While many are blaming Greece’s debt crisis for stocks falling around the world, Marc Faber, editor of the Gloom, Boom & Doom Report, takes a decidedly different view.
“I don’t believe that stocks are going down because of Greece,” he said in an interview with Bloomberg Television. “I believe that the market has been weakening internally for a long time.”
When asked about the situation in Greece, Faber said he saw a Greece agreement happening at the last minute.
“But I don’t think that’s any positive because Greece is basically bankrupt,” he told Bloomberg TV. “The debt should be written down by 50% or more.”
It could be a positive for some investors.
When asked what kind of investor will profit the most off the weakness brought on by the Greek debt crisis, Faber said: “The investors who are in cash, they benefit the most, because asset prices have gone down substantially in the last couple of weeks.”
In the interview on Monday, Faber talked about the Greek debt crisis, as well as the overall U.S. economy, Chinese economy, and financial markets in general.
For more of his insights, here is an edited transcript of Faber’s interview with Bloomberg TV’s Stephanie Ruhle, Joe Weisenthal and Scarlet Fu:
STEPHANIE RUHLE: For more reaction on the evolving situation in Greece, I want to bring in Marc Faber. He’s the editor of the “Gloom, Boom and Doom Report.” He joins us now over the phone. Marc, give us your assessment. What is the Greek situation really like right now?
MARC FABER: Well my sense is that they will come to some kind of an agreement in the last minute. But I don’t think that’s any positive because Greece is basically bankrupt. The debt should be written down by 50% or more. However, I have this to say. I don’t believe that stocks are going down because of Greece.
I believe that the market has been weakening internally for a long time. On Friday there were almost 200 new 12-month lows on the New York Stock Exchange. The Chinese stock market, the Shanghai index is now down 20% from the highs. So Greece is a side play, but it’s used by people as an excuse to sell stock.
JOE WEISENTHAL: Marc, should people in Europe feel confident that what’s happening in Greece stays in Greece, or do you think we could see contagion spread and similar concerns re-arise in Spain and Italy?
FABER: Well I think a lot of Europeans don’t like the E.U., and the bureaucrats in Brussels. They hate them because the bureaucrats in Brussels are like the [International Monetary Fund] and the World Bank, basically a corrupt organization that do not pay taxes, but then impose taxes on other people and so forth. And I strongly believe that the typical European would prefer not to have or be a member of the E.U. SCARLET FU: Marc, I want to get your perspective on who and by what, I mean, what kind of investor is going to profit the most off this weakness that we’re seeing this morning brought on by the Greek debt crisis, brought on by the negative headlines on Puerto Rico, brought on by the selloff in China, what kind of investor?
FABER: I will tell you precisely. The investors who are in cash, they benefit the most, because asset prices have gone down substantially in the last couple of weeks. In the case of China within two weeks the market is down 20%. The bond market has given up all the gains since the beginning of the year, and there are losses in bonds.
So people who are in cash, they are not totally wrong. And the big losers are people who just vote on the advice of some media into stock months ago. They are the big losers because many stocks — Micron is down 46% from its high earlier this year. There are many stocks that have lost a lot of money.
WEISENTHAL: Marc, besides cash, is there anything else that you like right now?