The refugee problem is just getting started. Summer is here and the flow will grow again. Millions of Muslims flooding in with no cultural similarity, an extremist Islam group embedded in the refugees, and a very high birth rate, there will be growing political and security problems not just in France and Belgium, but throughout Europe. The Europeans do not fully understand what is required of its police and intelligence forces to cope with the terrorists embedded in the refugee flood. Merkel seems as oblivious as Obama. Over time the Muslims will be so numerous that the politics of many countries will be affected. Already we see huge increases in the voting for far right candidates against the immigration of Muslims. They came very close to winning in Austria this week. It is only a matter of time, and more terror attacks and the far right will prevail. The next several years are going to be politically messy.

There has been no real reform of labor laws, nor is there likely to be any in the near term. Italy is falling backward as are France and others. Europe is simply unable to compete effectively in today's competitive world. It is going to fall further and further behind and will be forced to raise taxes even more to sustain the failed left wing socialist entitlement programs. One would think the Democrats would look across the pond and see this instead of following Bernie.

Russia is becoming more and more aggressive as Merkel and Obama let Putin get away with his encroachments. If Trump is elected, as now seems very likely, maybe he will make a major shift to strength and stop Putin, but Merkel is not going along with that. Russian encroachment is an ongoing problem.

There is nothing to suggest the Euro is going to stage a material comeback. It may deteriorate as the Fed finally raises rates sometime this summer. So not only are you chasing currency hedges, but potentially a flat or possibly declining economy. The risk reward is simply not worth it.

For many months I have been stating that investing in Europe for long term assets was a bad risk reward play. There is simply too much political, geopolitical and financial risk. For the past few months it appeared investing in Europe was a smart move, but now the picture is much more clear, and it demonstrates by the flood of investor cash flowing rapidly out of Europe, that it is not where you want to be. It is likely that some asset purchases have worked out well, as they were probably done at a deep enough discount to work. However, overall, such investing makes no sense to me in longer term assets.

The banking system has serious problems and is much weaker than in the US. It is undergoing major management changes all across the continent, and they still have not cleaned up the mess from pre-2008. It will be several more years before the banking system undertakes the reforms and balance sheet cleansing that is needed. Without strong banking there cannot be sustained real economic growth. The ECB can only do so much, but it cannot force a solid rebound in the economy. At best it can try to prevent a recession.

Greece, Italy, Spain, are all still weak and while better, are far from having sustainable growth. While Germany continues to have decent economic results, but not good ones, it is not able to carry the continent.

The refugee problem is just getting started. Summer is here and the flow will grow again. Millions of Muslims flooding in with no cultural similarity, an extremist Islam group embedded in the refugees, and a very high birth rate, there will be growing political and security problems not just in France and Belgium, but throughout Europe. The Europeans do not fully understand what is required of its police and intelligence forces to cope with the terrorists embedded in the refugee flood. Merkel seems as oblivious as Obama. Over time the Muslims will be so numerous that the politics of many countries will be affected. Already we see huge increases in the voting for far right candidates against the immigration of Muslims. They came very close to winning in Austria this week. It is only a matter of time, and more terror attacks and the far right will prevail. The next several years are going to be politically messy.

There has been no real reform of labor laws, nor is there likely to be any in the near term. Italy is falling backward as are France and others. Europe is simply unable to compete effectively in today's competitive world. It is going to fall further and further behind and will be forced to raise taxes even more to sustain the failed left wing socialist entitlement programs. One would think the Democrats would look across the pond and see this instead of following Bernie.

Russia is becoming more and more aggressive as Merkel and Obama let Putin get away with his encroachments. If Trump is elected, as now seems very likely, maybe he will make a major shift to strength and stop Putin, but Merkel is not going along with that. Russian encroachment is an ongoing problem.

There is nothing to suggest the Euro is going to stage a material comeback. It may deteriorate as the Fed finally raises rates sometime this summer. So not only are you chasing currency hedges, but potentially a flat or possibly declining economy. The risk reward is simply not worth it.