Greece and the Rise of Nationalism in Europe and East vs West

I am not particularly shocked or worried about the cancelled European finance ministers meeting. I still think this bailout gets done because Europe and the markets are not prepared for a disorderly default and politicians cannot risk the fallout one would create. Where my concern lies is the medium to longer-term.

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Here’s the clip from yesterday afternoon’s Capital Account with Lauren Lyster. I am on as a guest in the first part, talking about Europe. If you have been reading Credit Writedowns for the past few months, then nothing I said here was really news.

I am not particularly shocked or worried about the cancelled European finance ministers meeting. I still think this bailout gets done because Europe and the markets are not prepared for a disorderly default and politicians cannot risk the fallout one would create. Where my concern lies is the medium to longer-term. The austerity approach has created a depression in the periphery, with Greece being the hardest hit. Eventually this will lead to political extremism and nationalism.

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In the UK, the Chancellor got the wrong message from the downgrade by Moody’s. He will re-double austerity efforts as a result and that will weaken the economy but be bullish for government bonds.

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