Brexit, PIIGS and continual troubles in the European Union have made some investors scared. Sure, the Greek sovereign debt offers a big pay day – if they repay their loans. But, what if they run out of money? What does Highland Capital President James Dondero think? Is Europe slowing down?
“Is Europe Floundering?”
All empires fall when they can’t solve the next problem. The problem with the European Union is that they might have a dozen unresolved issues. Investment Professional George Soros suggested that the EU was on verge of collapse in 2016. This was before Brexit. So what does Investment Professional James Dondero think?
When Barrons asked James Dondero about Europe, he said the following: “We think Europe continues to slow down. I think European equities have played out over the last six months and have a few more months to run, at most. That pertains to high-risk debt also. You are seeing shrinking credit demand, and when the European Central Bank starts regulating the banks in the fourth quarter, there will be more pressure on lending. The strong currency is crimping manufacturing in Europe. The euro and Europe’s economy are vulnerable.” James Dondero does not mince words.
He has basically presented some of the key problems in the European Union: strong currency and banking insolvency. They can’t win. A strong euro destroys manufacturing and exports. The EU can’t grow with that scenario and unfortunately, many European nations are seeing declining GDPs.
“Can Europe Recover?”
Instead of investing in Europe, James Dondero chose South America – Argentina. The US dollar dominates the region, which makes it possible for Argentina and other nations to export cheap goods. This allows them to increase their growth rates. South America traditionally has higher interest rates than Europe also.
“Reasoning Mind = Mathematics + Computers”
Low income Dallas school children can benefit from one of James Dondero’s charities, called “Reasoning Mind.” This provides computers for math classes from pre-kindergarten through the seventh grade. Europe might be slowing down, but thanks to Jim Dondero, Dallas youth are speeding up.