Gartman: European Union In Crises, The Exodus Is Coming

With several European governments having trouble handling their debt or reducing their yearly budget gaps, and most importantly, facing the reality of what’s transpiring politically and economically from the heavily-indebted economies, such as Greece, which has a ballooning budget deficit that at 12.7% of GDP this year is far above the 3% EU limit, certain countries may consider withdrawing from the European Union altogether, according to Dennis Gartman:

Businessinsider : The Gartman Letter: “However, perhaps most importantly, we’ve reached a “tipping point’ in the case of the EUR, for it is against the EUR that we think the dollar shall show its most serious strength. Try as we might… and we have tried over the course of the past week or so to convince ourselves that we are wrong and we cannot… we are unable to “spin” the news out of Spain, and Greece, and Ireland et al that their fiscal circumstances are anything other than massively detrimental to the EU’s well-being. At the margin, the swiftly deteriorating fiscal circumstances that these countries are going through are going to become materially worse over the course of the next several weeks and months, putting very real and severely growing strains upon the very existence of the Union itself.

For the first time in years there is talk that one or more of the EU nations may chose to withdraw from the union rather than face the higher interest rates and tighten fiscal policies that Frankfurt and Brussels will demand of them. Even as France and Germany may be coming out of recession, Spain, Greece, Ireland and some of the eastern nations are mired deeply in recession, and the prospects of higher interest rates, or mandated tax increased or forced budget cuts shall simply not be acceptable. Madrid, Athens, and Dublin cannot stand by and allow Paris and Berlin to make the demands of them that the current debt/GDP ratios would seem to mandate. Politically it is untenable, and at the periphery we shall see dissension within the Union increase. That alone shall be sufficient to put downward pressure upon the EUR, and the chart of the EUR vs. the dollar at the upper left of p.1 makes this rather clear. Damage has been done already. More… materially more… shall follow.”

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