Oaktree's Howard Marks says Trump policies defy economic reality


              In this Aug. 10, 2016, photo, Republican presidential candidate Donald Trump speaks during a campaign rally in Abingdon, Va. Amateur psychoanalysts have put Trump on the couch, calling him a sociopath, unhinged, a narcissist. Amid all this psych-talk, there is one group of people who aren’t talking as much: the professionals. Or at least they’re not supposed to. (AP Photo/Evan Vucci)
In this Aug. 10, 2016, photo, Republican presidential candidate Donald Trump speaks during a campaign rally in Abingdon, Va. Amateur psychoanalysts have put Trump on the couch, calling him a sociopath, unhinged, a narcissist. Amid all this psych-talk, there is one group of people who aren’t talking as much: the professionals. Or at least they’re not supposed to. (AP Photo/Evan Vucci)

NEW YORK - Policies proposed by Republican presidential nominee Donald Trump would result in a credit downgrade for the U.S., job losses and a more isolated economy, billionaire investor Howard Marks said.

Trump's most unrealistic claim is that he could reduce the federal debt by negotiating to pay off less than the total amount owed, Marks said in a memo to clients Wednesday. Such a move would hamper the country's access to capital markets, the Oaktree Capital Group LLC co-founder said.

"The United States could refuse to pay its debts in full - that's called 'rescheduling' or 'default' - but we'd be unlikely to have the same access to the credit markets," Marks, 70, wrote. "We would certainly cease to enjoy the benefits of a high credit rating and resulting low interest rates."

Marks, whose Los Angeles-based firm is the world's biggest investor in distressed debt, previously refused in interviews to discuss his views on specific policies put forth by the 2016 presidential candidates. The billionaire, who uses his widely read quarterly memos to opine on issues in finance, investing and economics, added a rare postscript to Wednesday's letter, apologizing if his statements cause readers "unhappiness."

Democratic nominee Hillary Clinton also has shortcomings, Marks said, though "she hasn't been anywhere near as guilty as Trump of defying economic reality." Her faults, according to Marks, include using a private email server while secretary of State and embracing positions with the apparent focus of winning over voters who supported Bernie Sanders in the primary campaign. He cited her opposition to the Trans-Pacific Partnership and promising free public college for some as examples.

Protectionist policies by Trump, such as his proposals to fight China on trade, may cost some American jobs by motivating trading partners to increase tariffs on U.S.-made goods, said Marks.

"Trump's campaign is mainly targeting people who fear being left behind by globalization, and ignoring the individual winners and positive overall effects," Marks wrote, comparing such potential voters to those in the U.K. who opted to separate from the European Union.

Oaktree oversaw $98.1 billion in assets as of June 30. The firm, started by Marks and other partners in 1995, manages distressed debt, private equity holdings, real estate, infrastructure and energy-related assets.

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