We've all been hearing a lot about the European Debt Crisis and possible scenarios that may unfold.  Financial Journalist Bob Veres recently authored this piece with a good summary of upcoming important dates and a more optimistic perspective than we often hear.  I found it interesting and reassuring, so I thought I'd share it with you (with his permission of course).

What's the Worst That Could Happen?

by Bob Veres

If you've been paying close attention, you might have noticed that the U.S. and global investment markets have been bouncing around unpredictably from one day to the next, and every time there is a major move, you hear analysts mumbling something about the debt crisis in Europe. On the up days, they talk about light at the end of the tunnel. On the down days, they talk about the possible collapse of the Euro as a currency, or the breakup of the Eurozone.

The assumption seems to be that if Europe were to devolve back into multiple currencies, there would be dire consequences for the global economy--and your stock portfolio. Or, if the various bailout measures work, people seem to assume that the world will enjoy economic sunshine.

On September 29, the German parliament will vote on whether to authorize a major bailout, and Austria and the Netherlands expected to vote on similar proposals soon thereafter. We can expect more volatility in the next week or so, as pundits, economists and day traders speculate on which way the political winds are blowing.

But how important are these votes, really? What if the gloomiest predictions are right? What if Germany decides to leave the Greeks to their fate, and Greece were forced to secede from the Euro and start printing drachmas all over again? What if Ireland took back control of its own currency? Or (what seems to be the scariest scenario) if Italy were to drop out of the Euro to get its fiscal house in order?

A recent analysis by Stratfor Global Intelligence points out something that many people (especially investors) seem to have forgotten: that Europe's individual countries were the world's leading economic powers for centuries without the convenience of a common currency, and often while they were engaged in fierce wars with each other. Since World War II, before the advent of the Euro, the various citizens of Europe created a local free-trade zone. But even they adopted common guidelines for managing fiscal policy, and voted to create a common currency, they never gave up their local languages, customs or pride in their individual nationalities.

The Stratfor article points out the obvious: that Germany and Greece are still different countries in different places with different value systems and interests. The idea of sacrificing for each other was always a dubious concept, especially the idea of sacrificing in order to hang onto a mutual currency that nearly 50% of both populations never wanted in the first place.

If Greece--or any other nation--were to secede from the Euro, it might actually relieve the pressure that the world is experiencing now. Greece would be able to print more Drachmas, inflate its currency a bit, and make its foreign debt less onerous. Of course, this would function like a stealth tax on its citizens--their income would be worth less--so the pain would be shared among the European banks holding Greek bonds and the citizens who fiercely oppose paying higher taxes in order to pay off foreign creditors. This might be a more workable solution that either an outright default or German citizens reaching deep into their own pockets.

In fact, the Stratfor analysis suggests that this breakup might be inevitable anyway. "Does Greece or Portugal really want to give Germany a blank check to export what it wants, or would they prefer managed trade under their control?" it asks plausibly. "Play this forward past the euro crisis, and the foundations of a unified Europe become questionable."

Stratfor's conclusion is that Europe will remain an enormously prosperous place under either scenario--bailout or not. Does anybody seriously disagree with that? And yet isn't that what the pundits and others are ultimately calling into question?

If the worst case were to play out, if Germany votes not to fund a bailout and several PIIGs decide to opt out of the Euro, what then? If our worst fears are realized and the consequences are not nearly as bad as everyone seemed to imagine, you might see a lot of investors returning to the market to buy the stocks they unloaded when they thought the world was going to end.

So how do you "value" a remodeling project?  Value can be determined by both the enjoyment that a homeowner derives from the improvement as well as the likely return on your investment at resale.  There are a lot of other factors that come into play as well. Regional differences in homeowner and buyer preferences are a large consideration. For example, a deck addition in San Francisco will recoup more that 100% of the investment, but the same deck in Columbus, Ohio is likely to recoup less than two thirds of its cost.

Before

After

A deck addition in North Texas? Don't bother. A flagstone patio on the other hand - especially with space to eat and lounge - that is a coveted improvement. We recently removed an old, high maintenance wood deck in Keller, Texas and reworked the area with flagstone and updated the landscaping plantings. The update opened up the entire rear of the house and completely transformed how the homeowner's use the space. By using high quality materials that have impact and longevity, this project will almost certainly add value if (when) the homeowners sell the home.  (All Photos Courtesy of Baer Home Design.)

Add even a basic outdoor cooking area or a fireplace and you are talking about serious value add. Other hot buttons in North Texas and throughout the country include (not unexpectedly) kitchens and baths. We see higher end finishes - stone counter tops and stainless appliances for example - turning up in the kitchens of moderately priced homes.  Baths too are becoming more luxurious with the addition of stone floors and counter tops, soaking or jetted tubs and interesting lighting.

There is one other important consideration in your remodeling plans - what will the impact of your project be on the rest of the home? A super high end kitchen may have a different perceived value if it accompanied by a master bath that hasn't been updated in 25 years. Depending on your budget, you may choose to spread your remodeling dollars around the high impact areas.

What remodeling projects provide that combination of enjoyment and return?  Get the scoop in the rest of this article at www.KeenerFinancial.com.