I have a bad habit of regularly studying a wide variety of boring documents ranging from central bank reports to obscure economic indicators. Lately, it has been difficult to find anything positive about Europe. Since media is full of negative information about Europe, there is no point in regurgitating the information easily available elsewhere.

Baron Rothschild, an 18th century British financier made a fortune by buying during the panic related to the Waterloo battle against Napoleon. “The time to buy is when there’s blood in the streets,’ Rothschild is believed to have said. There is no blood in the streets of Europe, but there is blood in European financial markets.

To understand why I am dipping my toe into Europe, let us start out with how we got here.

Europe is no United States

The concept of euro was sold with the slogan: ‘œOne Market, One Money.’ The argument was made that since a single currency works in the United States, a single currency should work in Europe.

Europe is no United States. In the United States, majority of taxes are paid to the federal government and not to individual states. In Europe, taxes are almost exclusively paid to nation states and not to a central authority.

Most states in the United States have to balance their budgets as a requirement of their constitutions. There are no such requirements in the constitutions of most nation states of Europe.

Current account disparity

The current account is a term in economics that….Read More at MarketWatch..