Initially, Ukraine’s political challenges last fall were viewed as a regional issue; however, they have become a global issue now.
Remember when Greece’s financial challenges were seen as isolated, then the distress spread, becoming a pan-European issue and raising red flags in Portugal, Italy, Ireland and Spain, as well. (Or maybe you remember how the U.S. subprime mortgage crisis was “contained.”)
On Bloomberg TV on April 28, Nouriel Roubini — aptly nicknamed Dr. Doom — said he believes Ukraine could tip Europe back into a recession. Given that the International Monetary Fund earlier this year made a statement that it sees deflation as a key risk to watch, it may not take much to tip Europe back into recession.
It is interesting to hear the way Roubini frames what is happening in the Ukraine as a “New Cold War” between the United States and Russia.
When asked where Ukraine sits now on a scale of 1 to 10, with 1 equaling low risk and 10 high, he put the risk at 7 and rising.
Is it perhaps time to re-evaluate and recalibrate Ukraine’s risk impact to Europe and your portfolio?
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John Hunt is conference program manager at Institutional Real Estate, Inc.
