same rate the money printer creates liquidity. Since Mr Bernanke cut thefed fund rate last September, oil has increased by more than 50%.Even in a slump some region and sectors will expand. As a result, the demand for commodities from China,India etc. will not vanish. Nevertheless, a slowdown in demand growth should be expected.Some equity markets have already declined significantly. Selectively, some buying opportunities are beginningto show up. The same applies to selected commodities, which had larger price declines.Volatility will stay high! Large upward and downward moves

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like in the 1970s

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will occur in all markets.Real estate should be interesting in commodity producing countries. A huge shift of wealth and power isunderway. New kids on the block may be the prime beneficiaries of the current crisis.