A View on the World's Economic Crisis

ZHANG:
And as the world's leaders search for solutions to the global economic crisis, our team in Israel interviewed a man who predicted the state of the markets three years ago.

STORY:
Itay Slonim owns an investment management firm in Israel. For more than three years, Slonim has been the economic commentator for the Israeli edition of The Epoch Times.

In his first article for the newspaper, published in October 2005, he wrote, "The global economy is facing a severe crisis, perhaps the most severe in its history. The question now is not whether it will happen, but when."

But how did Slonim know? He says he could see a growing trend after analyzing economic data and charts.

[Itay Slonim, Epoch Times Commentator]:
"Three years ago, I was looking at some economic indicators and charts of the global economy and saw that some of the data is completely out of sync with historic norm, virtually 'out of the chart'...the sums of money that was printed by the world's governments, credit growth, private consumption and housing prices in US production and investment in China, it all looked totally out of sync."

And what are the reasons? Slonim says that the world's governments have printed too much money while trying to support their two big mistakes.

[Itay Slonim, Epoch Times Commentator]:
"There were two steps: the first one was in 1994 when China devaluated the rate of its yuan by 40 percent and decided to peg it at that level...the government started to print a lot of money in order to prevent the yuan from getting stronger. The second step came after the Hi-Tech bubble exploded in 2001. USA drastically lowered the interest and this move, supported by the Chinese and the Japanese governments, launched the second wave of printing money."

Experts are saying that the Chinese economy will be the big winner of this crisis. But Slonim holds says the Chinese economy is extremely unbalanced and will suffer from both a global slowdown and increasing production costs.

[Itay Slonim, Epoch Times Commentator]:
"Since China fixed the yuan at a low exchange rate, production factories were shifted from the west to China. Since China is such a big country it could have lasted for so long without causing inflation. But last year, excess capacity has started to come down and as a result inflation has risen."

So what will become of the Chinese economy?

[Itay Slonim, Epoch Times Commentator]:
"China will suffer a lot from the crisis; first, the global demand for Chinese products will decrease and in addition, production costs will increase and as a result the manufacturing sector in China will face a dramatic slowdown."

And how the world's economy will look like on a whole?

[Itay Slonim, Epoch Times Commentator]:
"The next 2 or 3 years are probably going to be the worst since the big crisis of 1930."

But Slonim isn't completely pessimistic... he says that there is a way to restore the world's economy.

[Itay Slonim, Epoch Times Commentator]:
"The only way is to let all the bubbles to burst in order to 'get back into the chart and start a new balanced and stable economic growth."

This is NTD Israel.

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[jack10133]

wow he is saying exactly what ron paul has been saying, about letting the markets correct themselves... who would of thought

[Jesusthepalestinian]

where the ripping ofF the money went?

ISRAEL

[Will224000]

@artyphax the Jews steal money...don't listen to them.

[polygamous1]

two people both telling the truth But who will listen to them if its not in the iinterest of the rich n powerful?

[Jesusthepalestinian]

this man expose it all

[artyphax]

The Jews know money...better listen to him.

[avishalev2]

we should have listen to this man