Marc Faber: US Credit Ratings Should Be Lower - Wall Street Pit

Marc Faber, the author of the Gloom, Boom & Doom Report, believes most European nations should be rated triple-C and downgraded even further.

Standard & Poor’s one-notch downgrade to AA+ announced by the French finance minister was “insufficient” in terms of addressing ongoing systemic stresses in the country’s economy, Faber told CNBC on Friday.

France — Europe’s second-largest economy, behind Germany — now has the same credit status as the United States, which S&P downgraded in August. France’s triple-A was the most high-profile move from S&P, which also on Friday cut Portugal’s credit to junk and downgraded Italy and Spain two notches. Austria, Cyprus, Malta, the Slovak Republic and Slovenia also saw downgrades.

Faber said he wouldn’t buy French bonds “and I wouldn’t buy any U.S. bonds either.” According to Faber, the U.S. “should not be a triple-A-minus but a BBB or junk bond,” based he said “on the unfunded liabilities that will come due in future.”

Germany “is ok,” Faber said, but it too also “has large, unfunded liabilities.”

Faber predicts the S&P’s downgrades in Europe won’t have any significant effect on the world’s stock markets.

“Much of any downgrades has [already] been priced in,” he said of Europe.

Sectors in which Faber would invest include commodities, real estate and gold.

Faber Says 'Weak' Euro Nations Should Leave the Currency Union -BusinessWeek

Jan. 20 (Bloomberg) -- Marc Faber, publisher of the Gloom, Boom and Doom report, said it would make sense for the euro region’s “weak” member states to leave the currency union.
“It would be good if weak countries were kicked out or left the currency union,” Faber said in an interview in Zurich today. “It would be the better solution than denial.”
European leaders are struggling to contain the debt crisis, which forced Greece, Ireland and Portugal to seek external aid. German Chancellor Angela Merkel has made a deficit-control treaty the centerpiece of efforts to combat the turmoil, counting on stiffer fiscal rules to restore investor confidence in public finances across the 17-nation region.
The European Central Bank last month extended its use of unconventional tools to bolster bank lending and cut borrowing costs to 1 percent, matching a record low. The central bank has also been forced to purchase bonds of distressed nations.
Asked whether he’d purchase euro-region government bonds, Faber warned of a “high-quality state-bond bubble” and said that “it’s probably better to invest in shares.”
“Last year, we have seen high volatility, large swings,” on equity and bond markets, he said. “I expect this volatility to remain or maybe even increase this year. Shares are more attractive than bonds overall.”
Faber said the ECB will “probably continue to print money in a direct or indirect manner,” and that the “worst part of the crisis is still ahead of us.”

--Editors: Patrick G. Henry, Leon Mangasarian

To contact the reporter on this story: Simone Meier in Zurich at smeier@bloomberg.net

To contact the editor responsible for this story: Craig Stirling at cstirling1@bloomberg.net

Marc Faber Says Europe Should Dissolve the EU for Economic Growth - TheMarket Oracle

Marc Faber on the Euro-zone crisis, that the problem is that governments cannot agree to sticking to the 3% budget limits and the only option they have is to print money. The best solution is to dissolve the EU and let the markets sought things out.

 Marc Faber is a famous contrarian investor and the publisher of the Gloom Boom & Doom Report newsletter.