The late American economist Ezra Solomon once said, “The only function of economic forecasting is to make astrology look respectable.” So, instead of thinking forward, let’s go back to the year 2000 to see how things might improve in 2009. Nine years ago, the euro reached parity with the U.S. dollar and maintained it until January 2003. In my view, that parity helped the U.S. recession, which officially ended in November 2001. This means that the U.S. economy continued to grow despite September 11. Similarly, the E.U. economy “hit the accelerator” in the year 2000 and recorded faster GDP growth and job creation from 2000 to 2007. In the 2000-2002 period, oil prices stabilized at $20 per barrel. In December 2007, the U.S. economy went into a recession and, in 2008, the E.U. economy shrank as well. On July 15, 2008, the U.S. dollar reached its lowest exchange against the euro at $1.60. What does this preamble tell you? The Western economy is clearly better off when the dollar and the euro are in equilibrium. I’m not an economist –– I can’t even balance my checkbook. Come to think of it, neither can AIG, Citigroup, Lehman Bros. or Morgan Stanley’s well-paid executives. Which makes sense. As American physicist and Nobel Prize winner Sheldon Glashow once said, “Economic crises occur because financial experts don’t understand math.” Now, it is true that showbiz thrives during recessions, but it is also true that the entertainment business does well during a healthy economic environment like the one created by the dollar-euro parity. Check these figures out: In 2002, the U.S. entertainment media’s revenues grew by 8.8 percent over the previous year. Total box office spending grew by 13.4 percent. Total TV network programming spending reached $11.4 billion and the growth of advertising spending in television was 7.6 percent. Let’s compare that with 2008, when the dollar hit a record low against the euro. Total U.S. advertising expenditures declined 1.7 percent and broadcast television advertising diminished by 0.5 percent. So, how does one maintain that fabled dollar-euro parity? One way is for governments to re-implement the fixed exchange rate, which, after WWII, facilitated trade investments, created stability, controlled inflation and, today, would discourage speculators. Do you remember “Black Wednesday,” or September 16, 1992, when the U.K. government was forced to withdraw the pound sterling from the European Exchange because the currency was under attack by speculators?That operation cost the U.K. government 3.4 billion pounds and made speculator George Soros over $1 billion richer by shorting the sterling. While a fixed exchange is set by governments, and is therefore well regulated, a “floating” exchange rate is determined by the private market, which doesn’t favor regulations that would stifle speculation. The private sector has its own rules that do not have national or international interests at heart. Remember that over $1 trillion is traded in the currency exchanges on a daily basis, making it the largest market in the world. In comparison, at the peak of oil prices, daily oil trading was just $12.5 billion. And speaking of oil, in July 2008, crude oil reached $147 a barrel and speculation accounted for 81 percent of the oil trading volume. This “trivia” is for those who profess that oil and other markets should not be regulated, but left to the laws of supply and demand. Naturally, as soon as governments realized that oil speculators were wrecking their economies, they became vigilant, and the price of oil went from $147 a barrel to $33 in a matter of five months. With this in mind, imagine the profits that just one cent of currency fluctuation a day could bring to speculators, to say nothing of stability and national interests. Predictably, the proponents of “market knows best,” like Citigroup (which lost $24 billion in 2008) would attack the exchange parity by bringing up disastrous cases like Argentina’s pegged exchange rates to the U.S. dollar and the florid currency black market in the former Soviet Union –– both caused by applying irresponsible policies to sound basic principles, which they’ll forget to mention. The “market knows best” advocates also won’t be mentioning the success of the BrettonWoods system which, after WWII, allowed 44 Allied nations to create stability and economic recovery by having fixed exchange rates — until 1970 — with the U.S. dollar, either. In conclusion, my friends, let’s start thinking in terms of fixed exchange currency rates. No matter how salient this thinking is, eventually it will become a murmur and then a roar and, ultimately, a crack of thunder that surely cannot be ignored by government officials, despite their traditional hearing problems when common sense is involved. Dom Serafini M y T w o C e n t s V I D E O • A G E JU N E 2 0 0 9 30 MAIN OFFICES 216 EAST 75TH STREET NEW YORK, NY 10021 TEL: (212) 288-3933 FAX: (212) 734-9033 VIDEO AGE WEBSITES: www.videoage.org www.videoagelatino.com www.videoage.it P.O. 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