The Euro: The Incredible Journey from Symbol of Unity to Grounds of Feud

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The Euro: The Incredible Journey from Symbol of Unity to Grounds of Feud
Did anyone foresee today's euro troubles 7 years ago? Yes -- here's how

By Vadim Pokhlebkin
Mon, 14 May 2012 15:30:00 ET

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The European single currency, the euro, was introduced in 1999. Today its report card -- and that of the eurozone -- looks impressive:

After entering circulation in 2002, the euro became the world's second largest reserve currency, likewise the second most-traded (after the U.S. dollar).
In 2011, the total value of euro coins and banknotes surpassed that of the U.S. dollars.
A 2008 IMF estimate named the eurozone the second largest economy in the world.

These are truly remarkable achievements. Why, then, is the euro also quickly becoming one of the most suspect currencies in the world? Reports an October 2011 New York Times (italics added):

"The euro was a political project meant to unite Europe... Instead, the euro seems to be pulling Europe apart. ...anxiety in Europe is growing, and not just about the euro. The assumptions of 60 years suddenly seem hollow, and the road ahead is unclear... ...Europe is unpopular, a local metaphor for globalization, faceless and interfering.

“'It is a financial, economic and social crisis. But also a crisis of confidence... threatening the benefits of 60 years of European integration...' 'We are confronted by the greatest challenge our union has known in its entire history.'”

Today, after the European debt crisis has dominated the headlines for a couple of years, these words don't seem so radical.

But what if you heard or read something of this kind 6 years ago -- or even 12?

Our subscribers did. In 2005 -- long before the euphoria over Europea's new union had worn off -- to suggest that some days (soon) the euro would be "pulling Europe apart" would be considered heresy. Yet that's exactly what our research here at EWI suggested for the future of the euro and the EU (bold added):

“During the [coming] bear market, the independent nations of Europe will rediscover their borders and rekindle the animosities that kept them apart for centuries.”

-- The Elliott Wave Financial Forecast, May 2005

Even going back to 1999, the Elliott wave patterns in European stocks were already forecasting trouble ahead for the emerging European Union (bold added):

“[The] European Union was consummated following 1,500 years of repeated conflict in the region... This multi-year pageant of apology, concession and agreement and the concurrent wonderful atmosphere of international peace and cooperation are consistent with my Elliott wave case that an uptrend of Grand Supercycle degree is ending.”

-- Robert Prechter, The Wave Principle of Human Social Behavior, 1999.

These forecasts are no reason to gloat. We don't like to see a good idea go bad any more than you do. We simply wish to point out that when trying to anticipate the EU's future, the conventional model of economic and social forecasting fell way short.

On the other hand, socionomics -- the new science of social prediction based on the Elliott Wave Principle that allowed us to make the forecasts you see above -- did help to foresee the EU's trouble, based only on the long-term Elliott wave pattern in European stocks, the measure of Europe's social mood.

If you find this ground-breaking idea fascinating, you'll probably enjoy reading our latest intermediate-term forecast for the euro -- and Europe's future -- in the latest, May 2012 issue of our Global Market Perspective, online now.

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Tags: Elliott Wave trading, Elliott wave, European Union (EU), euro, euro stoxx 50, eurozone, euro/USD exchange rate, europe, european central bank, European debt crisis, socionomics

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