Matthew Lynn's London Eye Archives
Sept. 14, 2011, 12:00 a.m. EDT
Buying opportunity of a lifetime getting closer
Commentary: European stocks are about to get really cheap
By Matthew Lynn
LONDON (MarketWatch) — Even a few weeks ago, most analysts would have argued that the euro could struggle on for a few more years yet.
There was plenty of ammunition left in the armory. Moving to a common fiscal policy, and jointly issued eurobonds, would help out the weaker members of the single currency. A massive dose of quantitative easing from the European Central Bank would lift the continent out of depression. Sure, neither would be a long-term solution. But they would keep the show on the road.
This week, even a temporary fix looks increasingly unlikely. The German constitutional court has tied up its government in knots, making it hard to authorize more bailouts. The resignation of Juergen Stark from the ECB has made clear the Bundesbank’s opposition to printing money — and the ECB can’t do anything without the agreement of national central banks. And the Greek economy is disappearing down a deflationary plughole, proving that the rescue packages for the peripheral states are a complete failure.
The upshot? A disorderly, catastrophic collapse of the euro now seems close to inevitable. If that happens, just about every class of asset will get hammered — with the possible, but not inevitable, exception of gold.
But it will also open up one of the great buying opportunities of our lifetimes. European shares will be dirt cheap, even though many of them are in terrific fundamental shape.
What investors need to do is get themselves ready to strike when the moment is right.
The news from Europe just gets worse and worse with every day that passes. Even the most pessimistic observers of the euro — and I count myself among the gloomiest — generally reckoned it could hold together for a few years yet. After all, there were still moves that could be made to salvage the currency. It didn’t make much sense for it to be allowed to collapse without a fight.
Right now, however, that seems to be what is happening.
Must read: http://www.marketwatch.com/story/buying-opportunity-of-a-lifetime-getting-closer-2011-09-14
Gold is $1,581/oz today. When it hits $2,000, it will be up 26.5%. Let's see how long that takes. - De 3/11/2013 - ANSWER: 7 Years, 5 Months
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