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Germany to blame for weak global economy: Gartman

The uncertainty in the stock market and weakness in the global economy doesn't have to be this bad.

Dennis Gartman said a big part of the problem is Germany and the nation's reluctance to aggressively address the woes again sweeping across Europe with aggressive monetary actions.

"The Germans have been terribly reticent and absolutely wrong about not expanding reserves. They have done untold amounts of damage," he said.


Dennis Gartman
Adam Jeffery | CNBC
Dennis Gartman

Gartman was referring to a widely held belief that Germany refuses to embrace, in a meaningful way, programs that may stimulate the economy in the short-run but trigger inflation over time.

According to the Wall Street Journal, instead, "the German government is cajoling other European governments to continue (or resume) the budgetary austerity programs that have held back European growth in recent years."

In the past, Gartman has cited cultural differences between Germany and the rest of Europe as the catalyst behind this issue, with Germany still bruised by the damage done by the rampant inflation that swept across Germany after WWII. At the time, inflation became so bad, the people of Berlin were forced to trade cigarettes for food, rather than paper currency.

Although events happened more than 60 years ago, Gartman believes the wounds still ache today. As a result, an aggressive QE is unlikely; in turn, Gartman expects the U.S. economy to outperform that of Europe for some time to come.


If you want to put money behind the theme, Gartman said he'd short euro. There are two possible outcomes; either the U.S. recovers and Europe languishes, or, Gartman is wrong and Germany consents to aggressive QE. But in either scenario, Gartman said, the euro should lose value against the dollar.

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On a separate note, when speaking about gold Gartman said, "own it in euro terms, own it in yen terms, but I don't think you really want to own it in dollar terms."

Addressing Goldcorp earnings, Gartman added, "they should have done hedges and they dropped all their hedges years ago. That's one of the real problems with the gold mining industry. They could have hedged production for years forward and they chose not to. Shame on them."