International Investments for a Falling Euro

MILLBURN, N.J. (Stockpickr) -- The European PIIGS -- Portugal, Ireland, Italy, Greece and Spain -- have been at the forefront of the news the past few weeks. The sovereign debt of many of these countries has been downgraded. Credit default swaps for these countries' debt have widened out much as in the U.S. during the height of the 2008 credit crisis. As a result, the euro, a currency shared by the PIIGS countries as well as Germany, France and other EU nations, has lost a tremendous amount of value relative to the U.S. dollar and other major currencies. In the UK, a national election resulted in the formation of a coalition government under a new Conservative prime minister.

This all raises the question: What are we to do now about international investing? To quote sportscaster Len Berman, "let's go spanning the world" for some investment ideas.

The PIIGS in Europe were not major industrial nations to begin with. Greece has several problems stemming from institutionalized tax cheating and an overpaid governmental workforce. The European economy has been declining in relative global importance since the end of World War I, but not until the latest financial crisis was it made so apparent. There was a time when the sun never set on the British Empire; the problem is that there is no longer an empire.

The euro could turn out to be one of the biggest monetary mistakes ever. How could rational human beings believe that countries that have fought with and hated each other for centuries would all of a sudden join forces for economic and monetary purposes?

Perhaps, maybe, an argument could be made for investing in Switzerland. The Swiss have a relatively high per-capita GDP, one of the most educated populations in the world and a very well-managed currency, the Swiss franc, which is in many ways the anti-euro. Switzerland is known for its pharmaceutical, banking and food processing industries, but there is not a single individual Swiss company that really entices me. Switzerland can be considered the safe haven in Europe. As such, if you held a gun to my head and forced me to invest in Europe, I would allocate some capital to iShares Switzerland ETF(EWL).