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This is Europe’s Core Problem

Here's why “Europe” doesn’t really exist anymore.
Inquisitive investors can read Patrick’s clarion insights in the Macro Growth and Income Alert newsletter, where he infuses each issue with a macroeconomic outlook that points to the strongest sectors and best-in-class stocks. His fundamental perspective on stock selection coupled with Robert Ross’s quantitative rigor helps subscribers earn a consistent annual income using stocks and secured options. Before joining Mauldin Economics, Patrick was the managing editor at All Star Fund Trader, an award-winning advisory service near the top of Hulbert Financial Digest ratings for eight years. For over a decade, he was a contributor to Weiss Research, and he served as an equity portfolio manager for high net worth investors. Add to that his experience as a stock analyst, securities and commodities representative, compliance officer, risk manager, and even as a military intelligence officer—and you’ll understand why Patrick’s second-to-none research intuitions make him a trusted member of John Mauldin’s inner circle. Check out Patrick’s latest market take with a model portfolio designed for consistent income. Subscribe to Mauldin Economics’ Macro Growth and Income Alert newsletter.
Inquisitive investors can read Patrick’s clarion insights in the Macro Growth and Income Alert newsletter, where he infuses each issue with a macroeconomic outlook that points to the strongest sectors and best-in-class stocks. His fundamental perspective on stock selection coupled with Robert Ross’s quantitative rigor helps subscribers earn a consistent annual income using stocks and secured options. Before joining Mauldin Economics, Patrick was the managing editor at All Star Fund Trader, an award-winning advisory service near the top of Hulbert Financial Digest ratings for eight years. For over a decade, he was a contributor to Weiss Research, and he served as an equity portfolio manager for high net worth investors. Add to that his experience as a stock analyst, securities and commodities representative, compliance officer, risk manager, and even as a military intelligence officer—and you’ll understand why Patrick’s second-to-none research intuitions make him a trusted member of John Mauldin’s inner circle. Check out Patrick’s latest market take with a model portfolio designed for consistent income. Subscribe to Mauldin Economics’ Macro Growth and Income Alert newsletter.

The European Union’s founders envisioned an “ever-closer union” that gradually eliminated national distinctions. It didn’t happen, and geopolitical expert George Friedman of Geopolitical Futures says the opposite is now taking shape. “Europe” doesn’t really exist in any meaningful way.

No Commitment to Union

Between Italy’s banking crisis and Germany’s lagging export growth, Europe’s problems look mostly economic to some observers. Friedman disagrees. Speaking in a recent Mauldin Economics video about his 2017 forecast, he said the continent’s greatest challenges are political.

The mechanisms that might solve Europe’s economic problems function only if the member states are willing to help each other, even when it is to their own disadvantage. No EU country currently has that kind of commitment.

Collaboration Breakdown Is Europe’s Core Problem

Regarding Italy’s failing banks, Friedman says a European Central Bank bailout is the only possible solution, but no one likes that idea so it is going nowhere. A series of time-buying superficial repairs disguise this reality for now, but can’t do it forever.

This collaboration breakdown is the EU and Eurozone’s fundamental problem, according to Friedman, and no one has an answer for it.

EU Members Can Just Ignore Brussels

What’s next? Friedman says the EU is effectively already gone. Nations don’t even need to withdraw; they can simply ignore any edicts from Brussels they don’t like. Several nations already are on immigration and refugee policies.

Without an ability to sanction its member states, the European Union isn’t a union in any meaningful sense. Friedman’s only question is whether—and how long—it can continue to function at all.

Watch the full interview (3:24) below or on the Mauldin Economics site.

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