**[investwise]** BCA-Euro Area Problems Intractable, Indefensible, Incurable!

 

BCA If You Get Routed In Europe And US, Will You Not Exit Asian Equities? The collapse of Southern Europe will push Germany, France and Northern Europe into the Mediterranean. On a larger plane, one of these days markets will open gap-down so dramatically that Long Only Equity investors will never fail to forget May 6, the day the Dow fell 1000 points in 10 minutes. For the time being, all roads lead to one conclusion: continue lightening up on exposure to euro area banks but expect a big near-term bounce in markets overall. The markets sent a chilling and unequivocal message this past week. They will not relax until the aid to Greece has surmounted the political obstacles and has actually been delivered. And there still remains a major question mark over longer term solvency. The narrative was further complicated by a downgrade in Greece's debt rating to junk, Portugal's to A-, and most significantly Spain's diminution to anSpain is in a debt trap, with debt to GDP ratios of 90% and 67.5% respectively, there are major concerns about the ability of either economy to grow its way out of the problems. Spain's households are spent after acting as the consumer of last resort for the euro zone between 2003 and 2007, its secondary banking system is severely stressed and productivity is languishing. Portugal's comparative advantage is unclear beyond tourism and exports of pulp and cork and its 1% per annum growth record over the last decade has been abysmal. Spain's resilience will be severely tested in July when €16 billion of bonds fall due, and all eyes will be on Portuguese Prime Minister Socrates' ability to stare down political unrest in the face of unpopular economic medicine for the second time in the last ten years. Unfortunately, a successful outcome even in the short term will come down to the politicians. Have IMF head Dominic Strauss Kahn and ECB Governor Jean Claude Trichet done enough to convince the German Bundestag that not aiding Greece will severely damage Germany's economic interests? And have the Greeks got what it takes to see through hugely unpopular budget cuts? These and other equally problematic political questions will dot the investment landscape for years to come. AA designation by S&P. Safe Harbor Statement: Some forward looking statements on projections, estimates, expectations & outlook are included to enable a better comprehension of the Company prospects. Actual results may, however, differ materially from those stated on account of factors such as changes in government regulations, tax regimes, economic developments within India and the countries within which the Company conducts its business, exchange rate and interest rate movements, impact of competing products and their pricing, product demand and supply constraints.   Nothing in this article is, or should be construed as, investment advice.

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