The End of our Dreams?

I met recently with a senior member of a major european bank who has to deal with his regulators in numerous jurisdictions. As is often the case in my meetings our discussions were wide-ranging. In this case we focused on the precarious state of the Euro in general and Spain's position as the next line in the sand. He was not optimistic and didn't mince his words. His opinion hung between two main pillars-the pure bloody mindedness of the national regulators and his conviction that the experiment was doomed from the start. His recent experiences with the regulators demonstrated that regardless of the the protestations of their national politicians that the Euro was sacrosanct and that they would do whatever necessary to protect it the fact of the matter was that behind closed doors their interest was always to protect their taxpayers above else, and defintetly at the expense of other the Euro nations. This was a perfect backdrop as to why he felt the euro experiment was doomed to failure. Monetary union without fiscal and political union was never going to work. And the only way to fiscal and political union would be to surrender sovereignty. What politician was going to run let alone win on that platform-unless he had 100 armored divisions at his back. Unfortunately the only thing constructive from the conversation was that despite his prediction that after the Arab Spring we would have the European Fall-a complete social disintegration brought about by austerity programs-it would not result in a continental war. No, he foresaw a slow collapse of Euro, perhaps of the European Union, dragging on for the next couply of years. Sell bank shares. Sell the periphery. And I guess buy Germany.