The pending three-day rally that has seen European and US markets soar smacks of a short-covering squeeze, notes UBS' Art Cashin, as some of the biggest percentage gains came in the most heavily shorted stocks. While this is hardly surprising in this increasingly schizophrenic economy market, it is the long-term consistency and prophetic consternation of Margaret Thatcher's view of the Euro as "perhaps the greatest folly of the modern era" that sits uncomfortably with the Merkel comment-driven rally of this morning (for now).
UBS' Art Cashin: The Other Woman - Part II - My mention of Margaret Thatcher’s fears and concerns about the Euro brought two enjoyable results. First, it prompted some friends to pass along several articles on the topic - mostly from the UK Telegraph. Second, it allowed for a rather extended discussion of Thatcher’s foresight with my friend, Carl Quintanilla, in the last hour Tuesday of “Squawk on the Street”.
Thatcher called the concept of the Euro - “perhaps the greatest folly of the modern era”. As Peter Osborne noted in the Telegraph back in 2010:
Today, Margaret Thatcher’s autobiography, first published in 1993, reads like a prophecy. It shows how deeply and with what extraordinary wisdom she had examined Delors’ proposals for the single currency. Her overriding objection was not ill-considered or xenophobic, as subsequent critics have repeatedly claimed.
They were economic. Right back in 1990, Mrs. Thatcher foresaw with painful clarity the devastation it was bound to cause. Her autobiography records how she warned John Major, her euro-friendly chancellor of the exchequer, that the single currency could not accommodate both industrial powerhouses such as Germany and smaller countries such as Greece. Germany, forecast Thatcher, would be phobic about inflation, while the euro would prove fatal to the poorer countries because it would “devastate their inefficient economies”.
It is as if, all those years ago, the British prime minister possessed a crystal ball that enabled her to foresee the catastrophic events of the past year or so in Ireland, Greece and Portugal. Indeed, it is one of the tragedies of European history that the world chose not to believe her.
Thatcher’s warnings read like headlines on page 1 today. Leaders aren’t always listened to. How unfortunate.