Marc Faber Interview – Part 1

marc-faber-1Marc Faber, one of the world’s most influential and respectable investors and economists thinks that the big market and political collapse is unavoidable but he considers that governments and central banks operating with false statistics and other ways of manipulation can delay it significantly. He also emphasizes that mainly the American but now partly the European Central Bank too,are the ones which will destroy the current global economical and financial system with their unrealistic and seemingly endless money-printing and bond-buying actions.

Zentai Péter: How does Europe look like from Asia? What can Europe offer for an Asian investor, or to what extentare the leaders of the Asian national economies concerned about the euro zone crisis?

Marc Faber: Basically they are not concerned at all about Europe. The Asian experts – if I may say so, the ‘clerks’ – are more concerned about what is happening in Asia. They have a good reason for this because the slowing down of China’s economy has become a real problem, the evolving conflicts – some of which are becoming persistent between certain Asian countries – may lead to unforeseeable consequences. But – to reply to your question –it is clear that from Asia you can’t see what is happening in Europe. Surely there are a few companies which really depend on the European export, but they are only a minority.

Consider that only South-Korea alone exports moreto Asian, Latin American and African countries (and is connected with them in more respects) than to Europe and the USA together!

Otherwise, China needs to be treated separately. On one hand the increasing economical slowing in itself is alarming, but on the other hand the stream of lies is a problem too. I am reading such non-official statistics – made by economists whom I highly appreciate – according to which the Chinese economy is growing only with 1,5 percent in reality.

Z. P.: Would you repeat this, please? Maybe I have misunderstood you!

M. F.: According to the most recent official statistics China’s GDP this year is grew by 7,8 percent instead of 8 percent – estimated by the government formerly. But those acts which I had the possibility to look into, prove that only a fraction of this is true: the pace of growth is only 1,5 percent!

No one knows the truth. But because I know the Taiwanese and South-Korean keep track of everything very well and I think they are reliable – what they show clearly is that these countries’ export to China suffered a tremendous setback and all their economical activity with China has suffered -well, we can be completely sure that the whole Beijingian official forecast about the 7,8 percent growth is a lie.

Z. P.: What do you think: how global phenomenon is the falsifying of statistics? You have surely read what (Jack) Welch, the former GE-leader said about the last weekend job-market statistics of the USA… He thinks that the American government – on behalf of Obama’s re-election – has falsified the statistics, and it can’t be true that the American unemployment rate is under 8 percent. Can you imagine that out of power interests, even such an absolutely open, transparent system and society like the leaders of the United States can lower themselves to such lies as the leaders of the more closed Chinese system do?

M. F.: I don’t know, more precisely, I don’t think that America and China could be compared in this respect. But regarding inflation and its calculation America surely makes such data falsifyingwhich in the first round will hide the pace of price rising which affects the average person. I have no doubt that in the USA the real job-market situation is far worse than the official one, there are much more unemployed people than it is officially recognized. This is completely sure.

Z. P.: I also think that this will cause big problems. If the United States keeps on falsifying statistics, European governments will supposedly do the same. Let’s say that our pessimism is reasonable! The moment of truth has to arrive anyway, and – as you used to say – everything will collapse.

M. F.: The stock-markets collapsed in 2000 and 2008 only because of this. But the paper-castle is always rebuilt.

Z. P.: Well, if it can be rebuilt every time, there is no problem. It is important that we can make investors, consumers, average people and mass-media believe what we want them to believe.

M. F.: You may think this is not a problem, but I think it really is! Because one day the moment of the truth will inevitably come and it can lead to a big tragedy, a global or regional explosion.

Z. P.: But you don’t know it either, when it will happen, do you? Maybe in fifty, maybe in one hundred years. None of us will live until then…

M. F.: Maybe. But it is also possible that the day of the truth is going to be tomorrow, though I don’t think so either. Because the more and more unlimited and uncontrolled money printing which does not reflect the real economical situation, is going on in America, and the central bond-buying programme in Europe – leading to an objectively big problem – as well. Anyway, these programmes create a false reality around the economical rulers. The main difficulty, the problem of the total indebtedness will not only not stop, but will become even worse. According to this the power of the coming explosion, fall and collapse will be even more dramatic. This will inevitably happen. The only question is: when. And the Dow Jones index may climb to one hundred thousand points by then…