Should I Move To the European Union (EU) for the Best Information?
The recession has lingered for the last four and a half years. We’ve had depressing housing starts, dismal non-farm payrolls, swelling first time claims of unemployment, and sharp drops in the retail and manufacturing indexes. The Board of Governors of the Federal Reserve has met many times to discuss the economy and presented scholarly papers to a variety of listeners across the county. Moreover, the Chairman himself, Dr. Benjamin Bernanke, has testified under oath before Congress and various sub-committees about the state of the economy. All told, any of these events could have sent the market gyrating in half-point to full point swings, but no longer. Lately, the market shrugs off the announcements off and goes back to its business. However, the current meat of the economic matter occurs overseas and we are now forced to keep our eyes on a new set of metrics.
For instance, the European fragility has created a new aura of fear and anxiety. For the first time in my life, I could care a less about domestic unemployment claims effect on interest rates. Instead, my current preoccupation centers on discussions at the EU Summit, German unemployment, Euro-zone economic sentiment, Italian weekly jobless claims and the seven-year note auction for Spanish bonds. Additionally, my focus has shifted from Capitol Hill to the European Commission, because the quarterly report on the Euro Area carries more weight now than “The Beige Book” from the Bureau of Labor Statistics. The economic nerve central has shifted to Brussels and away from D.C. Unfortunately, it’s quite difficult to get a handle on how things are done on the other side of the Atlantic with all of the idiosyncrasies of operating in the European Union. Some countries are in the Union while others are not. Some are members of the Union don’t use the currency. Furthermore, others nations have completely chosen to go it alone, which complicates things even further.
C-SPAN is great for getting up to the minute, play-by-play for information about Congress, but I’ve yet to see a media equivalent for the E.U., which is sorely needed given its overarching grip on our economy. While Europe determines what the Union will be and who will be in it, we will continue to languish in the economic doldrums as the GDP of our nation (derived from Europe—really?) moves at a snail’s pace.
As far as the mortgage market is concerned, problems in Europe create happy times for all. In the short term, anyone who can qualify will get a great rate, compliments of the Irish flu, Portuguese plague, or a German sneeze. However, in the long run, we will suffer as a result of underutilized capacity in factories and phones that don’t ring as frequently, due to a lack of demand for our goods and services overseas.
Indeed, I never thought that I’d see the day when America’s GDP wasn’t as important to me as German optimism for a European turnaround. Also, I wouldn’t have believed that Deutscheland would be the one country to hold up the European continent. These are interesting times. The Euro is getting close to being pari pasu with the dollar at a 1:1 ratio (currently it’s 1.22). Realistically, I would never be able to move to the E.U.– it’s definitely cheaper to be there right now, and one would most certainly be around the movers and shakers who are shaping the world’s economies. However, I love my country, and could never leave; but the truth of the matter is, my wife wouldn’t let me!
Preston Howard is a mortgage broker and Principal of Rose City Realty, Inc. in Pasadena, CA. Specializing in various facets of real estate finance, he can be reached at firstname.lastname@example.org.