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.