Marc Faber On a Global Crash, the U.S. Treasury Bubble & China’s Slowdown

On Bonds:

Treasury yields peaked out in 1981 with the ten years at 15.8 percent and now we’re below 1.5 percent , some of my friends who are the super bears on assets prices and on inflation , they think that we will have deflation they think that yields would drop to say less than one percent on the ten years and less than 2 percent on the thirty years , so it may happen but say it is like if you said at the end of 99 the NASDAQ is a bubble well it still went up between December 99 and March 2000 by thirty percent and offers people a hell lot of money in NASDAQ stocks , so all I am saying is I do not think that from a longer term perspective to own US treasuries is a desirable investment but if you asked me , can they rally somewhat more , YES possible I just won’t buy them at this level I think the risk out weights the return potential – (Ed Note: Marc’s comments on a Global Crash begin at the 9 minute mark in the video below. All of his comments end at the 10:10 mark)

On China:

The difference between China and the US , the US had credit bubble built on consumption in other words the debt level on the household sector level the government level went up dramatically to finance consumption in the case of China at least it financed investments in infrastructures research and development and so forth that is a key difference , now if you have a capital spending bubble like in china the downturn can be very severe because you’re running to over capacities and then when you print money you produce even more over capacities and the fact is simply that if you look at reliable statistics say which country is the largest export market for Taiwan and South Korea ? it’s China and if you look at exports from Korea and Taiwan they’re all flat year on year so that is quite reliable , you look at electricity production in China it’s up one percent year on year and so forth and so on , so the statistics would actually suggest that Chinese economy is much weaker than what the official statistics suggest , it does not mean that all Chinese growth model will collapse entirely , but I’d like to mention one thing , in China we still have One Party System and we have an incredible level of corruption and that could lead to social unrest at some point , by the way we can have social unrest anywhere in the world given the high unemployment that we are facing in most countries , but that could derail growth in China for a while and then we have geopolitical problems coming up , the south china sea and so forth and so on so there are many things that could go wrong.