Famed investor and author of the Gloom, Doom, Boom Report, Marc Faber, returns to the podcast this week to discuss the slowdown in the global economy, signs of which he claims are multiplying fast all around the world. In the 1960s-in accordance with Susan Jacoby’s thesis (The Age of American Unreason)-(white) American engagement with the news media, while slipping, was still relatively enthusiastic. Think of the news media as that car alarm and share of income and wealth garnered by the working class and middle class, as the Mercedes, which has deteriorated to the Ford Focus. The stock of Apple, which depends heavily on demand from China, fell more than 6 percent.
They also discuss possible endgame scenarios for liquidating unprecedented amounts of sovereign, commercial, and household debt; whether coming monetary shocks will present the IMF with an opportunity to demand a global currency reset, and who wins and loses when the game of musical chairs stops. But recent economic data suggested that the skepticism has grown over the Fed’s crucial decision.
That it will likely resume next year if China manages to get the yuan included in the currency basket that makes up the SDRs at the IMF. China’s currency devaluation is a confirmation that the world’s second-largest economy could be on the verge of an economic collapse. Authorities in China devaluated the yuan to boost the struggling economy and repeatedly said it would be a one-time devaluation.
When the world’s largest economy has grown less than 1.5% this year and the second-largest economy is slowing down dramatically, the whole global economy may be on a verge of an economic collapse. Blogs, newsletters, and inboxes are cluttered with dire warnings about an event in October 2015. Stocks began falling last week when China announced that it was devaluing its currency, the yuan.
When I met Ben Bernanke in Korea recently, he told me he was heavily involved in discussions with the IMF in 2009 and 2010 on a variety of issues including IMF voting rights, issuance of SDRs, U.S. funding of the IMF and an increased voice for China. But it is an important sign of respect and does represent enhanced prestige, which China desperately wants.