Europe is not a crisis but a negotiation

Because so many analysts missed the 2008 crisis through simple lack of detailed

knowledge of the shadow banking system, they are twice shy having been once

burned. The European “crisis” bears no resemblance to 2008. All the parameters are

known. In fact, we know the worst that can happen: Italy takes a 50% haircut on its

debt and the French banks are nationalized. The French banks, though, are not virgins

in the matter of nationalization. They have done this before, and it made little

difference to the world economy.


In one way or another, Europe’s assets will change ownership, and Europeans who live

on the corrupt welfare state will come out much poorer. They will take fewer

vacations, eat meat less frequently, drive smaller cars, live in smaller homes, and

generally will feel miserable. What remains of Europe’s productive assets will be

redirected towards the world’s areas of growth. Germany already has reoriented its

high-value-added export trade to China, and the rest of Europe will follow, if only

because the Chinese come into ownership of so much of its productive assets. And one

should not underrate the importance of Chinese tourism in this regard. Osso Buco had

become Shanghai’s signature dish a decade ago, and newly-prosperous Chinese will

choose Europe as a vacation venue in increasing numbers. Europe will decline, but

there is life after death. Even Sparta, a pathetic shadow of its old self, made a living

well into the Second Century B.C.E. from Roman tourists who came to watch the last

of the red-robed Spartan warriors drilling in phalanx and combing oil into their hair.


via The Macro Strategist


Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s