while everyone's worried about the Atlantic, disaster threatens our own front door. It's about the euro. When Germany agreed to monetary union, the rules were clearly defined. No Member State is liable for the liabilities of the other. The central bank is prohibited from directly acquiring government bonds. And they all commit themselves to respecting deficit limits.

In five years of Eurorettung these rules were ruthlessly broken. 15 out of 19 countries took advantage of the ECB's zero interest rate policy to incur even more debt. Because they could afford it. And the central bank created a kind of liability union through the back door with its bond purchase programme;

It is an irony of history that it is precisely in Italy and France - the core countries of the euro area, which have hardly implemented any reforms - that nationalists and opponents of the euro are increasingly gaining in popularity. What answer would Europe actually have to a threat with Frexit or Italexit? More concessions on debt community? At the end of March 2017 the British will officially declare their intention to leave the EU. The difficult negotiations that would then be pending anyway would be "the" opportunity for a new start in Europe. There must be opportunities to leave monetary union and re-enter it after devaluation. The rules of the Maastricht Treaty must be enforced. ECB policy needs limits. Those are, admittedly, big issues. In view of the many elections in Europe, they will probably be on the table in the coming months. And shake the capital markets over and over again.

For equity investors, the euro is still hardly an issue at the moment. They hope that the comeback of fiscal policy in the US will give them a positive boost - more growth, higher earnings, perhaps a little more inflation. This will be interesting: the legendary US investor Warren Buffett once said that interest rates have the same significance for the prices of economic goods as gravity has for the apple on the tree. In the weightlessness of recent years, real estate prices have therefore risen many times faster than rents. Share prices climbed much faster than corporate earnings. What happens when gravity returns with inflation in the future? The only certainty in 2017 is likely to be uncertainty.

Sincerely,

Klaus Meitinger
Chief Editor

Moritz Eckes
Publisher