Minyanville Round Table: Social, Political, Economic Polarization Threatening Recovery
Kevin Depew, Peter Atwater, Conor Sen, and Professor Pinch discuss the European crisis and what it means for the coming years.
Peter Atwater kicked it off Thursday morning:
I am gravely concerned about Europe.
From a safety and soundness perspective what the ECB is doing is horrendous. They are providing solvency at this point, not just liquidity. And the degree to which margin requirements have been stretched is very troubling. At the same time, the actions which Germany is now taking suggest that it is every man for himself. And I am afraid that from here on out the lifeguards will only provide assistance post-, not pre-default.
Over the past few weeks I have grown more and more pessimistic. I still think the economy is in much better shape than people think, and equity valuations until the past week have been compelling. But I no longer have any confidence that the people through their elected officials are going to let things continue as they are.
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I completely understand. You have a real economy that is showing potential, but a macro construct that is just plain unhealthy. In Europe's case the situation is worse because the gang that can't shoot is playing with dynamite.
Peter, I agree. The ECB's course of action is reckless and idiotic. "Trash for cash" is not a strategy that will solve this mess. But, everyone there is afraid of letting go of the dream: both the euro & the EU. And they won't let go of it until there's no other choice. I have no feel for how long they'll try to hold on to it, but they will.
This is interesting, and a great way to put it: "I completely understand. You have a real economy that is showing potential, but a macro construct that is just plain unhealthy." The uncertainty is terrible, but we will eventually repair the macro construct... or not. That, in my opinion, is the ultimate bull versus bear divide. Bulls believe we will inevitably repair the macro construct and emerge with something new, while bears believe we will not.
I don't know if I need to add it, based on what I've written on Minyanville, but will: I'm in the bull camp and believe that we reconstruct this and rework it into something positive and unforeseen. The white swan. There will be much noise in the meantime, and the noise will be intense, but to me, if you can find quality companies that you can imagine might be around in 2025, at compelling valuations, and I think you can (See Minyanville commentary on large cap tech stocks such as Microsoft (MSFT), Cisco (CSCO), Intel (INTC), Google (GOOG) and Apple (AAPL)), then this is one of the greatest long-term buying opportunities of individual equities in a lifetime.
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