The Eurozone debt crisis a decade ago was grim for all concerned. Even aside from the impact on people’s lives, every lurch lower in the euro felt a step towards the brink of an even greater calamity.
One striking feature of that period, though, was that it showed Europe does take decisive action when its markets — particularly its bonds and currency — are in freefall. In that narrow sense, investors in the region could really do with a flashback to that time now.
Despite political dysfunction in core EU members France and Germany and a generally sluggish economy, European stocks are not having a terrible year. The Euro Stoxx 600 index is up by a little over 5 per cent. Some domestic indices, including Germany’s Dax and Italy’s FTSE MIB, are comfortably in double figures.
The problem is that the US is pulling ahead at a fast enough pace that fund managers could be forgiven for wondering if Europe is worth the bother. The gap in valuations between American and European stocks (in favour of the US, if that was not obvious) is nothing new to this year, nor even to this decade. But it has yawned wider since the US made such a startling success of its tech industry.