Gartman: Greek Crisis Will Destroy European Union

Friday, 07 May 2010 08:43 AM

By Dan Weil

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The European debt crisis that has spread from Greece will ultimately tear apart the entire European Union, says hedge fund manager Dennis Gartman.

“I think the whole thing will go down to defeat, the whole thing will eventually unravel," says the author of The Gartman Letter.

The crisis has intensified, with riots erupting in Greece after the International Monetary Fund and EU agreed to provide a 110 billion euro ($140.36 billion) aid package.

Meanwhile, ratings agencies have downgraded Spain and Portugal’s government debt.

All the turmoil has sent the euro tumbling down to a 14-month low.

“The market has lost confidence in the bailout process, and that has led to concern over the euro,” Amelia Bourdeau, a currency strategist for UBS, told Bloomberg.

“It’s questioning the medium-term implications of the (aid) package. Can Greece meet the terms, and will the package be enough to stop contagion risk?”

The answer for Gartman is obviously no. He declined to specify a date for when he thinks the EU will collapse.

But he did tell CNBC, “it doesn't look good."

Investors should avoid U.S. stocks until the storm clears, Gartman says.

"It means confusion, it means a stronger dollar, it probably means weak commodity prices," he said. "I think people should be on the sidelines and out."

A correction of at least 15 percent for stocks would be normal, Gartman points out.

And, "There's always a chance we could get worse than that."

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