European so Bubalicious: Is it Going to Burst and When?

Thursday, July 26, 2007
European so Bubalicious: Is it Going to Burst and When?


The European markets have been on fire. Even the most stringent Europe bashers have been complementing our neighbors across the pond. Fueled by the developing eastern bloc countries as well as Asian, African, and Latin American unquenchable demand for goods,and services in practically every industry. Things seem to be going great. You couldn't ask for much better. NYSE and EURONEXT together seem like an unstoppable force, being the worlds largest international exchange. NYSE EURONEXT has poised itself to be a dominate global player for the far foreseeable future. However, is it realistic to believe that this bubble of good fortune and prosperity will last for the NYX, or will we see the biggest bubble burst in recent history.

It has been said throughout American history that America should stay out of foreign affairs. Our forefathers wanted to keep interaction with Europe and the rest of the world to a minimum. Yet, the powers that be, globalization, has married us together for eternity. Many Americans want a divorce before it is to late and think that the EURONEXT deal leaves us vulnerable. There have been many analysts that are saying problems in US sub prime mortgage markets "have already caused some uncertainty for both US and European leveraged loan markets".A recent study by a leading firm found that "The European leveraged finance market is an unsustainable bubble, according to almost 60 per cent of respondents""80 per cent expected the bubble to burst in 6-12 months' time." So will Europe, who has been susceptible in the past, spiral out of control plunging the world in to darkness.Is Euronext doomed in a flawed system?Will it pop faster than Cramer hangs up on a guest after a question? It is possible but there is yet another side to the debate.

While our forefathers said we should stay out of European affairs, they were incapable of comprehending just how pervasive the powers of globalization are and could become. The same powers which were in place long before their existence have encompassed the globe. Opptimists of NYSE EURONEXT deal understand that Euronext's growth are going to come from these powers of globalization. It is logical to believe globalization is here to stay forever, and even if it slows down it is not going anywhere. On Boeing's recent conference call they stated, after reporting positive earnings, that the airplane manufacturing industry could see a five to fifteen year growth period. This is proof no doubt that the wheels of globalization are still in motion and show no signs of persisting.
This debate will go on for some time. Will the European bubble burst? Will NYSE EURONEXT be a great success ? We will have to see. Certainly a day like today down 300 it is discouraging. The August 2nd earnings report may be a turning point for NYSE EURONEXT and signal a new phase. One thing is for sure and cant be denied. Globalization, if you like it or not is relentless and will conquer everything in its way. It sounds like NYSE EURONEXT will be there with it.