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Emma White / US Economy - Eurozone "Centralization"
 
Name: United States
Description: United States
Author: Emma White
 
Economic Analysis  
 
1. Importance Very important   While Europe represents 18% of the exports of the US, which is about $400B annually, it's strategic importance is even greater. It is the largest export for China, and it's involvement with US banks is huge. Thus, it is very important to consider Europe's economic future when evaluating investments in the US.
2. Wisdom Important   The US economy is intimately linked with the success or failure of the European economy. As Europe goes, so goes America.
3. Knowledge Important   If "Centralization" is the path the the European Union countries choose, and implement it in a timely manner, then all the economies of the world will improve, including the US.
4. Current Assessment Fair   The sovereign debt crisis in Europe threatens the economies of the world.

The US, having the largest economy in the world, is especially vulnerable.

Most economies are fragile. The fragility has been caused by excessive debt. The US is in a precarious position, and can ill-afford to suffer another deep recession.

Governments and corporations are currently evaluating the impact of certain scenarios should the European sovereign debt crisis get worse or remain unresolved.

Investors need to consider these scenarios in their planning, whether they are 25, 45, 65 or 85 years old.

Most agree that the current deleveraging that is rippling through economies, industries, companies and households will take 10 years to complete. The crisis started in 2007, and thus it will be 2018 before the world has completed the deleveraging cycle.

The three possible scenarios are:

  • Centralization
  • Disintegration
  • Reduction

    This model focuses on Centralization and its impact on the US economy and securities.

    • 5. Future Assessment Good   "Centralization" and the fiscal coordination that it brings would be the best possible outcome and path forward for Europe. This would avoid a deep recession, and put Europe on a path to improved economic stability.

    It would take many years to accomplish and enact, and would have periods of ups and downs, but over the long run it would be the best decision and provide the best results.

    The US GDP would likely exceed 4% for a number of years. Investments in every asset category would benefit.

     
     
    Future Assessment Probabilities, Reasons and Explanations
     
       Possible Outcome Probability Value Reasons and Explanations
    1. Awesome   10% > 8%
    2. Good   60% > 4% Centralization would usher in a period of strong economic growth for the US as the nation de-leverages debt.
    3. Fair   30% > 2%
    4. Bad   0% > 0%
    5. Terrible   0% < 0%
     
     
    Key Performance Indicators


    Key Performance Indicator Importance   Current Assessment   Future Assessment  
    1. Economic Cycle   Very important   Fair   Good
    2. Consumer Durable Goods   Important   Fair   Good
    3. Gross Domestic Product (GDP)   Important   Fair   Good
    4. Inflation Rate   Important   Good   Good
    5. Interest Rates   Important   Awesome   Good
    6. LIRA - Leading Indicator of Remodeling Activity   Important   Bad   Fair
    7. Personal Income   Important   Fair   Good
    8. Saving and Investment   Important   Fair   Fair
    9. Total Economy - Current Account   Important   Bad   Fair
    10. Unemployment   Important   Bad   Fair
     
     
    Linked Entities


    Industry Importance   Current Assessment   Future Assessment  
    1. Consumer Services   Very important   Fair   Awesome
    2. Finance   Very important   Fair   Awesome
    3. Technology   Important   Fair   Good
    4. Consumer Durables   Very important   Fair   Good
    5. Public Utilities   Important   Fair   Fair
    6. Basic Industries   Very important   Fair   Good
    7. Energy   Very important   Fair   Awesome
    8. Capital Goods   Important   Fair   Good
    9. Health Care   Important   Fair   Good
    10. Consumer Non-Durables   Very important   Fair   Awesome
    11. Transportation   Important   Fair   Good
    12. Funds   Very important   Fair   Good
    13. Miscellaneous   Important   Fair   Good
     
     
    Portfolios
     
    Morgan Stanley - Cloud Computing - Best Positioned US Companies details | stock charts
     
    Associated Information
     
     
    Nicolas Sarkozy: 'To defend the euro is to defend Europe' - the Guardian - 2 Dec 2011
     
     
     
    CNN's Nina Dos Santos reports on the proposed Europe-wide "golden rule" to ensure balanced budgets. Dec 5, 2011
     
     
     
    Merkel calls for fiscal union to resolve European debt crisis - guardian.co.uk, Friday 2 December 2011
     
     
     
    El-Erian: Europe must go 'all in' - CNN Money - 02 Dec 2011
     
     
     
    Brussels summit rejects EU-wide treaty change - 9 Dec 2011 - posted by Al Jazeera (English)
     
     
     
    EU Summit Repercussions - FRI 09 DEC 11 - CNBC.com
     
     
     
    What the EU Agreement Means to You - Jim Cramer, Mad Money - 09 Dec 2011 - CNBC.com
     
     
     
    Why investors still worry about Europe - CNN Money - December 12, 2011
     
     
     
     
    Hyperlinks to relevant information
     
    Radical eurozone shakeup could see Brussels get austerity powers - guardian.co.uk, Tuesday 6 December 2011
    European Union leaders have five days to solve debt crisis - The Guardian, Saturday 3 December 2011
    European public debt at a glance - CNN - July 21, 2011
    Latest EU Deal Still More Can-Kicking: Analysts - Friday, 9 Dec 2011 - CNBC.com
    Europe forges fiscal union, sees way out of crisis - AP - Yahoo.com - 09 Dec 2011
    EU Fiscal Pact Takes Shape - video - CNBC.com - 09 Dec 2011
    European Union summit agreement: the main points - guardian.co.uk, Friday 9 December 2011
    Stocks tumble on European worries, Intel warning - CNN Money - 12 Dec 2011

     


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