Dennis Gartman & Jim Rogers on CrossTalk – The Eurozone Crisis…
Dennis Gartman (editor of The Gartman Letter), Jim Rogers & some professor woman (Scheherazade Rehman) were on Russia Today‘s CrossTalk program the other day. The debate was on the Eurozone crisis: see below for the video and summary.
- Dennis Gartman always thought that the Euro would be an inherently dysfunctional currency. Jim Rogers appreciates that something like the Euro is necessary to replace the dollar as the world’s reserve currency. However, he cannot conceive how hard-working Germans and Austrians can pay for Greeks sitting on the beach drinking ouzo.
- The Germans don’t have to pay the piper, Greece should go bankrupt. Then everybody would know that the Euro is a strong, hard currency.
- Jim Rogers: ‘Since when are taxpayers supposed to pay for the mistakes of bankers?’
- Dennis Gartman says that Greece should go back to a devalued greek drachma.
- Jim Rogers: Eventually, the market will force a solution. At least if you have a crisis now, you can organize it. Jim Rogers would not pull out of the Euro if he was in charge of Greece. The Euro is good for Greece.
- Jim Rogers: The approach of not letting people fail creates lost decades. The Japanese tried it and now they have a ‘zombie economy’ with the stock market 75% below its all-time high.
- Gartman: Austerity doesn’t create growth, getting the government out of the way does.
- This happened in Scandinavia, after 2-3 years of pain they bounced back and are now a prospering corner of Europe.
- Gartman: The central bank actions of October 2008 were ok, but the subsequent central bank balance sheet expansions were the wrong thing to do.
- Jim Rogers: Who’s going to pay for all of this? The crisis is just getting worse. The debts are increasing, and 5 years from now we’ll be saying that the world really is coming to an end because the debts are staggering!
- There was a legal agreement within the European system called the Maastricht Treaty – the countries of Europe were supposed to keep their deficits under 3%. They violated this law, so how can one argue that others should bail out the cheaters on the basis of legality?
- Banks have been going bankrupt for hundreds of years, it’s not the end of the world!
- Gartman: The Euro (as we know it) will disappear within the next five years. There will be a Euro for the more ‘fiscally responsible’ states and there will be individual currencies for the fiscally irresponsible states.
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