Faber On Europe: Think GERxit Not GRExit

Monday, July 2, 2012
By Paul Martin

by Tyler Durden

In line with our views on Europe’s endgame, Marc Faber opined on Bloomberg TV this morning that if he “was running Germany, [he] would have abandoned the eurozone last week”.We suspect that given the lack of real steps forward and no additional exposure (as yet) for Germany that they can hang on a little longer before they reach the final phase of the game-theoretically optimal exit (that Credit Suisse and us share) of a mercantilist GERxit occurring sooner than many think (benefiting from deposit inflows and low-EUR-based high profitability from exports for as long as possible and not a moment longer). The “cosmetic fix” of this latest summit, as Faber calls it, simply does not solve the fundamental problem of over-investment in the euro-zone. He is bottom-fishing in some European equities (though avoiding banks) and is not long the Euro here as he sees the modest rally in risk assets in Europe as merely a reflection of illiquidity and a grossly oversold market reverting on ‘not a total disaster’ though he reminds us early on that “pooling 100 sick banks does not make them healthy.”

The Rest…HERE

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