A Particularly Gloomy Look (The Pragmatic Capitalist)

THE “SMARTEST MAN IN EUROPE” IS VERY GLOOMY

12 JULY 2011 BY CULLEN ROCHE 43 COMMENTS

The following is an excerpt from a piece by Byron Wien posted on the Blackstone website last week. Wien has an unnamed friend in Europe who he refers to as “the smartest man in Europe”. He meets with him on occasion to pick his brain. His most recent outlook was particularly gloomy:

“It’s very hard to make money in stocks. Earnings growth is the key to equity market performance and with the heavy debt burdens of the developed economies of the United States and Europe, growth is likely to be slow….

Ironically, the big beneficiary of the financial problems in the weaker European countries has been Germany….

Over the next few years the banks in the stronger countries – Germany, France and the Netherlands – will try to become less exposed to the sovereign debt of the weaker countries. In a few years, if the situation has not improved, the European Union may have to be restructured….

Right now my portfolio is invested in gold and Swiss francs….

The central bankers throughout the world have lost touch with reality….

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