First Week of 2009 U.S. Trading Proves Disappointing, Euro Weathering Global Financial Storm
The monthly Labor Department employment report disclosed that the U.S. unemployment figure climbed to 7.2 percent – the highest in 16 years – with 524,000 jobs being lost in December, bringing the total job losses for the year to 2.6 million, the highest figure since 1945. Analysts agree that this acceleration of job losses is an indication that the world’s biggest economy is in a downward spiral, giving a renewed sense of urgency to implement, without delay, the proposed job creation and economic stimulus plans as outlined by President-elect Barack Obama.
Other causes for concern in the upcoming weeks include the fourth-quarter results to be released by the financial sector, and while analysts and investors are anticipating a bleak performance, just how bleak it will be remains to be seen. The CEOs of both Bank of America and JP Morgan Chase have already indicated that their reports will be dismal; however, they are expected to remain in the black. Citigroup is likely to report its fifth consecutive quarterly loss, while it is predicted that profits at Wells Fargo will decline 17% from a year ago. With financial institutions under Congressional scrutiny regarding their lending practices and following the collapse of Lehman Brothers and Washington Mutual in September, the final quarter of 2008 proved to be one of the toughest on record for the U.S. financial sector, and deteriorating credit conditions and rising unemployment continue to present a challenge.
Meanwhile, with January 1 being the tenth anniversary of the Euro, it appears to be coping with the global financial crisis better that most other currencies, resulting in a number of countries clamoring to dump their national currencies in favor of joining the growing Euro-zone. This growing influence of the Euro has analysts raising the question: “Is the Euro the new US Dollar?” The Euro-zone is now 15-members strong with a combined population of around 320 million using the currency. Add to this countries such as Kosovo and Montenegro, which effectively use the Euro as their national currency, along with a number of France’s former African colonies which peg their national currency to Europe’s, and the total population relying on either the Euro or Euro-pegged currencies rises to more than 500 million. European Commission president, Jose Manuel Barroso, points out that the Euro has delivered lower inflation, greater price stability and lower interest rates, while helping to create at least 16 million jobs. The Euro is also credited with shielding member states during the current global economic turmoil by preventing a currency crisis and exchange rate volatility – all indications that, as Barroso puts it: “The Euro works”.