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12-23-2013, 06:37 PM
More Thoughts on the European Endgame
Today’s commentary
My view remains that Europe is in an incipient but unstable recovery vulnerable to exoge**us shocks. However, I do **t believe this recovery means that crisis is over. Rather, this is a lull before continued stagnation forces Europe to make hard policy choices about who actually remains in the euro over the long-term.
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Policy is geared toward the present framework of eurozone cohesion via austerity and internal devaluation. This will **t work. Eventually, the eco**mic depression in the periphery will force a change in policy and the question will be whether Europe can react by integrating the necessary flexibility into its structure or whether we will see a disorderly exit. It is **t clear which outcome is more likely at this point. I don’t expect this endgame to come to a head in 2014. But if it does, it would be in Greece with its sovereign debt restructuring. My expectation is recovery in Europe, low interest rates, and improving equity markets that allow the EU to paper over these *****s. And major policy shifts almost never occur unless crisis dictates it. Therefore, it will be easy sailing in Europe as long as the eco**my is on the upswing as it seems to be **w. However, when the eurozone falls back into recession, crisis will return and these issues will have to be dealt with.
Happy investing until then
More About: default (http://www.creditwritedowns.com/tag/default/), Europe (http://www.creditwritedowns.com/tag/europe/), eurozone breakup (http://www.creditwritedowns.com/tag/eurozone-breakup/), eurozone periphery (http://www.creditwritedowns.com/tag/eurozone-periphery/), government debt (http://www.creditwritedowns.com/tag/government-debt/), Greece (http://www.creditwritedowns.com/tag/greece/), Hans Werner-Sinn (http://www.creditwritedowns.com/tag/hans-werner-sinn/), Members (http://www.creditwritedowns.com/category/members/), Wolfgang Munchau (http://www.creditwritedowns.com/tag/wolfgang-munchau/)
The most in-depth research and analysis is on Credit Writedowns Pro (https://www.creditwritedowns.com/members/).
More Thoughts on the European Endgame (http://www.creditwritedowns.com/2013/12/thoughts-european-endgame.html) originally appeared on Credit Writedowns (http://www.creditwritedowns.com)
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Related posts:
Predicting Europe’s endgame policy response (http://www.creditwritedowns.com/2013/11/predicting-europes-endgame-policy-response.html)
Some thoughts on Europe, most of them positive (http://www.creditwritedowns.com/2013/07/some-thoughts-on-europe-most-of-them-positive.html)
Some brief thoughts on the eurozone breaking up (http://www.creditwritedowns.com/2013/10/some-brief-thoughts-on-the-eurozone-breaking-up.html)
Today’s commentary
My view remains that Europe is in an incipient but unstable recovery vulnerable to exoge**us shocks. However, I do **t believe this recovery means that crisis is over. Rather, this is a lull before continued stagnation forces Europe to make hard policy choices about who actually remains in the euro over the long-term.
[Content protected for Gold members only]
Policy is geared toward the present framework of eurozone cohesion via austerity and internal devaluation. This will **t work. Eventually, the eco**mic depression in the periphery will force a change in policy and the question will be whether Europe can react by integrating the necessary flexibility into its structure or whether we will see a disorderly exit. It is **t clear which outcome is more likely at this point. I don’t expect this endgame to come to a head in 2014. But if it does, it would be in Greece with its sovereign debt restructuring. My expectation is recovery in Europe, low interest rates, and improving equity markets that allow the EU to paper over these *****s. And major policy shifts almost never occur unless crisis dictates it. Therefore, it will be easy sailing in Europe as long as the eco**my is on the upswing as it seems to be **w. However, when the eurozone falls back into recession, crisis will return and these issues will have to be dealt with.
Happy investing until then
More About: default (http://www.creditwritedowns.com/tag/default/), Europe (http://www.creditwritedowns.com/tag/europe/), eurozone breakup (http://www.creditwritedowns.com/tag/eurozone-breakup/), eurozone periphery (http://www.creditwritedowns.com/tag/eurozone-periphery/), government debt (http://www.creditwritedowns.com/tag/government-debt/), Greece (http://www.creditwritedowns.com/tag/greece/), Hans Werner-Sinn (http://www.creditwritedowns.com/tag/hans-werner-sinn/), Members (http://www.creditwritedowns.com/category/members/), Wolfgang Munchau (http://www.creditwritedowns.com/tag/wolfgang-munchau/)
The most in-depth research and analysis is on Credit Writedowns Pro (https://www.creditwritedowns.com/members/).
More Thoughts on the European Endgame (http://www.creditwritedowns.com/2013/12/thoughts-european-endgame.html) originally appeared on Credit Writedowns (http://www.creditwritedowns.com)
Links: RSS (https://www.creditwritedowns.com/feed) - Daily (http://eepurl.com/hfF3U) - Weekly (http://eepurl.com/eklTA) - Twitter (http://twitter.com/edwardnh) - Facebook (http://www.facebook.com/creditwritedowns) - Contact (https://www.creditwritedowns.com/contact)
Credit Writedowns Feed # abf0d081857b85fe6be494728740a4f1
Related posts:
Predicting Europe’s endgame policy response (http://www.creditwritedowns.com/2013/11/predicting-europes-endgame-policy-response.html)
Some thoughts on Europe, most of them positive (http://www.creditwritedowns.com/2013/07/some-thoughts-on-europe-most-of-them-positive.html)
Some brief thoughts on the eurozone breaking up (http://www.creditwritedowns.com/2013/10/some-brief-thoughts-on-the-eurozone-breaking-up.html)