The storm clouds are gathering in Europe. That’s a cliché, but it’s oh so accurate. The mess over there will become very evident this coming week. Unfortunately, we in America may well take a hit from the fallout.
First of all: France. Tomorrow, it virtually shuts down. The Eiffel Tower is closed. So is the Louvre, home of the Mona Lisa. And, six big soccer games have been postponed. The authorities are very worried about a repeat of the rioting that’s been hitting the country for weeks. The common man is in revolt: Europe’s unsustainable socialism just doesn't work.
On Tuesday, the Brits will vote on Prime Minister May's plan to leave the European Union. Odds are it goes down to defeat: political chaos. These are divorce proceedings. The marriage between Britain and Europe is coming to an end, and the financial fallout will not be pleasant.
And then there's Italy. They're in a bare knuckles fight with the rest of Europe over money. If the Brits crash out of the EU, so too could the Italians.
Let’s not forget Germany: Europe’s most important country, and its biggest economy. It is leaderless as Angela Merkel prepares to step down.
Add it all up, and we're looking at what's called existential risk, that is risk that the European Union will cease to exist, certainly in its present form. That’s the worst case possibility. Even if it doesn't get to that extreme, the financial markets in Europe will be all over the place.
Wall Street, our market, is unlikely to escape. I think Europe may have played a role in our recent volatility. After all the events of the coming week, I suspect we will be taking even more heat.
Watch out: European unity is a thing of the past. With socialism failing, the European Union will have a hard time surviving. It’s not going to be pretty … for them, or us!