Barron's : 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