John Mauldin: And Then There Is Disaster C
I have
contended for some time that Europe is faced with two choices: Disaster A,
which is the break-up of the eurozone, or Disaster B, which is the creation of
a fiscal union, which keeps the euro more or less intact. Over the last few
months I have come to realize that there is indeed a third option, which now
looks increasingly possible. This is rather sad, as the third option is just an
even worse Disaster C. Each choice carries with it its own unique set of
problems, but the outcome of any of the choices will be that the people of
Europe face a serious recession, if not a depression. This will impact global
growth for more than a short time and, depending on the choice, could plunge
the world into a crisis as bad as or worse than the recent credit crisis. In
today’s letter we look at all three choices, meanwhile musing on how we arrived
at the bottom of such a deep hole, shovels flailing.
