The steady drumbeat of negative news related to the European fiscal crisis could be signaling the beginning of the end of the euro. But that's not even the worst news, according to David Rosenberg, chief economist and strategist at Gluskin Sheff + Associates Inc.
"We could look back on this period as the inflection point of the breakup of the euro," he said Monday morning in Chicago while speaking on a panel at the 65th annual gathering of the CFA Institute. "From my perspective, the eurozone is already a failed experiment, and for the next few months, it will be a matter of how it will unravel."
Among the three panelist and a moderator, Mr. Rosenberg offered perhaps the darkest outlook for what will come out of the European fiscal crisis. "We're moving into a new realm in this European fiscal and financial crisis that is ushering in a period of change," he said. "The austerity hasn't even really begun, and already, it is having the door shut in its face."
Germany, widely viewed as the county in the best fiscal shape in the region, is becoming "increasingly isolated, which introduces a new geopolitical element," he said. And the United States "is still facing a very real fiscal cliff," he added.
When prompted, Mr. Rosenberg acknowledged that "the whole world sucks except for Canada."
The morning session, which was geared toward investment endgame scenarios for the world's debt crisis, also included perspectives from Anatole Kaletsky, chief economist at GaveKal Dragonomics, Barry Ritholtz, chief executive and director of equity research at FusionIQ, and moderator John Mauldin, president of Millennium Wave investments. Mr. Kaletsky also acknowledged a list of global financial challenges but said most people appear more worried about issues beyond their own borders.
"To me, it seems like there is an inversion to the cliché that the grass is always greener on the other side of the fence, because I think people are actually seeing the grass as browner on the other side of the fence," he said. "In the U.S., everybody is concerned about Europe; in China, everyone is worried about the United States; and from where I sit in Europe, I find it hard to lose any sleep over what's happening in Europe."
Regarding the steady flow of news related to the European debt crisis, Mr. Kaletsky explained: "The markets are not moved by events; they are moved by unexpected events. When Europe has been on the front page for more than a year, it has become very hard to move markets by what is happening there."
Mr. Kaletsky said he is most concerned about the U.S. bond market, describing it as the most dangerous asset class in the world right now.
Then there was Mr. Ritholtz, who said he tries not to spend too much time worrying about the future. "I'm concerned with identifying when the secular bear market ends and how to try and make informed decisions about what's happening today," he said. "But people like us tend to spend a lot of time worrying about the future, when we don't even understand what's happening today."
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