In an interview with CNBC, European Central Bank president Jean-Claude Trichet said that the ECB is not worried about the health of the Eurozone as a whole because it is in better shape than the U.S. or Japan.
Trichet told CNBC’s Silvia Wadwha "I am not concerned for the Eurosystem as a whole… if I take the Eurosystem as a whole we are in a much better situation… than the US and Japan or other big economies."
Despite the one teeny tiny detail that the Eurozone itself is not a country but instead a group of countries that simply share a currency, Trichet says that the Eurosystem’s budget deficit is better than that seen in the U.S. or Japan.
According to CNBC, the Eurozone’s overall budget deficit will be in the vicinity of 4.5% of GDP in 2011, which compares favorably to the 10% level seen in the U.S. and Japan.
Perhaps realizing that he may be taking the point a little too far; Trichet added that there were indeed “problems in individual countries” and that these countries will need to rein in their budget deficits. He added, “The problem is that some countries were not very well managed.”
While Trichet remains steadfast in his belief that the Eurozone “experiment” is “just fine, thank you,” there are any number of analysts who fear that developing trouble in countries such as Italy and Spain could bring the Euro – if not the global banking system – to its knees.
From an investment standpoint, it looks to be clear from the charts below that investors still favor the U.S. over the Eurozone – regardless of Mr. Trichet’s or Mr. Berlusconi’s recent comments.
iShares EU - Last 12 Month
S&P 500 - Last 12 Month
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