Greece is toast–they just have not declared it officially burned. Portugal is so small it could be bought by a major US PE firm and just be another portfolio hold, although a poor investment. Ireland destroyed its banking system and will take many years to recover any semblance of its great growth years. Spain has well over 20% unemployment, but when you talk to Spaniards they say life is good, the restaurants are packed and we are all on unemployment and healthcare is all paid for so why worry. Italy has had more governments since WWII than anyone can count, and the current prime minister makes Bill Clinton and Monica look like a minor peccadillo. There is no way to know what shape the European banks are really in since they seem to have phony stress tests and nobody is really sure how bad the sovereign exposure is. Possibly France will be OK but who really knows for sure when Greece finally defaults.

So one wonders why so many US funds want to go to Europe to invest. It is clear there are assets for sale- you can buy almost anything in Greece for a deep discount-but is it worth the risk reward. There is no question the PIIGS are in deep trouble for years to come, and there are no good answers. The world economy and the US are not going to suddenly revive and pull Europe along as has occurred in the past. China needs to invest in Asia and Africa to secure its markets and raw materials, and to get geopolitical advantage now that the US is led by a weak president who has no idea how to cope with Chinese expansion. They are not going to be investing a lot in the Middle East either until that mess sorts out.

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