The Euro will Go Down.

By

Sampson Iroabuchi Onwuka


The creation of the currency called Euro has offered nothing but bad news to the world. It was designed as a bait against the US dollars. There was the guarantee of credit from within members and there was the matter of stabiliy pact, which is not only a credit matter but a question of protection, from both foreign and regional conflict. For all intended purposes the formation of currency has yielded more trouble than good. As we speak, all member states are expecting 1.9 % dip in thier economy. Kudos has been given to the AAA French stock, but it is far from certain that their triple A will remain stable. the French in themselves ran out of option a lot time ago. Then there is Germany, once the third largest economy of the world are now fourth by market estimate, replaced by China a week ago. Italy and Croatia, the geographical neighbours are more than likely to fracture from Euro given thier balance sheet problem. Since the advent of Euro, job creation in 5 million Croatia have not taken the required form. David Rosenberg of Bloomberg News, once despaired over the Euro, citing the "centralisation of currency and discentralisation of policy" and in his view it is difficult for anyone to trully describe the movement of European economy.



In 1999, when the Euro currency began to circulate, it raised a lot of tension regarding its use. By 2000 when it eventually dawned in US market, we began to notice some problem of mergers and acquisition. Big guns bullied small ones in Europe and when they did, Europe felt that in the long run they will all benefit. Yes, there is benefit when there is no market competition and when significant versions of the industries are in few hands. The benefits are follows, natural monopoly which creats inflation, uncontested cost of items within an industry, uncontested worker's wages and treatment, and a big drum of depression. Is like Europe forgot to study the conditions for depression in the US in the late 20's. By eliminating value, It will appear that the Euro succeded in whacking the US stock market in 2000, this thereforced investors to look elsewhere for profit since then. This was actually possible, by way of Unified currency leveling out value. In essence, market value was dysfunctional since European countries relatively bound to the America by capital wealth and culture, now excision from that Global economic equation.



The Real estate was the only industry that provided real time dividend and as such provided high leverages for private business owners looking to stay afloat, it equally made room for investors looking to recover those old days of boom. Bond and Hegde fund managers were not left out, they were ready to display thier own goods, in US to begin with, and then the wider world if necessary. The opening of US market to China, India and Russia sponsored the false faith in commodities, that all these hopes atgged to US economy were indeed possible. In keeping to the nature of markets, commodities all the more impressed a certain kind of confidence with these emerging markets penetrating the US. The price of that confidence was thier investment in non perishable goods, most importantly Equity.



That confidence began to falter when the promise of profit through 'commodity did not level out'. In the place of goods to keep fixed income earners in demand, goods flooded the market, to the degree that American goods began to diminish in supply. Job elimination due to outsourcing killed the idea of open boarder trade and revealed in the long distance the grand possibility that Europe and European currency may not have a great idea. Yet Americans were as creative as they come, and they soon demonstrated through their Media, that Europeans can use the converted power of thier currency to buy into the USA market. Tourist flowed from all over Europe into Newyork and the US, so came also thier investment. Once more, no one could remember that when a particular market is necessarily based on performance from outside, the inside suffers. That generating money in American cities like Newyork from visitors was like repeating Amsterdam in 1600. The eventual fall of Amsterdam stockmarket was due to much money pouring from visitors, not from fellow indigen, which ended up in real estate and Tourist attraction at the expense of stability of Amsterdam economy.

Europe was meant to solve here the problem with house rent, in fact the rent was set in such a way as to conincide with the Euro. It was designed with Euro in mind. Asia and emerging markets were meant to the case down inflation. This was not the case since Europe could not accurately measure thier own value stemming from saturation of banks. As such the profit Banks sought to generate through money function was stalled because of poor attractio of money from US into Europe. This forced a reversal of course and retained a worm of high leverages. Then a credit crunch since many were not paying up in Newyork and in US.



What were they expected to do, since thier hope of generating cash for the banks and for thier private committee of friends were faithfully ended. The nature of the credit crunch and the high derivative that is partner with it, adding the struggling nature of Job and income, which became increasingly burdensome with net profit paraire. Of course, a price of building in Newyork area went from 350 thousand to 550 thousand and on to 600 thousand and within a matter of years 800 thousand. Banks and thier agents were throwing money away, in hope that when buildings are mounted, Europeans with thier Euro will buy them all. All these where happening at the same time employment numbers were down and unemployment numbers were up. Mayor Bloomberg of New York even declared at somepoint that the 'Euro Genius' was a survival of fittest. African Americans who were unjustly forced out of thier homes, received zero attention from the Mayor making it very possible to justify thier eviction.



Without good jobs, without jobs simple, Americans whites or blacks or other could not afford
the price of homes. The monthly payment was just too much for anyone, let alone Americans who were fixed income earners. On a brighter day, when the markets were strong, the whole business will be overcome with time. Yet, we could not have imagined that besides America
and Europe, there are no useful economy in the world. When Europe levelled out oppotunity America bore the weight of the world and thier insurance companies span the rest of the world. It was only a matter of time, when that currency will stall and essentially strangulated the world. By that I mean, that the room to speculative finances became a straight line, too linear for market profit, too preditable, too unique given the one man show and less adventuresquely. Other major countries of the world, were busy shoving around thier currency rate.



If 10% of that US market is credit and the default is only 5% of the 10, then there are other forces at work besides the credit problem. What forced Ben Benanke and Hank Paulson to declare the US market problem - ridden is significant inability of the stock market to
meet expectations over a very long period. Europe and her member currency levelled
out opportunity making it impossible for thier holds in US markets to yield fruits. Europe was nolonger competitive, as such volitility followed a straight line like a heart that so pounded that is gradually stopped to beat. Benanke and Paulson's may have over stated the condition, forcing investors to panic with caution on the market's direction appreciably fair but unappreciably misdirected. The Euro sponsored a false sense of hope that the market will take care of itself.


The Bail out, Benanke, and Barak Obama

The initial bail out of $200 billion in 2008 is now trifty sum given the fear that was coming, and more than that it was intended to the stem the tide which did not include Lehman Brothers. The fall of Lehman brothers explained the picture much better to the rest of the world and against the hope of bankers, it widened the gulf of fear and that enlarged the picture with a hurricane
of debt restructure. Placing your head above the market parapet is a difficult matter, and whether moral hazards or not, Banks seeking survival as mate would have to bail, at least pretend they needed money.



But we noticed in October and November last year, can be described as rigged on the count that 700 Billion was asked for and in 7 months, the Dow precipitiously declined. Hundred billion raffle per month is the loss from oil from from June to December 31st, when the Dow finally stabilised. The 700 billion to me was perhaps profit made over the years of conflict in Iraq, which was
now used as debt restructure to the banks affected, banks who perhaps loaned the money to
US government. Injecting this money on a private jetting over a period of 3 years, would unnecessarily inflate the crude oil price. Such practice may or may not have been necessary,
had it not been for the Euro that peculated with the Crude oil price.



If the gloomy picture created by Barak Obama on January 7th 2009 is anything to go by, it can therefore be said the initial $200 billion was a salvafic endeavor and the returning $700 billion asked from congress would been a mere overture. The tussle of conflict had begone to exhibit sign of confusion by January 14th, by Benanke showing that 1.3 trillion is not yet enough, we might begin to argue on the condition, on how big the problem really is? By request and in keeping to tenets of his speech, we fall for the hope that Benanke has seen the light, that he has seen the size of the problem at hand, that it will take much more money to stem the tide. But this position is opposite what we hope to archieve, that spending will not help.

If at all spending will help, we would have soughted out the problems in 2008. If this is the case, it will therefore mean that as much as we shall spend, we might be tempted to at least presume that money is not the problem with world market, that in fact our current market is anti 'depression era' and by this is diagnoses, no amount of money will actually help. It essence, the problem has to come from elsewhere, and in my opinion it has to come from market power; price function and relative Value.



The price of failing is not just Benanke's reputation, it is only greater in the image of the young Barak Obama since history would not treat him fair. History will ugly out his time, as a flip side of popularity's lasting expression, concerning the rise of the most celebrated African American since Martin Luther and the fall. It is not idle conjecture that such hopes have crossed the minds of many people, neither can we hide from such dark embrace that it can be the case. You see in market if not in in life, there is always the second meaning to every tedium. We can however presume that all the pains that he bore leading to the White House were his darker days, whose flip side are brighter days of days to come. For ages that is to come, for all the Americans living and dead, for those whites and blacks that now he represents by accident, for all Americans hoping to live out thier years as the greatest generation, for the very world, this man cannot fail. He must continue to act, to act, and act until we reach a higher ground when our system recovers from its losses. May your stars join to once more see you through.



If the call to action is to be taken literary, it should entail visiting the world before the introduction of Euro. To see the comparative US market behavior from 2000, and ask without sentiments how and why the stock took that sudden dive and why values defy expections. The answer would lead us back to where why I started that the Euro essentially whacked the US stock market, thereby forcing the idea of relative value out of global equation. In essence, Europe represented by thier currency is missing in Global action and the world miss them too.
Mr. Obama who is surprisingly zero on Africa American economist, should look to question the meaning of Euro as a currency. What is the market meaning of a currency that allow member states to have thier own tax system, thier own interest rate and thier own municipal bonds, but unified in currency? How can any one follow such market when ECB pretty much operate in the dark.



If Barak Obama can find a way to secretly dismember the currency and not the Union, he would have solved the problem of the decade, if not century and saved the world a bundle. If he cannot tow the line here, he can at least question, the formation of currency in the world. The Euro is the problem of global market yet it took us so long to get to this crisis, which explains the flawed nature of our economic barometers and indicators, and altogether the resistance of the US market. A 'word is enough for the wise'.

by Iroabuchi Onwuka