Marc Faber, Jim Rogers Clash Over China and Commodities, Agree on
Business Intelligence Middle East
gurus Jim Rogers and Marc Faber agree to various degrees on many
issues but the one thing separating them this week is the future
direction of the Chinese economy and if this could have a devastating
impact on commodities around the world.
and Rogers have been warning about the effects of monetary and fiscal
policies on the US economy, since the recent rally has been mostly
based on printed money, a kind of 'reverse Robin Hood policy' of
governments, to steal from the peasants to give to the rich.
As with Faber,
Rogers is mostly to be seen being interviewed on CNBC and Bloomberg
Asia or Europe as they both live in Asia now and since their views
are to put it mildly, somewhat negative on the prospects of a sustainable
Marc Faber, the Swiss fund manager and Gloom Boom & Doom
editor, believes a Chinese slowdown is already under way.
In a phone
interview with CNBC
Friday, he said that a hard landing for China will have a major
negative impact on global commodities and risk currencies, before
going as far as saying that he is "more worried about a Chinese
economic downturn than a recession in Europe".
For his part,
legendary global investor and chairman of Singapore- based Rogers
Holdings, Jim Rogers thinks Faber has got it wrong about China.
still does not understand China. There are going to be several hard
landings in the next few years, but Chinas will be less hard
overall than others such as Greece, U.S..." Rogers told CNBC
activity slumped to its lowest level in 32 months in November, banking
giant HSBC said November 23, renewing fears the Asian powerhouse
is losing steam amid global economic woes.
China economist Qu Hongbin said he expected cooling domestic demand
and weakening external demand for China's exports heralded a further
slowdown in production in coming months.
economy consists of many sectors and I think some sectors are already
probably in a recession," Faber elaborated.
growth will be much lower and it is possible that we could have
a hard landing with no growth at all," he predicted.
market, in particular, will bear the brunt of a China economic deceleration,
according to Faber.
a lot of people will care if china grows only at 5% rather than
10% or 0% in a hard landing case because china is the largest buyer
of commodities in the world," he said.
Chinese economy slows down the demand for commodities slows down
and then the economies of brazil, Argentina, everybody is affected
and then they can buy less from china and then you have a downward
spiral, Faber added.
the commodity market will have a correction, but rebutted Faber's
view that it would be devastating. "Yes, there will be consolidations
in the commodity bull market just as all markets have consolidations,"
he said. "In 1987, stocks declined 40%-80% worldwide, but it
was not the end of the secular bull market in stocks."
was always bullish about commodities and completely missed out on
the crash in 2008, then obviously, having tied essentially my reputation
to commodities, I'd continue to be bullish," Faber had earlier
said about Rogers' view on commodities.
repeatedly far and wide that one should not buy commodities in the
run up phase", replied Rogers. "I also explained that
I was not selling mine since we were [and are] in a secular bull
market," Rogers stressed.
shorts decline 90%-100%, it is a good year even when ones
longs decline," Rogers added.
Rogers, Faber is the one who has made many wrong calls, arguing
that he "totally missed" the secular bull market in commodities
that began in early 1999.
growth eased to 9.1% in the third quarter from 9.5% in the second
quarter, as government efforts to tame inflation and economic turbulence
in Europe and the United States curbed activity.
Wang Qishan, China's top finance official recently warned that China
needed to fix "structural problems" in its financial system
to cope with a "long-term" global downturn that threatens
the world's second largest economy.
"For an economy like China that depends heavily on exports,
the key is to understand the situation and put one's own house in
order," the state Xinhua news agency quoted him as saying.
a subsequent interview
on Saturday with CNBC's Simon Hobbs and the Money In Motion traders,
Faber reiterated his view: The data can be manipulated, but in general
I would say there is an obvious slowdown in the Chinese economy
and I think there is a chance for a hard landing.
on to elaborate on the unintended consequences of easing: "When
Mr. Bernanke became fed chairman, the S&P was at 1264 that
was on February 1st, 2006. We're now at 1244. So, the market is
lower than it was at that time. In the meantime, gold has gone to
US$1,746...The easing may not mean that the economy will do particularly
well as the easing can shift money into some sectors of the economy...The
stock market in China may rebound, but I don't think we'll see new
highs, and I think the economy will weaken because we have a very
capital goods oriented economy, and capital spending is very volatile."
the rest of the article
Marc Faber [send him
mail] lives in Chiangmai, Thailand and is the author of Tomorrow's
2011 Business Intelligence Middle
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