The chart shows the huge decline in the euro against the US dollar over the past ten years and I will start with more about the euro because... 
 

A strong currency is a sign of a strong economy and that is a sign of strong leadership.

That ancient wisdom applies well to the euro that has proved to be anything but strong thus reflecting the poor shape of those other two factors.  

I wrote extensively about the euro nearly three years ago in this linked article titled Assuming The Euro Will Recover Is “Suicidal”.  and this one titled The Euro Is In Crash Territory 

This is important because the euro is probably the world’s second most important currency after the US dollar. I will not repeat all of those articles here but much remains as valid today as then apart from the fact that things have worsened since both in the state of the eurozone economies and the euro’s value.  

The EU's currency - the euro in its final form that is today's form - was not designed by economists with their safety factor recommendations built in but by politicians and, like most things politicians do, it was poorly thought out and introduced into the wrong countries at the wrong time and at the wrong exchange rate, all without asking the people living in the countries it was dumped on.

In my opinion, its creation was a reckless, hubristic act of a messianic cause intended to chain free people together forever. It is a political tool, not an economic one, and has been used as such. In 1995 the European Commission's economist charged with the creation of the euro, Bernard Connolly, advocated the abandonment of it in his book The Rotten Heart of Europe. He wrote the truth when he described the euro as unworkable and irresponsible and, like the bearer of bad news in past centuries, he lost his life (his job in this case).

The outcomes have been sickening for many; tens of thousands of people had their jobs and lives ruined. The Italian Federation of industry estimated that in the first years following its introduction the euro lost the country more than 15% of its manufacturing capacity as some 32,000 SMEs went out of business. The Greek economy shrank by 25%. Neither country - nor others like Spain that were hurt too - has recovered and never will because even if economic conditions improve worldwide they lost many of their educated and skilled young people - a brain drain - who have made new lives for themselves in other countries and will not return. It is unsustainable but must be sustained at any cost because as long-term German chancellor, Angela Merkel, once said; "if the euro fails then the EU fails..."

The people whose lives have been destroyed by the euro have been described by those around and under her as being "an internal devaluation" and "a necessary adjustment".

Since then the EU has hardly benefitted from a worldwide recovery and is now back in recession. An excellent article recently in the Financial Times by a former managing director of the IMF named Jacques de Larosière is worth reading: The EU needs to tackle its economic and fiscal slippage 

The opening paragraph says much: "A sovereign currency represents the quintessence of the issuing country: the collective characteristics of the nation. The single currency of the EU, the euro, is far removed from this status. Rather than demonstrating unity, it is a continuing source of tension and dispute among the eurozone’s constituents".  Another point is telling too; "Euro area growth has lagged behind that of the US. Since 1995, real US gross domestic product has increased more than 90 percent, against the euro area’s more than 50 percent."

In a recent interview with the Financial Times the president of the European Central Bank, Christine Lagarde, said of their handling of the crisis “But what we should have learned is that we cannot just rely only on textbook cases and pure models. We have to think with a broader horizon.”  Then a few days later we learned this from the FT, quote:  Lagarde told the Financial Times Global Boardroom conference on Friday that eurozone inflation would come down to its 2 percent target if interest rates were kept at their current levels for “long enough”. But she added: “It is not something that [means] in the next couple of quarters we will be seeing a change. ‘Long enough’ has to be long enough.”

In other words, she has no intention of doing anything other than what she said she should not have done! 

I see no sign that things will change in the EU generally either because ...
 

The EU is intent on further fragmentation

The six western Balkan states of Albania, Bosnia and Herzegovina, Kosovo, Montenegro, North Macedonia, and Serbia are all aspirant EU members. Accession for any of them looked a distant prospect until Russia’s full-scale invasion of Ukraine (another aspirant member) last spring got Brussels talking seriously about enlarging the EU again.  Brussels calls that all part of the process of integration but it has not yet succeeded in integrating all existing members. This linked article in the Financial Times tells more: History casts a low shadow over EU's expansion plan.  

That tells of the many political and cultural tensions to be overcome but says nothing about the financial ones. Billions of euros are transferred each year from the supposed rich members to the poorer ones to persuade (bribe!) them to be more democratic and less corrupt and history shows scant success with that in eastern European countries such as Hungary. 

Those aspirant members will require many billions more but the unelected "elite" running the EU Commission in Brussels show scant concern about the health of the sources of that money.  

EU leaders have their own meaning for the word fragmentation.  For example, Mario Draghi - former president of the European Central Bank - in this recent article in the Financial Times warned that the European project’s long-term survival depends on urgent political integration. 

An excellent article on TalkMarkets by Daniel Lacalle titled The Eurozone Disaster - Between Stagnation and Inflation makes a very worthwhile contribution to the subject.  I wrote one on the EU back in 2019 and things have been the same or worse since. It is lengthy but tells of many things that investors in the EU need to know today given the determination of its leaders to do more of the same. It is titled Recession or  Regression through Suppression? 

I will lift a piece out of the latter to show where the EU remains today...

I took that photo in January 2019. Today those lanes should be jammed with trucks carrying goods to warehouses and shops around Europe in time for Christmas but, instead, there are as few today as that after-Christmas photo nearly five years ago. Bloomberg has just reported that German retailers are expecting poor Christmas sales and since Germany is the largest economy in the EU and its main financier one can only conclude that it is the same or worse in other EU countries. 

I live near that autobahn (interstate/motorway) just outside Zürich, Switzerland. Although we are not in the EU our road and rail systems are essential for the EU and this is one of Europe’s main crossroads that runs - at this point - around 30 kms (19 miles) south of Germany's Baden-Württemberg border. B-W is the home state of Mercedes Benz and Porsche cars and many world-leading machinery makers. The lanes flowing towards us head on to southeast Germany - Bavaria, home of BMW, Audi, and Siemens - and to Austria and many countries east from there; Poland, Czech Republic etc.

Those flowing away split beyond the overhead direction signs with the right lanes heading to France then via France on to Spain in the south and to north European countries such as Holland, Britain and Denmark, etc. The left lanes head off south to Italy. In normal times one and sometimes two of those lanes each way are slow-moving conveyor belts of nose-to-tail trucks at the time of the day I took that photo; 4 pm. The registration plates on those trucks made a fascinating sight in those times; German, Spanish, Italian, French, Netherlands, Lithuania, Poland, Hungary, Sweden, Turkey, Russia, etc. Those in my photo are nearly all local Swiss registered trucks.

Those two south German states that I mentioned - Bavaria and Baden-Württemberg - are among the few economic dynamos in the EU. B-W is the EU’s leader in innovation and the two states together contribute 74% of Germany’s internal financial transfers that finance the twelve of Germany’s states that cannot make their own ends meet plus transfer vast sums to the EU to finance its wasteful way of life. Other internal problems will now arise due to the German Constitutional Court rendering illegal a Euro 60bn government off-balance sheet debt issuance plan to help its budget. 

Germany is also in recession mainly due to its dependence on China as a buyer of German cars plus it self-inflicts further problems for itself by low investments. For example, German public investment in decaying infrastructure is 2.7% of GDP compared to 3.4% of the US which itself needs much more.  Private investment is deterred by a madhouse of bureaucracies seemingly determined to prevent anything new from happening - authoritarian suppression!  German politicians blame the EU yet have done nothing except make matters worse for themselves having, as one example - phased out nuclear power without replacement so that redundant and filthy coal-fired power stations needed to be restarted.

One could write books about how such unbelievable actions have become the norm in much of what happens in the EU so for brevity’s sake I shall rely on what these photos tell us...

(Photo: Alle Dörfer bleiben)

German energy giant RWE has begun dismantling a wind farm to make way for a further expansion of an open-pit lignite coal mine in the western region of North Rhine Westphalia.  

The combustion of lignite produces less heat for the amount of carbon dioxide and sulfur released than other ranks of coal. As a result, lignite is the most harmful coal to human health!!  

Open-pit mining is surface mining done in the open atmosphere using mechanical, polluting methods. Open-pit mining thus has a lot of devastating effects on the environment.

According to a study, open pit mining exposes 8 to 10 times more waste materials to the environment than underground mining. These effects substantially affect the soil, water, air, and living beings near the mining area.

The Greens - part of Germany’s coalition government - insisted on getting rid of nuclear then condoned that reuse of filthy coal and mining for it on German soil!   

And while all that is happening German company Siemens Energy (SMEGF) needs a Euro15 billion ( $16.3 bn) government rescue package for its troubled wind turbine manufacturing division!   

Unbelievable is the new norm in politics! 

That brings me back to finding answers to this article’s headline question...
 

Where To Invest In This EU/Eurozone Mess? 

I am personally invested in two French companies that are doing well and should continue doing so because they are strong at home and are more globally diversified than many so-called global funds. One is...
 

Air Liquide 

Founded in 1902 Air Liquide (AIQUF) - or AI:PAR on the home Paris exchange where I own it - today is a world leader in gases, technologies, and services for industry and health. It is present in 73 countries with approximately 67,100 employees and serves more than 3.9 million customers. For brevity, I shall just use AI as the company name. 

I own AI mainly for its growing hydrogen activities worldwide. It is one of the top three companies leading the way with hydrogen - the other two being Air Products (APD) and Linde (LIN). I own those too for the same reason. 

I covered all three and hydrogen comprehensively in my article titled Make Money Cleaning Our Polluted Environment 

That article was written three years ago and it has done nicely for shareholders, including myself, since then as this Financial Times chart shows...

(Click on image to enlarge)

So far this year the share price is up over 23%. In addition to that AI pays a safe 1.75% dividend.

That is a stark contrast to the chart I headed this article with showing the euro’s decline and showing some companies are managing nicely despite those many challenges.  

AI is well managed financially and in product and market development ways. 
 

Income statement in EUR

Year on year Air Liquide grew revenues 28.28% from E23.33bn to E29.93bn while net income improved 7.25% from E2.57bn to E2.76bn.

Importantly in a time of high interest rates Air Liquide uses little or no debt in its capital structure.

Those interested in the financial side can see all on the company website 

Those finances provide sound foundations to take advantage of the many market developments especially those in Hydrogen - Our Future’s Fuel 

Many more things have been added to those I mentioned in that linked article. Information Trends report that the Hydrogen Fuel Cell Bus Market is Poised to Take-Off.  

In spring 2023, Air Liquide announced the creation of Hydrogen Airport, a joint venture with Groupe ADP. Hydrogen Airport is an engineering company dedicated to helping airports in their transition to hydrogen. They have identified around 200 airports of interest, both regional and international.

This has recently been announced by AI: Air Liquide and ENEOS partner to accelerate the development of low-carbon hydrogen and energy transition in Japan

AI started in China in 1916 and today operates nearly 120 plants in over 40 cities employing around 5,000 personnel nationwide. It is a leader in hydrogen there, which is important given China’s need to reduce pollution  
 

Risks

The biggest ones I see are all political and - with luck rather than political will - may not come about. If the EU continues on its present ways it will fragment and that will upset all company values. Just a few weeks ago, a survey by the German Civil Service Association revealed trust in the government’s ability to do its job is at an all-time low, with 69 percent saying it is deeply out of its depth.

That and EU authoritarian suppression is leading to the growing influence of extreme right wing - almost neo Nazi parties - mainly in Germany ( the AFD party) but also showing up in other EU countries such as Spain.  

Ever the optimist I have a solution!  I live in non EU member country Switzerland and this weekend we have canton (state) political leader elections.  We have one new political party started by a young person who could set a precedent that EU countries will one day fix their mess by copying: It is called the Bier Partei - the BEER PARTY. 
 

Until then...

I shall stay invested in Air Liquide as I expect that - barring a political disaster - it will do as well in the future as it has in the past and investors can make money cleaning our polluted planet. 

I plan to write about another French company soon that is also a global world leader in what it does in a global growth market for its products - Schneider Electric. 

In the meantime, ideas from readers made in the comment boxes below would be most welcome. There are probably many other good companies in the otherwise messed up EU and we can all benefit from sharing knowledge and ideas including those that might contradict our own. 

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