Tags: Mobius | European | Crisis | Over

Mark Mobius: European Crisis Will Be Over by June

Wednesday, 21 Dec 2011 09:11 AM

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The European crisis may have global markets sick with fear and uncertainty today, but it will likely be over by June, says Mark Mobius, executive chairman of Templeton Emerging Markets Group.

"The European crisis isn't as deep and terrible as people think," Mobius tells Brazilian newspaper Valor Economico, as reported by CNBC.

"Nations there are in a process of negotiations and that takes time."

Even emerging markets, which have taken a pounding lately, are not as bad as the world seems to think when economic fundamentals are considered.
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Take Brazil, which "is in a very good situation," Mobius says.

Mobius200.jpg
Mark Mobius
(Templeton file photo)
Brazil "is a little like the United States. They can isolate themselves from crises since they have a big consumer market, they produce raw materials, they have industry and agriculture," Mobius reportedly said.

The European debt crisis has carried on for two years now, intensifying lately on fears that pressures inside Greece to default and abandon the euro have spread to the larger Italy.

The European Central Bank (ECB) has resisted market calls to step in and buy government bonds directly from banks in order to ease tight credit conditions on the grounds that it would fuel inflationary pressures.

Bank officials have, however, made more short-term loans available to the banks themselves, and some of that money is finding its way to government bond auctions and is alleviating the crisis indirectly.

The ECB has arranged the euro equivalent of $639 billion to 523 banks in three-year loans, the biggest ECB infusion of credit into the banking system in the 13-year history of the currency, Reuters reports.

"The fact that the ECB is taking this step is a good thing," says Louise Cooper, markets analyst at BGC Partners, Reuters adds.

"It is helping to alleviate some of the strains within the system and does on the margin help banks fund themselves."

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