What European Union?

The EU needs to unify its stock markets, create a common banking system, and issue European bonds that can absorb all the fractured debt.

By MSN Money Partner Jun 5, 2012 11:53AM

By Sheldon Liber


Ever since the creation of the European Economic Community and the European Union, there hasn't been much sense of community or union.


The adoption of the euro helped. However, it has been a major flaw that countries can't print currency but everyone can issue debt -- and they did, as much as they wanted. The biggest problem in Europe is the people are not united and this keeps the markets separate, including their stock markets: the DAX, FTSE, CAC, and Athens Exchange to name a few.

Consider how the markets and the people in the United States respond to both good and bad news. If investors learn that General Motors (GM), Ford (F) and Chrysler (FIAT) beat earnings estimates, the stock market moves up in celebration. Now envision what would happen if German automakers BMW, Mercedes and Volkswagen beat earnings estimates. The stock market would also leap up -- in Germany. The French might be jealous, the Greeks would feel oppressed and the Italians would not let it interrupt their vacation plans. The Germans prosperity is theirs alone.

When Americans witnessed the devastation of Hurricane Katrina, they did not leave the people of New Orleans to fend for themselves. Individual citizens and private groups and companies immediately started loading up trucks with food, water and supplies and drove off to help. It was a national effort toward healing. Would the people of any country in Europe respond in the same way? Government agencies and organizations might, but would the people? I'm not so sure.

The EU needs desperately to unify its stock markets, create a common banking system, and issue European bonds that can absorb all of the fractured debt. Fractured, as in separate and broken. If they do not stand together how will they stand at all?

Look for "Safe places to hide" in an upcoming feature. 


Sheldon D. Liber is the CEO/CIO of Chasing Value Asset Management. He recommends consulting an adviser before making financial decisions. Follow him on Twitter: @chasingvalue. 
Tags: FFIATYgm
9Comments
Jun 5, 2012 3:48PM
avatar
Totally incomprehensible concept of a United States of Europe where they all look after their sister states as if they were there own - it will never happen. The southern countries are radically different in work ethic and history than the northern European countries. This is why the European Union is destined to fail. Good try while it lasted.    
Jun 5, 2012 2:57PM
avatar

"The EU needs to unify its stock markets, create a common banking system, and issue European bonds that can absorb all the fractured debt. Now envision what would happen if German automakers BMW, Mercedes and Volkswagen beat earnings estimates. The stock market would also leap up -- in Germany. The French might be jealous, the Greeks would feel oppressed and the Italians would not let it interrupt their vacation plans. The Germans prosperity is theirs alone."

 

The above was written by a true socialist. The Germans should be the only ones that benefit from their successes and the Greeks, Italians and Spaniards should suffer for their excesses. Next they're going to be calling for a a unified global order so they don't lose money when they make bets on the wrong sovereign debt while be tempted by high returns. Nobody is too big to fail.
 

Jun 5, 2012 7:31PM
avatar
Comparing how the US and the EU's unions worked is like comparing apples and oranges. It was easier for the US to form its union because for the most part was founded by Ex-pats from England and France and for the most part same culture across the board. Living abroad however I found Europe it would be much more difficult since you cross the border between say Germany and France the cultures and customs and mentalities are as different as day and night. Could the Europeans one day come together to make a single union government? perhaps but not with this generation maybe the next generation or the one after that. Remember Just over a decade ago you had Eastern Europe and Western Europe, East/West Germany and Berlin and as much as most don't want to admit it there is still anomisity to a certain degree between east and west peoples. If you read US history It did not start out to be the Union it is today and if you really read it makes you wander how the US even got off the ground to begin with but some how we pulled it off but it was not done in a generation took a couple to really get going and Europe will be the same way. If Europe can get past this financial diabolical it will thrive and become more unified and stronger...if not however then the EU will become another foot note in history. But I have a feeling this time now no matter what happens will be Europe's biggest test of all time. Will it survive and thrive? Or will it succumb to its divisions and financial problems and fall? We shall see...
Jun 5, 2012 12:11PM
avatar
European countries should agree to become states and make Europe the country.  Having only one common thread (Euro) is not enough to make them all work together.  So, some will be good neighbors and some will behave awful.
Jun 5, 2012 3:40PM
avatar

The European countries are already "States" by definition. 

 

In fact the 50 "States" in the United States of America were originally established as separate countries bound by an agreement (the Constitution) with a limited Federal government.  It took the Civil War to bring about the strong Federal Government and basically make the individual States virtually obsolete.

 

We are seeing an economic setup in Europe right now that is similar to the economic disparity that existed between the industrialized financial centers of the North and the less densely populated, agricultural centers in the South during that time.  Will the outcome be different this time?

Jun 5, 2012 5:58PM
avatar
I think the EU is structured just like old USA. They have welfare states just like our southern states. They can not print money just like our states can not but issue debit. EU is better because in order to correct their federal system they do not have to fight confederates. We had too. Their problem is England. They need the Brits out of the EU all together. Then they should dismantle NATO and form their own common defence. Then we have a real EU to be reconed with.
Report
Please help us to maintain a healthy and vibrant community by reporting any illegal or inappropriate behavior. If you believe a message violates theCode of Conductplease use this form to notify the moderators. They will investigate your report and take appropriate action. If necessary, they report all illegal activity to the proper authorities.
Categories
100 character limit
Are you sure you want to delete this comment?

DATA PROVIDERS

Copyright © 2014 Microsoft. All rights reserved.

Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.

STOCK SCOUTER

StockScouter rates stocks from 1 to 10, with 10 being the best, using a system of advanced mathematics to determine a stock's expected risk and return. Ratings are displayed on a bell curve, meaning there will be fewer ratings of 1 and 10 and far more of 4 through 7.

112
112 rated 1
270
270 rated 2
444
444 rated 3
693
693 rated 4
637
637 rated 5
692
692 rated 6
615
615 rated 7
498
498 rated 8
265
265 rated 9
126
126 rated 10
12345678910

Top Picks

SYMBOLNAMERATING
TAT&T Inc9
VZVERIZON COMMUNICATIONS9
EXCEXELON CORPORATION8
AAPLAPPLE Inc10
ATVIACTIVISION BLIZZARD Inc10
More

VIDEO ON MSN MONEY

ABOUT

Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.

Contributors include professional investors and journalists affiliated with MSN Money.

Follow us on Twitter @topstocksmsn.