'Prophet of doom' warns to prepare

PUBLISHED : Thursday, 30 September, 2010, 12:00am
UPDATED : Thursday, 30 September, 2010, 12:00am

Tensions between China and the United States could escalate as the mainland becomes the world's largest economy and the US struggles to adapt to the new order, according to the man known as the 'prophet of doom', Dr Marc Faber.

Faber said that the US had a strategic advantage because it had access to two oceans, but a problem for Asia was that 95 per cent of its oil came from the Middle East.

Speaking at a Marine Money ship-finance conference in Singapore, Faber said China had established 'a string of pearls to patrol' the shipping lanes between the mainland and the Middle East. These included the ports of Gwadar in Pakistan and Chittagong in Bangladesh, which had been developed using Chinese money and/or contractors.

'Tensions will arise because the US is building military bases in central Asia,' Faber said. This was happening, he added as China was developing strategic links with Africa.

'I don't know when the tensions will come,' he said, but it was inevitable that they would develop.

Faber also warned that the United States government was creating credit that would have 'catastrophic' consequences.

He forecast that there was a very high likelihood that the US government would be bankrupted in the next five to 10 years and in the meantime it was being forced to print more and more money to meet its future debt obligations, on which the interest alone would be the equivalent of 30 per cent of GDP.

Faber said the failure of the US government would cause problems for other governments that would 'take a rebooting of the global economy' to solve.

In an address laced with dire predictions for the future he also warned the 550 delegates to the conference: 'One day the internet won't work; one day your credit card won't work; one day your mobile phone won't work.'

He advised people to buy a piece of land on which they could subsist.