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European Problems Can’t Be Ignored Anymore: Jim Bianco


It seems like only "yester-month" when worries about a recession in Europe, made worse by mandated austerity cuts, were as widely ignored as last year's fashion. And yet, like magic, bell bottoms and Euro-fears just came back in style.

Who knew?

Jim Bianco did, which is why the president of Bianco Research offers a proverbial European "told ya so" in the attached video clip.

"As long as we continue to have one currency and 17 different agendas, this European crisis will remain a constant," Bianco says. The fact that a half-dozen weak European data points all cropped up at the same time is more a matter of coincidence than it is reflective of actual change. Bianco is of the mind that all we were ever doing is ignoring reality and pretending the "ugly little accident" wasn't actually there.

Politicians and central bankers point to the success of the ultra-cheap lending program for the region's banks, known as LTRO (long-term refinancing operation). Bianco sees it, at best, as little more than a stop-gap measure that tried to mask a larger, festering problem. The same problem, in fact, that brought protestors into the streets of Greece two years ago.

"We have a broken structure in Europe,'' he says. "More and more it looks like the 17 different countries are all interested in pursuing 17 different policies."

Of course the foremost threat to U.S. investors is if the European financial system was to seize up or collapse—something that would be far more damaging and costly to fix than the more mundane economic headwinds that are blowing from a region battling recession.

"Unfortunately it ebbs and it flows, but it never really goes away," Bianco say. "It'll blow hot; it'll blow cold—and now it's blowing hot again."