David McWilliams, one of Ireland's leading economic commentators, spoke during the lunchtime keynote Thursday at the 2012 Strategic Investment Conference, jointly hosted by the alternative investment firm Altegris and Millennium Wave Investments in Carlsbad, Calif.
The broadcaster and bestselling author began his discussion of what ails Europe by telling the audience, "You know it's a strange time in Europe when the Pope is German and the head of the ECB is Italian."
McWilliams (left), who says he was the first economist to see that the Irish boom was nothing more than a credit bubble and was one of the very few to accurately predict it would all end in a monumental crash, said his perspective is fueled by having lived through a civil war, four different currencies and two financial meltdowns.
"The key to what's happening in Europe right now is Germany," he said. "It reminds me of the four guys in 'The Hangover.' Germany wakes up and realizes they've been sleeping with the Greeks, and the Italians realize they've been drinking with the Irish."
Ireland and Greece borrowed too much, he added, and were surprised when Germany came knocking and asked for it back.
"Jack Welch once told me that in any crisis, you must first define your reality not as you would like, but as it is. You then do something about it. Once you define the problem and do something about it, you realize it's not half as difficult or traumatic as you initially thought."
The question for today, he said, is whether or not Germany has defined its reality.
"Europe as a whole traditionally has not," McWilliams continued. "In each of the last four or five years their forecast has been revised downward. Each year they say, 'What do we do about [the crisis].' The answer always seems to be, 'the same as we did the year before.'"
The problem with Greece, he explained, is not that the country defaulted, but that it didn't default enough, meaning it will do so again.
