Friday, December 4, 2015

Unlike America At Least China has Productive Credit

TD: Marc, I’ve also seen you note that early American railroad companies, heavily indebted, mostly went bankrupt. But they left behind lots of physical assets created by the debt.
Currently, is Western society creating anything with all the debt? 

Marc Faber : Yeah, I love that question because when the people default on their household debt, mortgage debt, and student debt, I wonder what will be left behind. They will be people you can’t hire because they studied the wrong stuff.
The difference with the US is that if there is a massive default, nothing will be left behind. At least in China they will have railroads, tunnels, bridges, highways, airport infrastructure, port facilities and so on.
So I say that China, with all its shortcomings and faults, at least they have had productive credit until recently. Recently it has also changed somewhat. But at least it has been productive credit that builds something. Here in the US, credit is used largely for consumption.

Marc Faber is an international investor known for his uncanny predictions of the stock market and futures markets around the world.Dr. Doom also trades currencies and commodity futures like Gold and Oil.

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