Sunday, July 24, 2011

Marc Faber : at least in China they use credit to make capital investments not to to buy McDonalds hamburgers

Marc Faber : We have a credit bubble (in China ) . Credit has been growing at an annual rate of 30% and they had a huge stimulus package  . But if you start with rapid credit growth with a debt-to-GDP of 100% is a different story than if you start from a debt-to-GDP of 600% if you include Fannie Mae and Freddie Mac. So yes in China they have excesses, they have mal-investments and oversupply in some industries. But at least in China with credit they do something. They build railroads and roads and bridges and infrastructure and education and so on. In the United States credit is mostly used for consumption and that's a huge difference. Whether you use credit to make capital investments or you use it to buy McDonalds hamburgers or SUVs 'made in China !!!  - in Yahoo Finance Tech Ticker


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