Marc Faber Fears No Soft-Landing Of China’s “Credit Bubble Of Epic Proportions”
“Investors should (and most don’t) realize China is a credit bubble of epic proportions,” warns an anxious Marc Faber during a brief Bloomberg TV interview. “China is not just a country, it’s an empire,” Faber adds, and warns that while some sectors may have growth (“just ask Yum Brands” he jokes), “but other very important sectors like industrial production aren’t growing at the present time.” In fact, Faber warns “I don’t think China’s economy is growing at all,” and while policy-makers may be able to “cushion the downturn somewhat,” he warns that achieving any soft-landing will be “very difficult,” even as he expects China to continue devaluing the Yuan.
Faber speaks to Bloomberg TV’s Stephanie Ruhle,
Some key excerpts…
On the mythical soft-landing…
FABER: I think it’s very difficult if you had the kind of bubble like you had in China, and the credit bubble, to then engineer a soft landing. You could maybe cushion the downturn somewhat, but the fact is I don’t believe that the economy isn’t growing at all, but I think that I have argued and this for the last 18 months that the economy was slowing down meaningfully, and that growth would be roughly at three to four percent, which it is at the present time, I would imagine.
Is China an accident waiting to happen?
FABER: Well it depends what an accident is in terms of definition, but I would say this. We have had very heavy capital flight over the last eight, nine months coming out of China. And if I had to bet on someone, the local knowledge or some economy somewhere in the world talking up China and how great it is, I would bet on the locals, who are shifting money out of China at the record level at the present time.
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