Marc Faber vs Arthur Kroeber : Is China in a Bubble

Dr Doom and Dragonomics lock horns over China's Bubble 08 June 2010

Reuters Insider Roadshow Is China in a Bubble : Arthur Kroeber founder of Dragonomics and Marc Faber editor of the Gloom and Doom report :
a crash in China should not be ruled out says Marc Faber
"well i want to clarify my position about China , I have argued for the last three months that the Chinese economy would slow down and that a crash should not be ruled out , it is not that I think that the whole thing will collapse right away , but let me explain to you the contest in which I see China and also the investment opportunities , first of all , we had as you know an economic crisis in 2008 - 2009 during which asset market collapsed and then a recovery recurred but basically what happened is that none of the causes of the crisis which were excessively expeditionary monetary policy under our money printing in the United States that led to excessive credit growth have been addressed , what has been done is essentially through fiscal and monetary measures globally and especially through huge fiscal stimulus to essentially postpone the problem , so nothing has been solved , and where as Mister Bernanke may be an expert on the depression 29 to 1932 he is an expert on the depression except for what caused the depression that has to be clearly understood , and most economist today they essentially do not understand what cases huge monetary and economic instability ....." etc...
Marc Faber to Kroeber : "I do not disagree that if you look at fiscal stimulus in China, at least at the end of the day they have infrastructure. In the U.S. they have nothing but debt, and ignorant people. "
'If you believe your story about China, which I've said, I think in 20-30 years time the Chinese economy will be much larger and more prosperous. People who bought the first U.S. shares at the beginning 1800's, and throughout the 19th century... it was a disastrous investment in the long-term. All they had to do was buy in the last 20 years..."
Kroeber: 'The answer to that is, and I know there are a lot of people here with a lot of experience, but you have no idea how big China is, none of us does. Take steel, people have been talking about over-capacity in the steel industry since China had capacity of 200 million tons, today it has a capacity of about 650 million tons and domestic consumption of 600 million tons. So if China had believed everyone's warning about overcapacity back then they had 200 million tons of steel production, steel would probably be worth as much as gold today. Fortunately, they didn't listen, they built all the steel plants, and they've absorbed most of it."

Note : the transcript is approximate and may not be 100% accurate

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