New gloomy forecasts for the eurozone in 2011

While almost all the major investment houses and leading fund managers predict that equity markets in Europe will see better days, with... the average forecast for the average annual return of European markets between 13% and 15%, there are still some analysts and fund managers who insist on playing Cassandras and seeing a bleak future for the eurozone.

The last ones to join in the dance of these negative predictions are the majority of investors-users of the electronic platform for markets and market analysis, Seeking Alpha, who predict the collapse-bankruptcy of at least one country-member of the euro over the next three years, and point out that the greatest mistake made by European politicians and economic experts was their decision to create a permanent mechanism to support countries with fiscal problems, rather than opt for a "haircut", or even a smooth bankruptcy process.

In theι portfolio of arguments, these new Cassandras include a mini-history of what happened in 2010 in the eurozone, to conclude that the examples of Greece and Portugal showed that an economy collapses rapidly, at a rate that the politicians cannot keep up with. And they cite a table with the bond markets of “dangerous” countries to support their view that the next countries to follow Greece and Portugal with mathematical accuracy are Italy and Spain. They foresee rapid growth in the yields of Italian bonds, insisting that the Europeans will be forced to intervene to prevent collapse. But Italy and Spain have economies which are ten times larger than Greece and Portugal, so the cost of saving them is such that even the most prosperous economy of Germany will not be able to manage.

And they conclude that this is the end of the euro. So, they recommend (?!) investment abstention from the European markets until the collapse of the eurozone. And then, they say, the big investment opportunities in the Old World will emerge!