Black Swan Capital - REACTION

‘The tale of two economies’ continues to progress.  Germany doing just fine (fresh high on IFO this morning), France okay, others getting body slammed ... Ireland downgraded, UK consumer sentiment awful, belief Spain next in line for trouble ... and Italy isn’t exactly looking like Goldilocks.  


We got another band aide fix from the eurozone leaders pushed out to 2013.  Euro reacted okay considering, but plenty of time and thinking left to do.  The ‘tale of two economies’ stuff we think will continue to cause tension across Europe.  Euro optimists, we think, will soon come around to the reality that an increasing bailout 
fund/mechanism isn’t going to do the trick in and of itself.  Real growth is ultimately the only savior here.  If the periphery doesn’t get it, and the numbers suggests the periphery is stagnating near zero growth and on the way into negative territory, the so-called bailout fund will be woefully inadequate to keep the game alive. 

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