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Dennis Gartman: PIIGS Will Go Bankrupt Within 18 Months

It was only last week that the parliament of Greece agreed to greater austerity, clearing the way for another bailout and sending world markets higher in the process.

But now, it’s almost as if the Greece austerity vote never happened.

Italy and Spain CDS blew out on Wednesday with investors growing ever more worried that these two nations will be the next hotspots in Europe, with leaders doing little more than chasing the EU's financials woes from one nation to the next.

Will the EU ever corner the problem?

According to strategic investor Dennis Gartman the short answer is 'No.' He tells Fast Money it ain't gonna' happen.

Although he concedes problems will probably be contained in the short-term - in the long-term he doesn’t see the situation playing out terribly well, at all.

In fact he tells us that he expects “all the PIIGS will go bankrupt.” And not 10 or 20 years from now. Gartman says prepare for it to start happening “sometime over the next year and a half. But they're all going to go."

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And he's not alone in his opinion. Trader Jon Najarian expects the same although he’s looking at a marginally longer time horizon. "I think it happens over the next 3-5 years," he says. "But I agree that it happens."

“The debt that they have is unsustainable,” he says. “And the wrong thing to do is increase taxes, which is what they’re doing.”

Gartman couldn’t agree more. He doesn’t see how increased taxes can possibly benefit these nations when they’re facing unemployment as high as 20%.

How should you trade it?

If you’re a currency trader Gartman thinks the play is a weaker euro. “The fact that the euro broke below 143 is technically important he says. I bet we’re trading under 140 in the not too distant future.”

Jon Najarian sees big money placing similar bets.

He’s watching the EUO the double inverse euro ETF. “That thing was just going nuts and trading something like 10 times normal volume. That’s a bet that the euro drops and on a 2 to 1 basis. That’s troubling.”

”Trouble is coming,” adds Gartman.





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Trader disclosure: On July 6, 2011, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Stutland owns (C), short (C) calls; Stutland owns (CSCO), short (CSCO) calls; Stutland owns (F); Stutland owns (GE) corporate bonds; Stutland owns (GLD); Stutland owns (GOOG), is short (GOOG) calls; Stutland owns (INTC), is short (INTC) calls; Stutland owns (T) is short (T) calls; Jon Najarian owns (BIDU) calls; Jon Najarian owns (SINA) calls; Jon Najarian owns (UA) calls; Jon Najarian owns (NFLX) calls; Jon Najarian owns (SLV) calls; Jon Najarian owns (SLW) calls; Terranova owns (XOM); Terranova owns (HAS); Terranova owns (DIS); Terranova owns (WFM); Terranova owns (LULU); Terranova owns (MSFT); Terranova owns (TM); Terranova owns (JWN); Terranova owns (MCD); Terranova owns (PEP); Terranova owns (MA); Terranova owns (BX); Terranova owns (CAT); Terranova owns (VRTS); Terranova owns (AAPL); Terranova owns (F); Terranova owns (CVI); Terranova owns (IBM); Terranova owns (FCX); Weiss owns (DE); Weiss owns (NAN); Weiss owns (HBAN); Weiss owns (BTU); Weiss owns (KEY); Weiss owns (CMA); Weiss owns (COP); Weiss owns (HK); Weiss owns (MRK)

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