Europe: A Financial Train Wreck

According to Scott Minerd, CIO of the fixed-income firm Guggenheim Partners, Europe is a “train wreck” that is teetering on the “brink of a major financial crisis.” Now that’s optimistic news.

Insane Actions

Minerd explained that Europe is acting in a way that many would define as insanity – doing the same thing over and over again and expecting different results.

As Minerd said,

“They keep throwing more and more liquidity at it thinking it’s going to get better and it’s not.”

He said that the main problem that Europe has is not a liquidity problem but a structural one.

Running from the Euro

Minerd explained that he thinks that people will walk away from the euro unless the EU finds a way to throw weak countries out of the mix. Obviously, however, he acknowledges that “I don’t see a mechanism to do that.”

Turning to the US

Minerd’s prediction is that, as the money moves out of Europe and looks for a safe place to go, it will turn to the United States and to the U.S. Treasury. Minerd described the United States as the

The United States is “the least dirty shirt in the bag,” Minerd explained. As a result, he predicted that, “We have a very good chance of seeing equities up maybe another 10 percent [over the next six months] from where we are.”

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