Bloomberg News

Faber Says Investors Should Accept Greek Writedown of 90 Percent

October 26, 2011

(For more on Europe’s debt crisis, see EXT4 <GO>.)

Oct. 26 (Bloomberg) -- Marc Faber, publisher of the Gloom, Boom and Doom report, said Greece is bankrupt and bond investors should have to take losses of 90 percent on their holdings as part of a solution to Europe’s debt crisis.

“Greece is bankrupt, whether they want to admit it publicly or not,” Faber said in an interview in Zurich today. “It will need a 90 percent writedown, but that’s not going to happen. What will probably happen is a 50 percent writedown.”

European leaders are back in Brussels today for an emergency summit in an attempt to contain the region’s worsening debt crisis and prevent a state default. Greece is counting on bond investors to accept “voluntary” losses as high as 60 percent and on euro governments and the International Monetary Fund to lend at least 109 billion euros ($152 billion) more to enable it to pay its bills.

The 14th crisis summit in 21 months starts with a meeting of all 27 European Union leaders at 6 p.m. Luxembourg Prime Minister Jean-Claude Juncker said in an interview yesterday that he expects leaders to reach a “final package.”

Faber said the European Central Bank will probably have to help finance the region’s rescue fund “one way or the other,” or the so-called European Financial Stability Facility “will issue bonds, though I’m not sure who’d buy those.”

“No one forced banks and insurers to buy Greek bonds,” Faber told reporters. “The crisis we have today won’t be fixed and the problems won’t be solved, they will be delayed. And then one day, we’ll see the final crisis, where numerous governments will go bankrupt.”

--Editor: Simone Meier

To contact the reporter on this story: Corinne Gretler in Zurich at cgretler1@bloomberg.net

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


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