"The euro crisis is about to be resolved. There is now a determination to make up the missing element, which is a common fiscal policy or a common treasury. But I'm afraid that the structure that is being put together will also be flawed. It is clearly visible that it will create problems in the years to come because the euro, which was supposed to bring about convergence has actually created a divergence within the performances of the various countries.
The structure that is currently being discussed will cast this divergence in stone. That will have very serious consequences because you are creating a two-speed Europe between surplus countries surging ahead and indebted countries sinking under the weight of their debt.
In the coming two years you will see something of a replay of the euro crisis in the United States in connection with the states and local governments."
George Soros
With the current Japanese tragedy heightening risk aversion in the markets, there would be little chance that ECB will raise rates in the short run. Spain the least exposed to the debt problems in the PIGS category. At govt yield of 4.2%, they seem to be able to make it out of the crisis in whole.
ReplyDeleteEuropean outlook:Intrinsic Value