by Michele Gillis, Staff Writer
A wealth advisor with Morgan Stanley Wealth Management, Peter O'Brien, presented the Commercial Real Estate Women of Jacksonville last month with an interactive look at the European Sovereign Debt Crisis.
O'Brien explained how the European Sovereign Debt Crisis is the shorthand term for the struggle that some countries in Europe are experiencing paying the debts that they have built up since the establishment of the Euro in 1999.
In particular, five of the region's countries — Greece, Portugal, Ireland, Italy, and Spain — have, to varying degrees, experienced severe problems arising from difficulties in their own economies as well as issues affecting Europe generally.
Although these five were seen as being the countries in immediate danger of a possible default, the crisis has far-reaching consequences that extend beyond their borders to the world as a whole.
O'Brien quoted Sir Mervyn King, the governor of the Bank of England, calling it "the most serious financial crisis at least since the 1930s, if not ever."
O'Brien explained how the crisis occurred due to a variety of issues including the near collapse of various banks in Europe, but most importantly the change to a common monetary unit known as a Euro in 1999.
In an effort to resolve the matter, the involved governments have found it necessary to restructure the debt of several countries and recapitalize many banks to avoid the crisis overwhelming the continent.
So, what will happen now?
"Europe is in a mess right now, but we all need Europe to get better as it is a major contributor to the world's economy," said O'Brien. "I am optimistic and subject to no extraordinary surprises, I think Europe will get through this.
"The next couple of years will be a bit tricky. It will be a painful process. This crisis will not be over at the end of the month or the end of the year. It will change shape over the next couple of years. The European economy is roughly the same size as the United States and we need Europe and Europe needs us."
O'Brien said major European Banks have been substantial lenders in the commercial real estate market in the United States and that activity is certainly going to be muted until their problems at home are resolved.