A Game of Thrones: Greece and the European Equities Decline

The Greek case shows that Europe has a laggard vision

Once again, the Greek government sold the Greek people. Paradoxically, it’s a defeat for Greece and for Europe. But above all, it’s a bad service to democracy. It seems like it doesn’t matter which side is governing a given country, the outcome will always be the one chosen in Brussels.

The old aristocracy reigns in Europe, they’ve left the common people have a taste of the purchasing power of the Euro. But now common folks are enslaved, bended by the very same Euro. Europe is building a laggard society to serve the old aristocracy.

My point focuses on the fact that the old grocery store math doesn’t work anymore. Economic systems resemble biology. They grow, evolve, adapt and mutate which makes them unpredictable. That is why the gold standard failed and any system that it’s based on a zero-sum philosophy will fail. However, the Neo-classic economy philosophy that rules Europe just can’t deal with this fact. They will keep screaming that the Sun circles the earth. Obviously, this won’t do us any good.

Without a vision of progress, Europe risks to repeat the errors of the past

They just can’t let go. It’s better to die in a world that they’ve always known than to let others pave the way to the future.

I once wrote these same words to describe the end of the Roman Republic. Look how closely this resembles to our reality. It’s not that farfetched to believe that the Euro zone might share the same destiny as the old Roman Republic.

But above all, the Greek government did a bad service to democracy. It will take a long time before any country will have the courage to empower an anti-establishment party. However, we have learned one important lesson: no one can try to negotiate with Europe holding a mere bluff. The next rogue government that tries to pull a trick against the EU must have an executable plan to leave the Euro (meaning Foreign Currency Reserves). Without that, the ECB will always pick the winner. And that is why I believe the Euro zone has started its decline. It might pass a long time before anyone tries to defy the EU, but when they do, they will be ready to break it. And by the Murphy’s Law, if something bad can happen, it will happen – it just didn’t happen this time.

The negative vision on the European society is a bad sign for European equities

Going forward, there can’t be much hope in any kind of long term outperformance by the European equity markets. The European retrograde elites are running the European companies based on a laggard set of management principles. This explains why, for example, Finland now a troubled country, lost Nokia (NOK) and Europe lost its jewel of the crown in the tech sector. Obviously, the old aristocrats don’t know much about smartphones and mundane stuff like that so in their perspective it was probably better to just get rid of it.

The United States with all its defects (and congress deadlocks) has by far a much better set of principles ruling the country. This is the main reason why, after I’ve started this blog to identify undervalued companies in Europe, I have been mostly identifying opportunities in the US. Europe is in decline and usually there aren’t that many opportunities in a context of slow death.

Going forward, European Jewels will just be a name. I’ll keep it but I could just call it Investment Jewels. It would probably do more justice to the blog, since I believe most of the opportunities are in the US (SPY), not in the decadent Europe.


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