Posts Tagged ‘joblessness’
“Euro B”: For internal trades?
Posted on: July 8, 2010
“Euro B”: For internal trades?
Most population or demographics of the Northern European States such as Germany, Holland, Danmark, Sweden, and Norway are on average much older than the Southern States such as Spain, Portugal, Italy, Ireland, and Greece. For example, the average age in Germany is 45 and thus, Germany spends less for new housing and can save much more than the younger States. States experiencing high deficits in budget and in GNP need plenty of credit to get its young citizens settled down.
The smaller or emerging States in the EU are suffering from another major handicap. In the previous decade, these States received plenty of financial funding from the richer States in the EU and thus, most of the young people quit colleges and universities in order to work in a booming economy and to make money and purchase consumerism products that their families never owned or experienced.
Statistics show that 80% of the newer entrepreneurs in Spain and Portugal have not earned a college degree; they have restricted and limited skills to compete in this global economic environment. An entire generation was lost to shoulder the next challenges.
The problems of the Euro currency and the economy of European Union (EU) States had begun before the latest financial crash, but this financial upheaval uncovered problems that were swept under carpets for as long as the illusion of global economic development was not that evident.
The European common market is a vast market of 450 million consumers, as large as the combined USA and Russia markets. If the EU policies focus on internal trades among its States then, most of the difficulties would be far more bearable in this climate of stringent conditions to slowing down deficits in budget and to GNP.
The EU needs to consider issuing a currency valid for its internal trades that is heavily devalued compared to the current Euro. This inner currency may be called “Euro B” which will have the consequences of lowering the cost of living compared to reductions in salaries and public reduction in sectors of health, education, family planning, and small business lending facilities. The other consequence is that tourism will increase and tourists will be able to purchase more consumerism goods as product prices effectively fall.
Another additional remedy that may keep internal trades developing smoothly is to allowing hard hit States to asking for more liquidity of “Euro B” as internal trades increase and develop. Obviously, Germany should keep the exclusive monopoly of issuing Euro, both Euro A and Euro B(a monopoly that generates over 5 billion Euros to Germany per year), but the mechanism for evaluating the needs for more liquidity should be more lenient and timely.
For example, the colonies in the US before independence experienced economic expansions while England was having hard times. Benjamin Franklin, Ambassador to France after the US independence, let out the secret: Economic expansion was related to the colonies enjoying the right to “printing” currency when the economy needed this “oiling” mechanism.
England then convinced the US government, after US independence, to have the monopoly of issuing money instead of the US treasury. The Rothschild family in England endeavored to ruin the US economic expansion by refraining from issuing badly needed currencies. The dollar received a higher value than being simply an oiling mechanism: thus, the dollar was overvalued and the economy shrank.
The “Euro A”, designed for external trades outside the EU, can still be devalued, but since export balances favor only export economies such as in Germany then, “Euro A” may be considered as a political currency that should not affect significantly internal trades in the European common market.
The Euro of the European Union (EU) currency or what I call “Euro A” is witnessing healthy devaluation lately compared to the dollar and needs to be lower to around 1.1 to the dollar. The increasing difficulties experienced by many States in the EU result from initial weaker economies that could not compete efficiently in the European common market and then, were buffeted by the US financial crisis as financial multinationals extended credits not based on tangible sound economic improvement.
As long as “Euro A” is overvalued and individual States have no sovereignty for issuing currency then, the smaller States will have no options but exercising internal devaluation of 20% represented in lower salaries and harsher budget cuts.
The European and international financial and political medias are breaking the taboo of discussing whether maintaining the Euro is a viable alternative in the short-term. The arguments of the group that staunchly defends the Euro is mostly based on political reasons: To them it is becoming a matter of safeguarding dignity and sovereignty. It believes that the Euro is the major factor in the reconstruction of the European market and for the political stability and the cohesion of the European market. This group would like you to believe that without the Euro there would be no EU.
The “taboo breaker” group believes that the EU is in dire difficulty because it prematurely created a common currency before ironing out and strengthening common politics. Germany and its satellites States in the northern hemisphere benefited most from the Euro since their currencies were highly overvalued “stronger” than the Euro and thus, they managed to compete better and export more to the European common market. The other States in the Union could not deal with a Euro that was much overvalued compared to their national currencies and thus, had to suffer in market competition.
The financial and economic commotions in Greece, Ireland, Portugal, and Spain are symptoms of the financial and economic imbalance with respect to the vaster and stronger economies in Germany, France, and Italy. This group believes that the EU is heading toward a deflationary period within a couple of years if no structural institutions are installed.
The main source of imbalance is that the original six States in the Union had firmer and better tested administrative and political institutions that could apply regulations agreed on; they had the capability to supervise and monitor laws and regulations governing the union members. The weaker States are at great disadvantage: The main powerful States in the union have no confidence in the resilient determination of the weaker States to effectively executing the agreed upon regulations and second, the weaker States are prohibited to issuing (printing money) to satisfy liquidity in their internal trade and commerce.
It is not the Euro that created the common European market: the EU was already instituted and functioning well before the common currency was created on political grounds. The Euro was mainly to be the material “symbol” of the Union and this symbol degenerated into a calamity at the first major problem. The EU could have imagined much less costly symbols for its unification until political coherence was firmly established, tested, and thoroughly evaluated.
The Maastricht treaty set limits to budget deficit below 3% and public deficit below 60%. Currently, only Spain has kept its public debt at 54% and Germany its budget debt at 3.3%. The remaining States in the Euro have doubled and even tripled both limits. Joblessness is very bad all over the Euro zone averaging 10%; Spain has 20% and Ireland and Greece about 14%.
It seems to me that the Euro has encourage many mafia type “economies” to expand simply because it became much easier to transfer a unique currency and circumventing further money exchange regulations and constraints. The “Euro A” will be a good barrier for whitewashing mafia money outside the EU.
The financial institutions and the medias are sending waves of terrors claiming that there is lack of confidence in the Euro; they claim that this confidence is so low that investors are shirking the Euro zone States. I believe that the Euro should stay but be restricted to the main large economies such as Germany, France, Italy, Spain, Holland, Danmark, and Norway where the same homogeneous spirit for taking seriously the application of financial and economic regulations among the member States.
The other weaker States should have an alternative common currency or “Euro B”, far devalued from the Euro and backed by the “Euro A”, until political coherence and institutions are equalized in efficiency and modernity. The weaker states should enjoy the privilege of preempting slow internal trade by issuing liquidity in the newer common currency within limits.
“Joblessness or what ignite dormant revolutions” (December 6, 2008)
I read an angry article on wordpress.com by a very frustrated USA man earning $10 per hour and working 15 hours per week. He said that it was about time that he signs up in the military for a steady job; he is also foreseeing someone entering an unemployment office, carrying an Uzi submachine gun, to reduce the number of unemployed applicants. (Uzi is the symbol of terrorism; just leave it to Israel to export what it does best). I commented to him that his suggestion of crazy behavior for mass killing might haunt him when it happens and to refrain from publishing cheap and dangerous ideas when in anger. Well, I am doing it anyway (maybe there is plenty of pent up anger in my psyche).
The irony is that Bush has already done his major war on Iraq to absorb the growing unemployment in the US and the country went bankrupt. Starting another major war, as a tradition for absorbing surplus frustrated population, is no longer advisable for the time being. Smart Obama has to be more creative than the Bush Administration. It would be very painful for the US people to get back to work on jobs that add values to their economy and then lead the world to stability, but not the way around.
Dark times are awaiting all countries and the dormant state of revolutionary frenzy will ignite and catch up like wild fire in every corner of earth. What happened in Bombay (India), the resurgence of violence in Iraq, Gaza, Sudan, Congo, Mozambique, the Israeli implants (colonies) in Palestine, and Egypt are the precursor signs. Europe and China would not be spared and throwing in money to stabilizing an endemic faulty economies are placebo when it should be invested in healthy companies and re-educating the working people.
I suggest that the developed States re-think their current strategy on war on terrors and comprehend that the real coming terror is in their mist from the vast pool of unemployed population. The under-developed States might be used to surviving on little but what of those well fed, consumer maniacs, and spoiled people who are used to be treated like Gods? Should the under-developed people continue to kneel in front of them while serving them the best food and luxuries?
Much violence will start in the under-developed States under the guise of national, ethnic, and religious self-autonomy demands and this fire will reach the developed States pretty soon; the revolutions in the developed States will start from within so they better open the borders and relax the immigration laws to put the lid on the red smoke.
Priorities and revised economic models for enterprises (November 29, 2008)
Within a month of the Wall Street financial crash, major EU industries (excluding the financial, real estates, and insurance institutions) have laid off over 62, 000 jobs and the USA over 77, 000 jobs. There is no end in the forthcoming months and the jobless rate has broken all record high. The communication, auto, computer hardware, retail stores, airline, and chemical companies are the hardest hit so far. As the jobless rate increases then society would drift into unstable climate of insecurity in individual health and safety and retention of their properties. Without a climate of security no influx of investment can repair the long-term malaise in the slow moving society to recovery. It is a definite pattern that in any downturn the workers, elderly and new employees, are the first to be laid off. As if it is the manpower that was the culprit and not the management. Consequently, a revised understanding of what constitute the worst case impact on a society should be evaluated.
Economical models for the productivity of enterprises need to be revised to include the sustainability of enterprises under fluctuating and cyclical financial crisis. The working capital should be able to remain intact for the demand cycle and the value added in manpower quality of the main industry units unaffected by the flux of capitals. Consequently, I suggest tackling two fundamental concepts.
First, the working capital should be managed differently from the general acceptable accounting procedures to resist fluctuation in central rate and money devaluation. It is very reasonable that the retirement funds of the manpower and the stocks purchased in the company by the manpower be within the working capital management. The manpower should then feel highly active to evaluating and discussing how the working capital is allocated and invested.
Second, we need to start a new field for defining added-values and how to measure it concretely instead of rationalizing it as a proxy ratio. Added values should be measured accurately because it is intrinsically related to the quality of manpower. Added-value is what makes an industry viable economically to the workers, stakeholders, and society in general. It would not be a piece of cake to operation value-adding parameters; otherwise I would not be suggesting a new economic field for the characterization of what we mean by value-adding economy. Every industry would have to define its value adding element such as in the service industry, hardware products, software products, chemical, car, heavy duty machineries, tourism industry, commercial banking, and financial investment banking, and so on. Every industry has it proper cyclical market demands and its competitors, localized or multinational, dependent or not on cyclical supplies of raw materials or manpower.
I am afraid that the first criterion that would jump to mind is for the concept of value-added economy to be represented in monetary terms, which is not the proper criterion. Value-added economy is the investment in the manpower; for example, programs in continuing education, acquiring new skills, versatility and flexibility to fill vacancies, knowledge of the competition, the products, the tools, and the equipments. Value-added economy is raising the quality of the manpower so that a large company would aid in subsidizing private complementary companies, from among its qualified personnel, when the tough gets going. Value-added economy is elevating the knowledge of the personnel and assisting them to find new jobs during harsh downturns. The only monetary value or ratio associated with added value would be the expense (value added capital) invested for manpower quality relative to working capital (VAC/ WC) for raising the quality and professionalism of the manpower. When this ratio diminishes then a company has gotten lax and is turning away from the new fundamentals. Obviously, an independent team should be hired to prepare, control, manage, and evaluate the effective progress in manpower quality at all levels of skills.
Quantifying the quality of workers and employees is the main task in measuring value-added industries; it is feasible and its time has finally come and it should be the optimizing factor in equations instead of rates in profit, shareholders equity, return on capital and so forth. Inevitably most of the variables used in current optimizing model of financial and economic problems would still be effective, many with significant re-definitions, but when the re-orientation is based on the added value of manpower then a new picture would emerge and standard financial analysis re-discovered.
The quality level of the manpower can be defined as the potential added value (PAV) in time of crisis and the working added value (WAV) in normal business cycles. WAV is the criterion that stocks in the market are valuated in addition to other financial criteria; PAV would have critical significance in times of hardships, especially, if the company recorded the events when this potential was managed and directed in previous situations to overcome serious market or natural conditions. As armies conduct maneuvers to test the readiness of its effective so companies have the duty to conduct maneuvering re-organizations of potentials to test and evaluate its field readiness and re-evaluate its programs for value adding quality in manpower. I think that the more credible and frequent the organizational maneuverings the higher the market value of the company. The more frequent the maneuverings the more evident would be the needs for downsizing and decentralizing and retaining coherent and manageable number in work force.
Adonis Diaries 