The chief economist of Aladdin Capital Management, Constance Hunter, said that the European economy could recover more quickly if a cathartic event forced policy makers to make tough decisions sooner than later.
Without a jolt to the system, she said, current fiscal and monetary policies risk prolonging Europe's economic woes. She gave her assessment in a conversation with the FINforums chairman, John Seigenthaler, in advance of her appearance at the FINforums Annual Hedge Fund Summit on September 14, 2011 at the Princeton Club in New York City.
In her discussion with Seigenthaler, Hunter identified three events that could force dramatic change. Potentially most impactful would be bank failures, as the European Central Bank has no mechanism similar to that of America for taking over failed financial institutions. The second event could be delivered via a German electorate that votes for politicians who opposed aiding the European Union's economically beleaguered countries. The reality is that decisions may not be made in the European Commission's offices in Brussels, but on the streets of Munich and Bonn, Hunter said.
The third event could occur if European Central Bank members take a more hawkish approach and decline to extend credit by purchasing country bonds. The paradox is that Europe needs growth at a time when it is imposing austerity measures that are hampering growth. The problem is that current policies could allow Europe to muddle through in the same way that Japan has been able to muddle through, she said.
Hunter will join asset managers, geopolitical analysts, and institutional investors at the conference who will discuss subjects like the global outlook for the fourth quarter and beyond, the best investment strategies for finding alpha, techniques for successful marketing and capital raising, regulatory and compliance updates, and the rise of alternative hedge fund structures