"Unless there's an authority that can really punish (rule breakers) it's not going to work," Faber told Fox Business Network. "I think the best thing to do is dissolve the EU. Let the markets sort this out. Let the countries default."
"It's going to be painful, very painful," says Faber. "But rather than to intervene into something that is not going to work in the long run … (intervention) is the wrong medicine." Mentalities in Greece, Portugal and Spain are totally different from that found in Germany, Faber observes, making forging and carrying out agreements difficult.
Moreover, Faber says that if the euro becomes history, countries can always trade in dollars. "In most countries now, the euro is actually a better currency than the U.S. dollar, but you could have dual currencies."
For example, Faber says that Greece could conduct transactions in drachma and euros or dollars. "The same is true in Latin America." says Faber. "I pay in dollars, I never exchange any money."
Faber points out that the U.S. has intervened in the free market since the savings and loan crisis, and "each time the crisis grew larger and larger and larger."
"I think that's a big problem."
The Washington Post reports that Sean Callow, a senior currency strategist at Westpac Banking, says the euro may reach $1.27 in the first quarter of 2012.
© Moneynews. All rights reserved.