I’m sitting on the “Railjet,” the Austrian Budapest-Munich train. For me, rail is undeniably the most civilized medium for travel.  I lived in Europe from January 1990 to November 1997. I lived briefly in Budapest, then in Munich and finally in Oldenburg and Dusseldorf. Over the last 14 days I’ve met up with more than a dozen friends, many whom I have not seen in 15 years. We talked about a lot of things, some of which have relevance to investment decisions such as whether the recent media hysteria of Greece’s default and other European problems are well founded. Bottom line – they are not.)

Hungary: I caught up with Bob Cohen, a cultural anthropologian and musician from NYC fluent in 15 languages, in Prague where his Klezmer band (www.dinayekapelye.com) was performing. A resident in Budapest since 1987, Bob says the Hungarian government has returned to authoritarian style rule.

Steve Carlson, a southern Californian, in Budapest since ‘88 and editor of Budapest Weekly sees the Hungarian political culture as soft authoritarian, with public life highly politicized. For example, as school teacher, it matters what party you support. Everyone cheats on there taxes while the tax authorities and customs office have the right to simply grab money from your bank account.

Suffice it to say, Hungary has fallen short in embracing the progressive tax policies embraced by Estonia, Poland and even Slovakia (which now uses the Euro).  These examples are really text-book cases of how market’s work.

If there is any one reason I believe that the United States will maintain some of its “safe haven status” over the next 25 years, it’s because of our justice system’s maintenance of the inviolability of property rights.

Germany in the meanwhile benefits massively from the Euro common currency according to my friend Michael in Munich.  I was a bit surprised.  I’d figured that with the EU and IMF bailouts of Greece and impending disasters in Spain and elsewhere that Germans would be much less enthusiastic about the EU.  But German exports continue to achieve new all-time high, and the 20% decline in the Euro since it hit $1.59 in two years ago, is helping the German exports continue to prosper.

Berlin: the Euro is enabling global business activity. My friend Bjoern, who works for Google, is video conferencing with Mountain View headquarters almost daily after relocating back to his native Berlin.

Sweden: Remember that Scandinavian used to be known as prohibitively expensive? The Swedish Krona fell 15% against the Euro and that hiccup has put their economy and competitiveness back in line with the EU.  As a traveler, however, you barely can tell how well Sweden is doing, because it was the Summer Solstice and everyone’s in such a good mood; it was hard to get much of a read.

Prague: David, who works in the Czech Spirits industry, said he could see the Euro being replaced with a new currency — after tossing out the laggards: Greece, Spain, Italy, Portugal, and Ireland. I’m skeptical of his view. I see the current turmoil as the natural and to-be-expected process of growing pains for the new currency.  Good change rarely can coexist without the presence of crisis.

There’s no turning back on the Euro. The Euro was launched in 1999 as an experiment in monetary union sans fiscal unity. That experiment has now ended, as its economically strong members are forced to subsidize the weaker members (see McCulley’s article at www.pimco.com).

Europe is economically stabile. Economic stability, even in the midst of eroding fundamentals and a decline in the standard of living, is still stability and stable systems rarely fall apart. Meanwhile global connectivity is empowering business (teleconferencing in Berlin) and venture capital attention as the EU (Bruxelles) this summer granted money to eight different venture capital firms to invest in start-ups in Hungary.

Speaking of which, Prague and Budapest now have a cost of living equivalent to the low-cost areas of the West.  The Rudas Turkish Baths in Budapest which cost 30 Forints in 1990 today the price is 2800 Forints (about $14-well worth it!). See, it doesn’t take all that long for people to adapt to capitalism and let market forces work they’re way through the system.

The bottom line: the Euros’ not going away. As Michael in Munich said, it’s more difficult to undue it, than to fix it.

When we emerge into the 2020s, the industrial society of our youth and the East-West conflict will be an artifact in the history books as well as the catacombs of our own memories.  As David in Prague wrote me this week; “In five years the world will look much different than it does now”. I concur.

Barnes Capital is a Registered Investment Advisor located at in downtown Lafayette. With RB Capital Management, Barnes Capital develops custom tailored portfolios for its clients. Specialized in retirement income portfolios, financial planning in an integral part of our process. Call 925-284-3503.

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