The euro saga continued

Written 9th June. The euro crisis has abated a bit, if only for the time being. It is interesting that the epicentre of the global financial crisis has moved decisively from the US to Europe. Frankly, Europe has very little going for it. The crisis is ongoing as the authorities desperately paper over the cracks throwing good money after bad. The Greeks can always call the EC’s bluff on fiscal consolidation as the alternative for the EC is too awful to contemplate. Markets react by trashing the currency and who benefits – the Germans. The only things worth buying in Europe are German, or North European, exporters. And as for European banks; they cannot access capital markets, which in turn makes them even more reliant on holding government securities.

In contrast in the US, the Fed chairman said yesterday that the US economy is still improving, and the Beige book out today confirmed this.