"Without the euro, there would presumably have been tensions among the various European currencies. If we had made greater progress in the economic integration of Europe, today we could play a better role and take advantage of certain opportunities that a unified EU market would offer. Unfortunately, we haven't reached that point yet," said the Allianz Global Investors CEO at a panel discussion held by the Society for Foreign Policy in Munich.

But despite criticism of patchy EU regulation of financial service providers, Faber was full of praise for the bailout initiative by the federal cabinet of Germany and the G8 countries, especially in light of the immense time pressure: "The German government responded knowledgeably, shrewdly and appropriately to the crisis. The same applies for crisis management by the EU and the G8 countries."

But Faber rejects any notion of carte blanche: "The state's holdings in banks did not arise because somehow out of the blue the state suddenly developed a great interest in banking. If the moral hazard problem means that banks can no longer be punished in our typical market-economy sense for acting irresponsibly, if they can no longer go bankrupt and the state has to jump in, then aid can't be provided in the form of a risk-free financial injection. The state must also be able to reclaim the aid it provides."

And the state's involvement might even pay off in the end. "Many market participants currently assume that bank securities are trading at especially low prices right now. In other words, in maybe two, three or more years, the state might also be rewarded financially for its economic action. And that, for its part, does fit with our understanding of the market economy. Nothing can be for free – which is why this bundle of measures, which also includes acquiring an equity stake in a bank, is the right regulatory solution for the problems we currently face in the financial market."

According to Faber, the crisis makes it clear that Europe needs an internationally coordinated set of regulations. "The many national regulatory bodies must be made subservient to a European chief regulator. Maybe the crisis will serve to highlight the need for regulation at the EU level. The most urgent need is to simplify low-cost cross-border payment traffic. We also need to harmonize contract law and regulatory law, so that within a few years we can offer insurance products across borders without too much expense. If this process accelerates, the crash would have a positive effect, at least in the long term."

As with all content published on this site, these statements are subject to our Forward Looking Statement disclaimer, provided on the right.