The Absolute Return Letter November 2011: Ignore Egan-Jones at Your Peril

Updated on

The ink on the Greek rescue agreement had barely dried before atriumphant, nappy-changing French President with an ego to match theheels of his shoes went on French television to portray himself as thesaviour of Europe. “We find ourselves at the start of a new world” , he jubilantly proclaimed.

Meanwhile, here in the UK, an unconvinced British press did nothesitate to denounce the Brussels agreement as hopelessly inadequate,and the euro sceptics in Parliament, of which there are many, had a fieldday. The point so sadly missed by many in this country, though, is that we are all in this boat together. As a Danish proverb says, you shouldn’t saw off the branch you are sitting on!

Perhaps more surprising, and considering the euro project has been saved (for now), the German reaction wasn’t exactly exultant. Here is what some leading German newspapers had to say:

Frankfurter Allgemeine Zeitung: “Whoever believes that the crisis has now passed its zenith is terribly mistaken. It is unlikely that the’firewall’ against market volatility that European leaders had hoped for has now been put in place.”

Die Tageszeitung: “Above all, €1 trillion simply won’t cut it, because not even €2 trillion would be enough. The crisis now has a life of its ownand has eaten its way into the heart of the euro zone.”

Die Welt: “But what does the euro crisis now mean for Europe? It will change the union down to its very foundation. Relations among themember states are likely to become more difficult and battles over resources more intense.”

Kenneth Rogoff, Harvard professor and co-author of  This Time Is Different, also chipped in, suggesting that the package agreed in theearly hours of Thursday, 27 October, will only buy the politicalleadership in Europe a few months.

Even George Soros was damning in his assessment. Soros is a European with a capital E which is why his words carry so much weight. This is what he had to say about the rescue package:

“Given the magnitude of the crisis it is again too little too late. It will bring relief partly because the markets were so obsessed by the lack of leadership. The mere fact that something was achieved was a major relief and it will be good for any time from one day to three months.”

Full document embedded below:

The Absolute Return Letter 1111(1)

Leave a Comment

Signup to ValueWalk!

Get the latest posts on what's happening in the hedge fund and investing world sent straight to your inbox! 
This is information you won't get anywhere else!