19 March 2010
Citywire’s Deborah Hyde recently picked up on an interesting observation by Bank of America Merrill Lynch’s global equity strategist Michael Hartnett who said the Greek government debt crisis is beginning to look like a re-run of the Asian crisis of the the 1980s and that there has been little to suggest that policy heads have any way of improving credit risk in Greece or the other debt ridden European nations.
'In our view, it seems like the 1998 Asia crisis in reverse: "Thailand...Indonesia...Korea...Russia" has this time become "Iceland...Dubai...Greece…”
For now, he is advising investors steer clear of equities as he believes they will remain under pressure as long as the cost of insuring European government debt continues to widen.
MBMG’s portfolio co-advisor Scott Campbell predicted the crisis in Southern Europe well over a year ago and since then it’s increasingly become overview that France and particularly Germany will bailout the indebted Euro members. This will buy short term breathing space but with disastrous long term consequences.