Dr. Marc Faber, born in 1946 and also known as "Dr. Doom", is a Swiss economist, business economist and entrepreneur who has been intensively involved with the financial markets for the past 40 years and is a welcome and critical guest in the media, at congresses and at universities all over the world. His gift for foreseeing crises and problems, but also opportunities has made him well known all over the world. In 1990, Dr. Marc Faber founded the Hong Kong-based investment company Marc Faber Ltd. With his "Gloom, Boom and Doom Reports" (GBD Reports, www.gloomboomdoom.com), he reaches tens of thousands of interested people around the globe who are concerned with financial issues. Dr. Marc Faber has been living in Asia for 40 years.
In an interview with Xecutives.net's Christian Dueblin, he talks about challenges in politics and business. Faber answers questions about the election of President Trump, and shows how to get the right information in this world where a lot of false and incomplete information is circulating. Dr. Marc Faber comments on the question of how the US, Europe, Asia and the Arab world will develop over the next 10 to 20 years, what lies ahead for these regions and what they may fail to do. Due to the fact that many problems are merely postponed and not solved, he draws a dark picture that should inspire us to think.
Christian Dueblin: Dear Mr. Faber, you have been in business for many years and are a valued interview partner worldwide with your own opinion, which often deviates from the mainstream. In a world where fake news and misleading news are apparently commonplace, and so it is not easy to form an objective picture, I would like to ask you how you inform yourself. Where do you get your information to form an opinion on economic and political issues?
Dr. Marc Faber: I read a lot. I realise that what the United States publishes is often not true. This information must not be considered as the Bible, that is, as the truth. The position that the United States takes, regardless of the prospects of other countries, the way of life of the people of other countries, the geopolitical circumstances and events, must give us food for thought. China and Russia, for example, see their world from a completely different perspective, with a completely different historical background. Kim Jong-un is disparagingly called a madman, the "rocket man" in the USA. In doing so, he merely represents self-interest, just as other rulers in the world do, so do you and I and the Americans. So you have to read a lot of reading so that you are informed about it and come to the objective truth. What you read is often misinterpreted. If you read a lot and travel a lot, not just go to one country and back for a holiday, but visit countries regularly and pay attention, you can get important information. If one observes the development of the many countries he has visited, as I have over the last 30 to 40 years, then one certainly has a better view of the world than the American President, who is totally ignorant and arrogant.
However, you yourself would have chosen Trump because you did not want to vote for Hillary Clinton. After all, there is an entrepreneur, or rather a businessman, at the push of a button, which is also a good thing for the whole political professional and civil service community, which many countries are confronted with?
That is correct. Unlike other politicians who have played a dominant role in recent years, Mr Trump's economic experience, unlike that of many other politicians, is certainly better or even better. You say it right, he's a businessman, but he doesn't understand diplomacy that much.
I like to admit that he's a businessman. Since he became president, regulations that have hampered the economy and business have been reduced. This positive development must be left to Trump. The mood in the economy has therefore improved and stock market prices have risen. I said back then that if Trump was president, the stock market would rise. It brings a certain momentum to the business world.
I think he's better internationally than Hillary Clinton. But the Americans often behave like elephants in a china shop. They don't understand the world because they never travelled. They have not studied history or geography. With the exception of some academics and educated people, most Americans know nothing about what is happening outside the United States.
That is a clear statement! But I know quite a few very intelligent people in the USA who are well informed and have travelled a lot.
This may be true, but it does not change the fact that most people in the US know relatively little. This is a fact and explains many of the incidents that have occurred in the United States. The typical American is not the one who studies and travels a lot. The typical American knows relatively little.
A colleague said a few days ago that the recent stock market crash was a manipulated matter. An attempt has been made to have a negative effect on share prices, including the bitcoin, so that it can then make a profit later on. What do you think of such speculations?
Everything is possible, and I am convinced that a lot is being manipulated in the financial markets. After all, the national banks have also manipulated interest rates and currencies. The prices of the cryptocurrencies are pretty sure to be manipulated, but to what extent I can't say. In two years, the S&P 500 has risen from 1810 in February 2016 to 2872 in January 2018 (26 January 2018). On March 6, 2009 it was still at 666, a strong increase. The market had been overvalued in January 2018, shooting far beyond the trend line. A correction was therefore foreseeable and normal.
However, valuations on the stock market are generally not low, as you often hear. They are deeper in Europe and the emerging markets. But they are generally much higher than in March 2009 and certainly not as deep as in 1982, for example.
I don't know what the value of the crypto currencies will be. There are already around 2000 different cryptocurrencies in the world today. I don't know if they're all worth anything. These currencies have risen sharply and have now been corrected. When the Bitcoin was worth more than 19'000 dollars, that was high, but nobody can say if that is everything.
Mr Faber, you grew up in Switzerland. You are in close contact with Switzerland, although you have been living in Thailand for many decades. Trump was just at the WEF and gave information here in Switzerland and gave a speech that can be interpreted in different ways. What would you recommend to Switzerland, a small country in the middle of Europe? We already have problems with the United States, with the EU, with Groko in Germany, with Mr Junker of the EU, almost personally. What should Switzerland do in this situation?
We Swiss-- I am on my mother's side an Unterwaldner, a descendant of one of the three founding cantons of Switzerland. We are talking about 1291, and since then we have always been committed to our independence and freedom in Switzerland, vehemently. We Confederates died fighting for it. Our ancestors sacrificed their lives for their independence. We Swiss should therefore be much harder on the EU and the US. We Swiss should beware of people who are ignorant, and we should behave like the Gesslers and the other country bailiffs who wanted to collect taxes from us, only 10% at the time. Today we are talking about much higher taxes that we have to pay (laughs)! I believe that we would be socially and economically better off if we were to be tougher with our foreign policy. But we would certainly have to be a little more self-serving and stubborn for that than we are at the moment.
Would you say the same thing to the English who want to go the way of Brexit?
Yeah, I did that too. I've always been a proponent of Brexit. I am in favour of certain aspects of the EU, but I am not in favour of most of them.
What aspects are you in favour of?
The single currency certainly has certain advantages, I do not deny that. There are also certain open borders, open trade in goods and goods, and openness with regard to the operation of services, which are beneficial for all. I do not understand, however, that the EU must always interfere in our affairs. I am completely against such external influences. Switzerland is a country that works relatively well. I say relative, because not everything is perfect. That is why we should not allow ourselves to be persuaded by people who come from countries that are in a catastrophic state, who are in a state of complete economic decline and who also have great difficulties in other respects.
Today, we are once again in a place where the average citizen is not able to assess what will happen in the future, as is probably always the case when talking to older people. There have been wars, the oil crisis and many other moments that have led to uncertainties and changes in our lives. Today it could be that we are at a turning point again, just when you observe the policy of Trump, but also the technical progress, including the cryptocurrencies and the blockchain developments in general. In addition, there are many unresolved social and geopolitical problems. What do you think is happening in this world at the moment?
What will happen in the future is always uncertain. The knowledge of individual citizens about the future is changing. There are periods of time when people are more optimistic or more pessimistic. Today, they are indeed concerned and rather pessimistic. I am talking about people who are or may be relatively well informed today. For example, you can read how much government spending and social security contributions cost us. These figures can be found when you want to get information and they tell you a lot about what is happening at the moment. People see the many refugees everywhere and wonder what they are doing and what they will cost. Who pays for all this in the end, people think? People who are going to get a pension are worried whether they will actually get their pension in the same measure as they have gotten it promised from the pension funds and politics. But the pension funds will not have enough money to keep their promises. So it will be the case that, in future, social benefits will be reduced in general or that the young people who work will have to pay more. You can count it on two fingers. That won't please the younger generation who work so much. They will also not like the fact that people, for example, come to Switzerland, receive large subsidies and do not work, so they will not themselves contribute to the country's welfare.
This is the case in all countries, including Germany, where this discussion is even more heated than in Switzerland...
Exactly. I would not let all people who do nothing or do nothing into such countries. These people come to another country, then you have to adapt to the realities of that new country, tackle and work, or not come.
Mr Trump is on the road with new ideas, with a lot of interventionism, and we do not know what to be surprised about, both positive and negative. China, on the other hand, seems to make this much more filigree and planned, more predictable. Then there is Russia, where it seems that we do not know whether the country will make it, and finally there are also the Arab states on the geopolitical map, which will have to deal with democracy, whether they want it or not. What do you think the next ten years will bring with regard to these regions?
Look, that's more than clear. Since I have been living in Asia since 1973, China and many other Asian countries have developed incredibly well. They have developed into an economic bloc. China was once unimportant - in 1970, even in 1990 - and today, just a few years later, it is the world's largest industrial producer. But you don't have to imagine that China is just a country where everyone works in factories and screws things together. That's a completely wrong picture. They have more patent applications in China today than in the US and Europe. They have modern technologies and brands there that are considerably larger than we know them in the USA and Europe.
So you are confident about China and you can imagine that this nation, like other Asian countries, will be on the right track. But what will happen at the same time as the USA in the next 10 to 20 years?
We don't know exactly what will happen. I have the impression that Western countries' fiscal policies, in general monetary policy in general, where money is printed on a large scale, will end very badly and miserably in the long term. I say miserable. I cannot tell you the timing of this miserable ending. Nor can I tell you what to do about it, for example, whether it is best to handle cash, buy stocks or precious metals. I would definitely diversify the assets. But the whole system of interventions that we have seen, in principle, amounts to not solving problems, but putting them on the next generation in the future. Their children will not appreciate that, as I have already said.
Look, my grandparents, who lived around 1900, had just experienced the First World War when there was hyperinflation in Germany. Then came the great global depression, followed by the Second World War. In Switzerland, which was not fully affected by the war, foodstuffs were rationed. Every two weeks you got an egg. These are conditions that young people cannot even imagine! They just think that if things get worse, the state will pay. Yeah, but who pays the state? This is going to end bitterly. I don't know what the timing will be.
We have had a hegemony of the western world behind us since about 1750 until around 2000, and now all emerging economies have grown at an enormous rate in the last 20 to 30 years, much faster than the economies of our countries. In terms of wealth around the world, the West has shrunk dramatically, whereas these other countries have grown enormously. That's huge! This is the beginning of the downfall of the West.
This almost sounds like the downfall of the Roman Empire, about which we know a lot today, an economic power that suffered under a lot of decadence and finally disappeared from the map.
Of course, that's what happened, and today it's the same thing. These processes went on in ancient Rome for hundreds of years. The difference is that the changes in the world today are happening at a much faster rate than they did in the ancient Romans. Transport networking is of a completely different nature and the transmission of messages is much faster nowadays. What used to take 200 or 300 years can now happen in 20 or 30 years in our world.
When I went to Asia in 1973, they were all very poor there. The country was an emerging market. But I was already positive about Asia at that time. But the development of this region, these countries, has surpassed even my most daring expectations and surprised me unbelievably. The accumulation of wealth is incredible. In 30 years, this world will look completely different from what it looks like today.
What do you think of the Arab states, which are also trying to make progress? A business leader recently said in a conversation that he would give these states another 10 to 20 years, then everything would fall over there. These countries are not viable for longer than that, it would be because of the fact that few have much and many have little to do with revolutions. The democratic deficits are not sustainable.
There is arrogance in the western world, saying that democracy is the best system. It may or may not be so. No one can tell me that there have been democracies in the last 5000 years of human history. What we have today and call it is not yet 50 years old! I have written about the economic history of England in the 19th century and have dealt intensively with many economic and social issues. At the time, not everyone could have had a choice, only people who paid taxes. Women couldn't vote at all. In the USA, the blacks and women have not been able to vote until recently, the latter not even in Switzerland. The fact that everyone can choose today is still an experiment and it remains to be seen whether this will turn out well, as the media and journalists think. I myself think that all this will end in disaster.
I'm sure there will be changes. The USA has extensive experience in destabilising countries. They're gonna keep doing this. The USA did this in Afghanistan, Iraq, Syria and Libya. They will continue to do so in other countries and protect their interests. With regard to the Arab world, the Saudis and Iran are the focus of attention today. Apparently they're looking for war there. However, Iranians also have allies, namely the Chinese and the Russians. This approach by the Americans will probably have a bad rather than a good effect on the USA.
You mentioned Russia. What's going to happen there? For us, the country seems a bit grim, a kind of drama for the average citizen there.
What do you mean by drama, exactly?
The image we have of Russia, including through the media, conveys a rather gloomy social development. First came the October Revolution with millions of victims, the collapse of the Soviet Union, today many oligarchs, democratic deficits, possible interference in the elections in the United States, geopolitical power struggles....
You know, the Western media has propagated this image of Russia over the last hundred years. I admit that, after I went to Czechoslovakia in 1968 and visited Russia in 1980, I was not enthusiastic about the countries that had a horrific state apparatus among the Communists. However, the Socialists in Switzerland want to introduce precisely this system. All people are supposed to be "made equal". They want to take away the rich peoples wealth and the state pays for the social costs. The state should become bigger, as in other European countries. In many countries, the government's share of gross national product is already 50% today! In the end, the state has a 100% share of the gross national product, as was the case in communism in China, Vietnam, Russia and all Eastern European countries. That is why, from this point of view, I have to tell you that things are already looking much better today than they were then. But much better!
You just can't believe everything the Western media publishes. If anything goes wrong in the world, it's Putin's fault. Trump was elected and Putin is to blame! That's what we get to hear from the media today. Kim Jong-un and the Chinese are also guilty and blamed for all evil in this world. And only the USA with its exceptionalism claims to be doing good things in the world.
That brings us back to my opening question. How can you get the right information and get an objective picture of this world, even for younger people who have little experience but want to find out more?
You definitely have to read a lot. There are many websites that are good, and you can find out a lot about them. Many of these websites and media do not correspond to the mainstream, which means that they are not mentioned in the mass media, and therefore their findings are not discussed in front of a large audience. Of course, travelling is also a very good way to get an idea of what it's like to visit another country and to get to know the people there.
Dear Dr. Faber, thank you very much for this interview and I wish you all the best for the future!
(C) 2018 (C) 2016 by Christian Düblin. All rights reserved. Other publications require the author’s explicit consent.