As the world tumbles, I stop for coffee

Its rarely apparent to the average European. We Europeans still resides in a cushy world where his life is influenced only by the concerns in his neighborhood. And, he is, thus, bewildered as to why an event with a US company could seriously affect his life across the Atlantic. So what if CitiGroup is slashing 20,000 US jobs? It is in the US.

That’s the thing. The globe is a global village. What hits you today will strike me tomorrow. What happens to the US economy is still very much an issue for the entire world. The US is the world’s biggest importer. If they import less, manufacturing prices of the goods rise in order for the manufacturer to stay in business.

Judging from declarations of European finance ministers, our economies are not going to shrink in 2008. Given the bad results of the first 5 years with the Euro, it is enough of a motivator for Europeans. But even if European economies are forecasting an OK growth-rate for 2008, can we hold our feeble economies? Or will we be pulled into recession by the US?

So, what is indeed our situation for 2008?

In simple terms – they had bad debts and told nobody about them. But they’ve covered it up for too long and could no longer hide it. Giants like JP Morgan and Citi Group, who have a say in the US economy, came out clean and showed just how bad their books were. The outlook is increasingly grim. Jobs are without a doubt on the verge of being cut, and combine that with the overall picture of the US economy and the word “recession” looks very, very clear. It hasn’t been this clear in decades.

The cost of the war in Iraq and Afghanistan. Ventures throughout the rest of the region to limit this emergent setback. The expensive cost of natural resources. The failing real estate industry. Mortgages and elevated bank interests. Job cuts throughout the USA. And to top it all a lot of multinationals show their true situation. The US economy is just not being strong enough to hit back.

This is not news. A few weeks ago, I remember watching a report from India on the BBC stating that the tourism industry in that country, who had to date welcomed the US dollar to pay anything from the hotel bill to a lollipop from a street vendor, no longer welcome it. Pay in Rupees, or we don’t want your business.

Where, a few years ago, most European businesses, big and small, had to do their tariffs in Euros and in US Dollars, its now all in Euros.

There are Americans who see this as a retaliation against the US for all the years it reigned over them and held many economies by the throat. But the world is not retaliating in any way. They are simply protecting themselves from a currency that no longer has the power it held for so long.

The US Dollar is not winning. Can it get back on track? No one is willing to decidedly confirm or deny.

And George Bush’s aim to offert a $140 billion as part of his stimulus plan? The world’s not falling for the plan. Global market shares, from Asia to South America, are loosing by the day, fearing that recession truly is the reality that will strike us all.

More than ever, the world must all make a real effort to understand where we stand and see how we fit in to this global village. The Money Blog gives me the education on how to deal with my personal finances as well as my company’s future potential. I am taking steps to protect the immediate future of my business and am busy setting up an IRA or 401k for the company and our workers which not only lures the highest level of professionalism from my workers but helps me keep them too. Plus I'll get the desired tax benefits that come with it. It is confusing to set up, and there’s a lot to understand – SEP IRA, 401K, SIMPLE IRA, Rollover 401k, SE 401k – but in days of uncertainty, it is an imperative step to secure my coming times.

The fact is, the entire world is feeling the black cloud approaching. A European who leaves his home in the morning and drives over to his local café for some coffee understands that his daily routine is now more expensive – everything from the gasoline for his car to the coffee he is served is more expensive. And because of inflation hitting us all, even the usual 5 or 10 cent tip he pays the waiter who serves him his coffee is now as low as an insult.

And so, as the world tumbles, I find myself standing by the coffee vending machine of my office, waiting for the cup of Nespresso that will get me through yet another long night at work, in the hope that, tomorrow morning, I will still be at my desk, but at least the business world will be calmer.

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