Back in 2002, the Euro currency began it's physical existence in the firm of banknotes, replacing Marks, Francs, Pesetas, and Drachmas, among others. A common currency had long been a dream among the economic thinkers of secular European democracies, making commerce and everyday life easier and better for most Europeans through much simplified trade. Or so thought the experts.
It is now known that Greece was cooking it's books to hide it's deficits, which have grown to the point that Greece is on the edge of default, anxiously awaiting rescue by more sober economic partners like Germany and France. There are calls for a new giant rescue since the most recent bailout (last week) seems not to have inspired the confidence of Greek creditors. Athens is looking more and more like AIG: a black hole into which you pour money and hope to fix some time in the future.
If there is a $700 billion rescue, the taxpayers of the more conservative economies of Europe will be footing the bill for ruinously expensive Greek social spending. Athens,the birthplace of democracy, will export it's social costs to Paris, Berlin, and Amsterdam. All courtesy of the free markets that allow for capital to move freely. In this case, free markets allow capital to flee socialist bastions like Greece and send the bill to the rest of Europe.
I remain cautious on the investment climate in Europe.
George T. Conboy
(This article contains the current opinions of the author but not necessarily those of Brighton Securities Corp. The author's opinions are subject to change without notice. This blog post is for informational purposes only. Forecasts, estimates, and certain information contained herein should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. References to specific securities and their issuers are for illustrative purposes only and are not intended and should not be interpreted as recommendations to purchase or sell such securities).