Click the play button below to listen to Chris’ interview with Marc Faber (37m:21s)
– Marc Faber: The Global Economy Is Entering An Epic Slump (PeakProsperity, Aug 23, 2015):
Famed investor and author of the Gloom, Doom, Boom Report, Marc Faber, returns to the podcast this week to discuss the slowdown in the global economy, signs of which he claims are multiplying fast all around the world.
He predicts the next year is going to be an especially bruising one for investors, and recommends a combination of diversification and defense for those with financial capital to protect:
I do not believe that the global economy is healing. I believe that the global economy is heading into a slump once again.
We have a slowdown practically everywhere and if you take out the fudging of statistics, the economy for the median household everywhere in the world is not doing particularly well. If the global economy were doing so fantastically well, how would it be that commodities collapsed to the extent that they have declined? Or how would it be that the currencies of American markets and some of them have actually declined by more than 50 percent against the U.S. dollar in the last three years. How would this happen? So I do not believe that we have a healing of the global economy. On the contrary, I believe that the global economy is slowing down and that essentially equity markets are not particularly attractive.
Preceding every bubble, you have a huge expansion of credit. That was the case in the period ’97 to 2000, and in the period 2003 to 2007, and on previous occasions in economic history. In the case of China, credit as a percent of the economy has grown by more than 50% over the last five years, which is essentially a world record. And in my view, its economy is slowing down rapidly. I had a drink with a friend of mine the other day who has car dealerships, luxury car dealerships, in China. He said sales have hit a brick wall. Not ‘slowed down’; a brick wall. And indeed, exports were down and car sales were down in July. I think that this will then spill over again into other emerging economies because China is a large buyer of commodities and a large trading partner to other countries.
I travel extensively. I can see roughly what is going on. So I really believe that the American market complex is not doing well at the present time. And everywhere, people basically are faced with rising costs of living and essentially declining currencies so that the persons in power goes down. So it’s not a pretty picture.
I have always liked this guy. He brought up the money printing, and his guess is that the bankers will do it again. But, he also brought up credibility, and how much they have lost in the past decade.
I really think if they do a QE 4, it will only benefit the few at the cost of everyone else, but that it won’t hold for long. China has been doing it, and only this morning, they are now using state pension funds to shore up their crumbling markets.
In my opinion, I am no Marc Faber, but I don’t think they can do that one again. Debt rate of the US has doubled since 2009 thanks to underwriting the greedy gut banks who caused the crash……..Also, nearly half of all Americans of working age are now employed, the other half suffering long term unemployment.
Millions more have lost homes, retirement funds, jobs and opportunities since 2008……
Marc Faber brought up the lack of capital spending that ought to go with QE….there was none. It all went to a few greedy guts, especially the ones who destroyed the global economy.
This time around, it won’t be that easy. Those printing presses are running out of ink. There are several key things different than in 2009……Our loss of credibility as a nation, the complete end of our once sterling market rules are a couple.
Even more to the point is the fact (and Marc Faber alluded to it) the US is rapidly losing World Reserve Currency status…..technology has rendered any world reserve currency obsolete. This has undercut the power of the US economy and the dollar more than anything else.
QE sucks, it only feeds greedy guts. No capital spending, no WPA, or any other enterprise to put people back to work. Instead, they kept insisting this was the endless recovery. A total insult to anyone with a mind.
Great post, thanks. I agree with most of what Marc Faber outlined. I don’t agree the banks can print more money and make it work……the central banks have burned that bridge behind them. It would only last a few days or weeks, it won’t survive for years……………