Wednesday, October 24, 2012

Felix Zulauf: Eurozone will be the shortest currency union in history

The president of Zulauf Asset Management AG - Felix Zulauf expressed his opinion that the Eurozone is oh its way to become the shortest currency union in history. Swiss hedge fund manager believes that the only allternative to breakup is only a federal union. Zulauf thinks that additional temporary measures risk aggravating social conditions, with local rioting leading to broader civil unrest.

Austerity measures brought by some of the European governments have only produced an imminent crisis. In Zulauf's view, the crisis is imminent and does not require a specific event. He believes that after six to nine months, the markets may suddenly wake up and react powerfully to some seemingly minor event.

Zulauf, during his recent speech in Prague, added that investment options in the intermediate term are grim. While the equity markets may thrive in the coming year or two, the seven-year equity cycle will turn in 2015 or so and "buy and hold" strategies will turn out to be painful for those with a three- to four-year horizon. Although the coming bust will be bad, Zulauf thinks it will not be as serious as the last.

Zulauf added, that Central banks sold gold at the low point, so they should not be trusted to manage inflation. The only hope, he said, was a supply-side focus on increasing productivity and lowering economic barriers could help in principle. But governments are already "heading in the other direction, Zulauf also said.

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