The Flinchum File
Thoughtful Economic Analysis and Existential Opinions

Nitpicking Good Guys

06/27/2012

It is time-well-spent for me to read the perspectives of other investment advisors, such as Goldman Sachs or Wells Fargo.  Locally, I enjoy reading the perspective of Palladium Registered Investment Advisors, whose newsletter is aptly named Palladium Perspectives.

Their summer issue makes the point that the European financial crisis is “the most over-examined debacle in financial history . . . which, by the way, has not occurred despite the months-long, 24-7 prattle of talking heads.”  They go on to a comparison of the gloom during the Great Depression and finally conclude that “Uncertainty has been and remains the issue.”

I agree that uncertainty is the issue, and I agree that the European financial crisis is over-examined, but not without reason.  It is a financial crisis, not a recession, and is easily transmitted in the globalized world of finance.  It has the possibility of being a “black swan” event or a sudden, disastrous event!  It is THE major cause of the uncertainty, even more so than the Fiscal Cliff, and it should not be trivialized.

While I disagree on how worrisome Europe might be, I do agree with their clear reminders that the world will not end, that stocks will out-perform bonds over the long-run, and that America still has many more advantages than politicians or pundits ever mention.

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