Let's discuss China. The economy appears to be weakening, and investors
understandably are worried. How does the situation look to you?
Marc Faber : There has been a huge credit bubble in China, and it isn't going to end well.
Its economy officially grew 7.7% in the first quarter. In reality, it is growing
4% a year, at best. Figures on Chinese exports to Taiwan, South Korea, Hong
Kong, and Singapore don't agree with the import figures of those countries. In
each case, reported exports are much larger than reported imports. Singapore
publishes relatively honest economic statistics. Its gross domestic product has
hardly grown in the past six months. Inflation is about 4% a year. Here in
Thailand, growth has slowed despite massive fiscal stimulus. Trade and
current-account surpluses have been shrinking in Malaysia, Indonesia, and other
countries.
Again, the economy of the rich is booming. There has been huge wealth
accumulation in Asia in recent years. But the middle class has experienced
diminishing purchasing power. Throughout history, growing wealth inequality has
been corrected either peacefully, through taxation and wealth redistribution, or
by revolution, as in Russia. I am not sure we will have a revolution in the
Western world, but I can see European voters turning against the arrogance of
the bureaucracy. There have been so many scandals involving French politicians
with Swiss bank accounts, and so forth. - in Barron's
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