Photo: Bloomberg TV
The Northern Europeans are concealing the inevitable, writes Jefferies economist David Zervos in a note out this morning, but don’t be surprised.Explaining investors’ realisation recently that all is not well in Europe, Zervos argues that eventually Northern Europeans will have to bear the burden of the profligate periphery and their own poor investments.
Should they continue to impose austerity and force the South to do their bidding, countries like Italy and Spain will eventually default and leave the euro. Otherwise, the euro will have to be devalued as a result of inflationary policy by the ECB.
One day, the truth will be revealed and there will be some very unhappy pensioners in Rotterdam, Vienna and Dusseldorf. Sadly, after all their hard work, these folks still won’t be able to afford that beautiful Tuscan villa! And of course, living in that villa will be a happy Italian couple who could turn it into a well priced B&B once the Lira is reintroduced or once Mario turns the Euro into a Lira! Either way it works just fine for the happy Italians and the rest of the south!
Right now, Northern Europeans just continue to hide the inevitable: their wealth will be destroyed no matter what.