{"id":407,"date":"2010-04-30T10:30:00","date_gmt":"2010-04-30T14:30:00","guid":{"rendered":"http:\/\/www.intuitiveinvestor.com\/web\/?p=407"},"modified":"2018-08-19T10:16:41","modified_gmt":"2018-08-19T14:16:41","slug":"calling-europe","status":"publish","type":"post","link":"https:\/\/jasonapollovoss.com\/web\/2010\/04\/30\/calling-europe\/","title":{"rendered":"Calling Europe"},"content":{"rendered":"

Long time readers of this blog know that I have been highlighting the economic challenges of Europe since the beginning.\u00a0 As I surveyed the worldwide economic landscape I saw that Europe had at least equal problems with its housing bubble and debt loads as the United States.\u00a0 However, Europe also always has had\u00a0slower economic growth; deep, deep structural impediments to growth; and a confederate approach to economic policies.\u00a0 This combination of structural\u00a0problems as been the primary source of my continued assessment: Europe is in trouble.<\/span><\/p>\n

More recently, I have talked about the possible dissolution of Europe as a united economic zone.\u00a0 This possibility would have been considered an absurdity two years ago.\u00a0 In fact, many of my competitor blogs were calling for deep investments in the Euro.\u00a0 The depth of the assessment on the part of these folks making currency calls seemed to be:<\/span><\/p>\n

1. The U.S. is in trouble, therefore the U.S. dollar is a bad investment.<\/span><\/p>\n

2. What’s the next\u00a0strongest, ergo safest, economy?<\/span><\/p>\n

3. Europe!<\/span><\/p>\n

4. Let’s invest in Europe.<\/span><\/p>\n

Can I just say that this is ignorant.\u00a0 In the face of the greatest economic crisis that the EU has ever faced, the Europeans have demonstrated that they cannot formulate a coherent response.\u00a0 And as four of its economies (Portugal, Italy, Greece and Spain) crumble around them, individual European countries are refusing to bail out their European neighbors.\u00a0 Largely this is because these nations’ own economies are already troubled.\u00a0 Why should a German be asked to live on an austere budget so that\u00a0he can bail out a Greek who has been living an irresponsible\u00a0Mediterranean high life?<\/span><\/p>\n

So to whom are the Europeans turning for an assist in bailing out their most troubled member, Greece?\u00a0 The International Monetary Fund.\u00a0 The IMF is a foreign policy tool of the United States.\u00a0 Not surprisingly, the IMF is predominately funded by the United States.\u00a0 So we have yet another European crisis where the Europeans have proven that they cannot wipe their own noses\u00a0and the Europeans are again turning to the United States for help.\u00a0 Whether it is World Wars I and II, the crisis in the former Yugoslavia, or the current economic crisis, the Europeans never seem to be able to take care of themselves when the going gets tough.\u00a0 Why is the Euro crashing relative to the U.S. dollar?\u00a0 It seems pretty obvious to me.\u00a0 Why did I never make a call that folks in the U.S. should be looking to invest in currencies other than those in the U.S.?\u00a0 It seems pretty obvious to me.<\/span><\/p>\n

At this point the future of the EU is in serious jeopardy as the economic union has proven that it only works in good times and fails in bad times.\u00a0 When crisis ensues the old European sectarian differences rear their ugly heads as member nations refuse to help out their fellow nations.\u00a0 Instead the various members craft press releases of their ambiguous intentions rather than their specific actions.\u00a0 But financial markets move very fast.\u00a0 Credit ratings agencies move very fast.\u00a0 Currencies move very fast.\u00a0 Crisis spreads like wildfire.<\/span><\/p>\n

Imagine if, in the United States, each of the\u00a0fifty states had to approve national policy\u00a0at the state level before it became law.\u00a0 Further, now imagine that some of the state legislatures had to put policies to the people for a vote in a referendum.\u00a0 How robust and with how much dexterity would the U.S.\u00a0respond to economic crisis?\u00a0 What kind of resentment would there be if California had to constantly bailout Texas, or visa versa?This is the situation in the EU.\u00a0 But it’s even worse.<\/span><\/p>\n

In the EU capital moves very slowly.\u00a0 It’s difficult to start a business.\u00a0 It’s difficult to find a job.\u00a0 It’s difficult to raise money to put capital behind a new, great idea.\u00a0 It’s difficult to deal with the labor unions.\u00a0 It’s difficult to deal with local and national corrupt officials.\u00a0 It’s difficult to trust official government economic statistics.\u00a0 It’s difficult to trust your neighbor because they invaded you in the last generation.\u00a0 Etc.<\/span><\/p>\n

So as an investor I am calling Europe…is there anybody home?<\/span><\/p>\n

Jason<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

Long time readers of this blog know that I have been highlighting the economic challenges of Europe since the beginning.\u00a0 As I surveyed the worldwide economic landscape I saw that Europe had at least equal problems with its housing bubble and debt loads as the United States.\u00a0 However, Europe also always has had\u00a0slower economic growth; […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_et_pb_use_builder":"","_et_pb_old_content":"","_et_gb_content_width":"","footnotes":""},"categories":[3],"tags":[],"class_list":["post-407","post","type-post","status-publish","format-standard","hentry","category-the-blog"],"_links":{"self":[{"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/posts\/407","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/comments?post=407"}],"version-history":[{"count":0,"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/posts\/407\/revisions"}],"wp:attachment":[{"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/media?parent=407"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/categories?post=407"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/jasonapollovoss.com\/web\/wp-json\/wp\/v2\/tags?post=407"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}