Is the Euro really the German D-Mark in disguise

In 1999, the Euro currency started trading in world financial markets. The Euro coins & banknotes replaced German marks and fifteen other EU member states currencies on January 1, 2002. The euro zone includes almost 300 million people. Outside of the EU, 23 countries peg their currencies to the Euro (175 million people). The Euro currency's highest rate against the dollar was in 2008 at $1.599 and the lowest was in 2000 at $.8252.

In 2008, Germany, France & the UK accounted for almost 60% of the total GDP of the EU countries ( the UK is a member of the EU without adapting the euro currency). Germany's share of GDP of Euro currency countries is over 30%.

The German government has approved a EU Greek rescue package of 110 billion euros and a plan to be unveiled tomorrow that will help support the euro currency. It is clear that the citizens of Germany are wondering what happened to their strong currency, the D-Mark. The results from elections held in Germany today point to rejection of support for the Greek rescue. What will happen next?

Contagion erupted in American markets last week and will probably continue into this week. Gold is hitting all time highs as speculators are broadcasting doomsday forecasts. It is up to the German government to stop this speculation immediately.

German chancellor Angela Merkel must take the leadership role in the EU or face the end of the Euro currency. Time is running out for Europe and it will spread to the rest of the world within hours.

Random thoughts....Obama, Bernanke and Geitner realize that the problem is the EU and not Goldman Sachs....it is time to focus on the global sovereign debt problem...Spain could be next and that will not be pretty....

The Clunker jump starts the Economy

Supply and Demand is an economic model based on price, utility and quantity in a competitive market which results in economic equilibrium. One of the consequences of the Great Recession of 2008-2009 is zero demand by consumers for automobiles and other tangible goods.

The U.S. government recently launched a new program called CARS (Car Allowance Rebate System) wherein the consumer receives a credit of $3,500 or $4,500 at the time of purchase of a new energy efficient vehicle for their 'clunker'. Qualified purchases must take place between July 1, 2009 and November 1, 2009. The original law called for the program to halt when $1 Billion of rebates was awarded to consumers. Due to overwhelming demand, the program will be funded with an additional $2 Billion for purchases by November 1, 2009. Cash for Clunkers has been an amazing success in Germany where up to $7 Billion has been given back to consumers. Similar programs are being approved in France and the U.K.

The programs have boosted automobile sales, saved factory jobs and got rid of 'clunker' cars which helps the environment. We can expect automobile production for the next few months to ramp up and produce profits for the industry. The $3 Billion cost is a hefty price to pay, but it directly creates demand for automobiles and will help to jump start the economy.

Random thoughts.... The stock markets performance in July shattered records as the professionals were starting to buy....there is still $trillions sitting on the sidelines getting 'zero' income in money market accounts....the residential real estate market will start to tick up in the next few months....look for pent-up demand to drive sales in every sector of the economy...