Raising The Stakes
While stock markets appear to take a wait and see stance, Europe's future is once again in the hands of its politicians, who meet on Friday.
Forget Wikileaks, here comes StanPooLeaks
Not as catchy for sure, but just as fumbling, and yes, just about as smelly as it sounds! Standard & Poors muscle in on the debate over Europe again. In case anyone was doubting the seriousness of the situation and - the concern of the US in this respect, Standard & Poors published their preliminary findings about where Europe's credit worthiness is heading - in time to wake up even the sleepiest of undecided leaders. Suitably, the response from Germany in particular ranged from robust to arrogant, just what must be expected. They have not forgotten that it was the same rating agency that could not find anything wrong with Lehman Brothers a week before it collapsed, nor did they bat an eyelid when advising on the now notorious mortgage certificates touted to foreign -, and of course also German banks.
So how could they possibly take them serious now? That is just where I find it is getting most interesting! The Europeans do think differently about their political aspirations, - and are far from convinced that they will need to sacrifice sovereignty on the altar of fiscal unity. To the Americans however, that appears the most logical step, because that is the system they have, so why not export it to flailing systems elsewhere? What seems not immediately obvious to its leaders is that this same fiscal unity - or oneness - kind of brushes over the incongruities the countries' individual states are experiencing vis-a-vis the Union. One fiscal administration - instead of 27 - happily allows the country to put up with many states operating as multi-ethnically and economically diverse as Europe, without being threatened by the differences. Europeans on the other hand rather see the differences as a threat to social structures, cultural identity etc. As to who is ahead of the curve on this remains to be seen. As far as history is telling us, gigantic one-rule-fits-all systems rarely deliver the kind of quality of life it promises.
As it happens, when taken at face value quite a few of its member states today are in a worse financial mess than Greece to name the worst offender. Take California, for instance. Debt to GDP is untenable and has been so even during the Austrian rule. While Greece has bravely put forward some cultural hangups to explain their shortcomings, as far as I know, Californians are not known for suffering such handicaps like not being able to collect their taxes, or running an over sized civil servant apparatus.
This, however. is not so much of an issue for Standard & Poors. Still, I sometimes wonder what resources, parameters and comparions they look at: If the Euro was as seriously under threat as prophesized in the media, how come it is still valued at a dollar thirty three ($1.33)?
Friday, December 9th, 2011 - another D-Day?
Europe's future is not so much a question of fiscal unity, but one of acceptance of common interests, which, when respected, will bring about the necessary fiscal disciplines, transparency and cooperation. As I said, that's for the future. If they can focus on that next Friday (and beyond), the solution they will come up with will be beneficial to all. If you think it can't work and we are all doomed, then at least wait for the stock markets' response before giving up on your investment goals.
At our end (Pro-ActiveManagemment), we have invested little over half of portfolio allocations in equity and with some profits to boot, - waiting to add more, soon. Raising the Stakes, so to speak!
Forget Wikileaks, here comes StanPooLeaks
Not as catchy for sure, but just as fumbling, and yes, just about as smelly as it sounds! Standard & Poors muscle in on the debate over Europe again. In case anyone was doubting the seriousness of the situation and - the concern of the US in this respect, Standard & Poors published their preliminary findings about where Europe's credit worthiness is heading - in time to wake up even the sleepiest of undecided leaders. Suitably, the response from Germany in particular ranged from robust to arrogant, just what must be expected. They have not forgotten that it was the same rating agency that could not find anything wrong with Lehman Brothers a week before it collapsed, nor did they bat an eyelid when advising on the now notorious mortgage certificates touted to foreign -, and of course also German banks.
So how could they possibly take them serious now? That is just where I find it is getting most interesting! The Europeans do think differently about their political aspirations, - and are far from convinced that they will need to sacrifice sovereignty on the altar of fiscal unity. To the Americans however, that appears the most logical step, because that is the system they have, so why not export it to flailing systems elsewhere? What seems not immediately obvious to its leaders is that this same fiscal unity - or oneness - kind of brushes over the incongruities the countries' individual states are experiencing vis-a-vis the Union. One fiscal administration - instead of 27 - happily allows the country to put up with many states operating as multi-ethnically and economically diverse as Europe, without being threatened by the differences. Europeans on the other hand rather see the differences as a threat to social structures, cultural identity etc. As to who is ahead of the curve on this remains to be seen. As far as history is telling us, gigantic one-rule-fits-all systems rarely deliver the kind of quality of life it promises.
As it happens, when taken at face value quite a few of its member states today are in a worse financial mess than Greece to name the worst offender. Take California, for instance. Debt to GDP is untenable and has been so even during the Austrian rule. While Greece has bravely put forward some cultural hangups to explain their shortcomings, as far as I know, Californians are not known for suffering such handicaps like not being able to collect their taxes, or running an over sized civil servant apparatus.
This, however. is not so much of an issue for Standard & Poors. Still, I sometimes wonder what resources, parameters and comparions they look at: If the Euro was as seriously under threat as prophesized in the media, how come it is still valued at a dollar thirty three ($1.33)?
Friday, December 9th, 2011 - another D-Day?
Europe's future is not so much a question of fiscal unity, but one of acceptance of common interests, which, when respected, will bring about the necessary fiscal disciplines, transparency and cooperation. As I said, that's for the future. If they can focus on that next Friday (and beyond), the solution they will come up with will be beneficial to all. If you think it can't work and we are all doomed, then at least wait for the stock markets' response before giving up on your investment goals.
At our end (Pro-ActiveManagemment), we have invested little over half of portfolio allocations in equity and with some profits to boot, - waiting to add more, soon. Raising the Stakes, so to speak!
Comments