The iPigs are coming

This is the age of i. Anything from iPods to iPads, everything now-a-days is christened with an appendage “i” . Perhaps it connotes the EGO of the self , or the self-centric approach to life that the Human Race has taken to, in the 21^st century, and coincides well with the technology mania that has gripped much of the 21^st century.

I decided to fall in line. After all, “i” pervades all, and “i” am no exception. The result , is iPigs – a rip-off, if you will, from the clichéd acronym. No, I am not manufacturing ham as yet. And I am still keeping my hands off Farmville (that contraption for time-pass in am even larger contraption for time-pass Facebook).

iPigs, in my fantasy, are the five European countries , which could ultimately contribute to the demise of the Euro as a Unifying currency in the European Union. Switzerland, Denmark and a handful of other countries were wise to keep their hands off the Euro, while a few other Big Brothers bit the bullet in the late nineties, and now are busy licking their economic wounds. The cause of the wounds? iPigs, of course.

Ireland, Portugal, Italy (to a lesser extent), Greece and Spain constitute the iPigs. In my opinion, these never deserved a strong currency like the Euro, in the first place. Everyone knows the value of the Lira before Italy embraced the Euro. Or, for that matter, the Escudo in Portugal. If ever you visit these countries, the disparity is there for all to see. Germany, France and the other Big Brothers are well and truly ahead of the pack in terms of material prosperity of the people. This is aptly backed by economic data.

Case in point – exports from Germany, in 2009 are estimated to be only a fraction lower than that of China, in US$ terms. Contrast that with Greece, which runs a budget deficit of close to 14% of GDP. Clearly shows that it does not produce enough to qualify to be in the same Industrial league as its more illustrious cousins across the Adriatic Sea. In normal times, the IMF would have swooped in and branded Greece a Banana Republic by now. But then we are not living in normal times! The pressure on IMF from the USA and Euro Zone, to desist from such “unwarranted” branding is palpable.

I strongly suspect that the Euro as a single currency may not see the light of the next decade.

Everyone is calling out the fall of the US$. But it continues to defy everyone. In my opinion, that is not because of any inherent strength in the US economy or the dollar itself, but the TINA factor ( there is no alternative). If people have to pull the rug from under the Dollar’s feet, where do they then park their funds? The Yuan? Chairman Mao will surely be turning in his grave. Gold? Bretton Woods made sure that gold will not take tha spot any more. The British Pound? That currency’s strength is history now. The Yen? Of late, the Yen is the punter’s paradise, being used ( and abused) for carry-trade. And Japan is a declining economy, and I do not see the Yen taking over. That leaves it to the Euro… hmmm, think of the Portuguese and Greek currency becoming the de facto reserve currency. I am sure the world is yet to come to such a pass.

At the risk of being snubbed, I stick my neck out and predict two things:

• Strong chance that the Euro may not survive as a single currency of the EU for too long, given these vast economic disparities.
• I suspect that the Deutsche Mark, in such a scenario, may well make a comeback, and with a bang.