"Look how much faster these economies are growing! Just look at their favorable Balance of Payments! Look at the FDI (Foreign Direct Investment) pouring in! Look at their fiscal health!"

These are words I often heard when I arrived in Singapore to run an Asian currency trading business in 2010. The center of economic gravity was moving East - this was the unchallenged view three years ago. It wasn't about 'if,' but 'by how much' will Asian currencies appreciate versus their G-10 (Group of 10) counterparts in the coming years.

Let's take a quick look at the world of trading currencies according to macro-economic fundamentals.

(Read More: China Eyes Market Forces to Drive Currency Reform)

The first port of call for the macro currency trader has always been the Balance of Payments (BOP) - trends in trade, capital flows and FDI would be scrutinized religiously. If inflows were set to eclipse outflows then the currency in question was going to be a winner. Asian currencies (bar a few exceptions) have certainly ticked the right BOP boxes over the past three years. So why are we perennially disappointed by such a poor performance year after year. More pertinently, why are the forecasts of those clever economists continuously so wide of the mark?

Well, we know Asian central banks aren't shy when it comes to interfering with market forces - currency intervention to protect competitiveness has been a feature of the Asian forex landscape since one was wearing short trousers. But surely this should have been taken into account when the most erudite economists nailed their currency forecasts to the mast.

On Friday, Toys "R" Us Inc. pulled its IPO offering, facing year-over-year quarterly declines in revenues, profits and comparable store sales. However, these are only symptoms of a larger issue facing the chain: a business model in desperate need of an overhaul.

(Read More: Did Toys 'R Us Deliver a Big Warning for Retail?)

As our political leaders take stock of where we stand in 2013—both as individual states and as a nation—we are hearing a consistent message: jobs, our economy and education are inextricably linked.

We heard the President make this case in his State of the Union Address and we've heard it echoed by both Democratic and Republican governors. If we want to see some meaningful improvements in our education system, business leaders must step up and lead as well.

Education is akin to a computer's operating system. It drives other crucial functions in a country: workforce preparedness, business growth and economic strength to name just a few. Unfortunately, our system of education and workforce training has become outdated. If we are going to prepare students as well as we should, we must upgrade.

Cloud computing is a technology megatrend that increasingly affects all industries, from technology companies such as cloud service and infrastructure providers, to brick-and-mortar companies using the cloud to reduce information technology (IT) and infrastructure costs.

However, many CEOs have not grasped the full impact of this trend on their organizations. One important area of oversight is the potential impact on the global tax position of the company.

The U.S. equity market had a great finish to a wonderful first three months of 2013. In logging its best first-quarter performance since 1987 (11 percent), the Dow set yet another all-time high. For its part, the S&P surged 10 percent, ending above its previous (2007) record close.

The rally reflects slowly-improving economic conditions, relatively robust corporate profitability and anticipation of stronger domestic and foreign inflows into the equity market. Yet this is far from the whole story.

Investors need only look at where some other benchmarks ended the quarter to get a feel for the unprecedented and artificial nature of today's capital markets.

(Read More: Rally Like a Broken Record as S&P Scores New High)

Last week in Wuxi, I noticed a newspaper headline about the bankruptcy of Suntech, one of China's largest solar panel manufacturers. Below the fold was a story about the success of several local car companies and the dramatic rise in their stock values. Was there something that these stories had in common - and something from them that could help the U.S. economic recovery?

Suntech defaulted on over half a billion dollars in government loans, a figure similar to the Solyndra losses for American taxpayers. There are numerous reasons for both of these failures, but chief among them was the fact that risk-free money resulted in both firms over-building their capacity ahead of market demand, driving down margins and ending any chance to make profits and repay loans.

When U.S. President Barack Obama looks at the dangerous euro wasteland that once was a prosperous region driving nearly one-fifth of the world economy, he probably has flashbacks of repeated rebuffs he got from German Chancellor Angela Merkel when, in late 2011, he asked for more economic growth and less austerity.

Schadenfreude (German word for delight in misfortunes of others) and "I told you so" are probably not even crossing his mind because he suspects that he might soon have to move to save Europe from the resurgence of its old demons.

I hope he does feel that way, because a real sense of urgency should prevail at the time when America's perhaps only and truly reliable ally is sinking deeper into an intractable recession and politically flammable problems of joblessness and poverty.

(Read More: Remember Euro Breakup Fears? They Are Back)

Indeed, just four days before the Holy Week came this heartbreaking report from Caritas (one of the world's largest humanitarian organizations): more than 3 million people in Spain currently live in extreme poverty (families with an income of less than $390 per month), and more than one million are barely surviving on charitable donations – an increase of 150 percent from the pre-crisis levels.

Saving Europe From Itself

And there seems to be no end to this, Chancellor Merkel says that at least five more years are needed to put this horrible human suffering behind. But five years sounds like a short time to produce a German euro area. And a more important question is whether that objective can be achieved without tearing apart the social fabric already stretched to the breaking point in France, Italy and Spain – to say nothing of smaller countries like Greece, Portugal, Ireland, Cyprus, Slovenia, etc.

For the U.S., the euro area chaos is not just an issue of bleak outlook for one-fifth of American exports going to Europe. It is a question of political stability of its key ally and a pillar of the largest and, arguably, the most successful military alliance in history.

(Read More: Cyprus Bailout Won't Be Euro Zone's Last: Poll)

It is also a question of the viability of America's new security doctrine, founded on the concept of sharing with allies the political and military responsibilities for world peace, and freedom of global commerce and finance. Yes, for reasons of its own budgetary problems, Washington wants its allies to do some heavy lifting, too.

But how can Washington square euro area's deep and continuing budget cuts for basic public services with the requirements of their military and political burden sharing?

Mission impossible, no doubt. America's new security doctrine is, therefore, just a pipe dream at a time when the world is confronted with serious challenges to peace and stability in the Middle East, Central and East Asia and parts of Africa.

(Read More: Euro Zone Overrates Ability to Curb Contagion: Moody's)

What can the U.S. do? To begin with, President Obama might wish to forget and forgive the uncooperative attitude of the German Chancellor. He would probably get the same answer again in the run-up to German elections next September. But only President Obama can free Europe from being hostage to German politics. As a leader of the Euro-Atlantic community, he should ask for the euro area fiscal consolidation in the context of growing economies and declining unemployment.

Regulate and Supervise, Don't Confiscate

Such a gesture from President Obama would get an enthusiastic support from French and Spanish leaders, and from whoever will be in charge of the Italian government in the months to come. That would be a formidable coalition.

(Read More: Italian President at Center of Storm as Deadlock Continues)

Probably kicking and screaming, the German, Dutch and Finnish advocates of austerity would have no choice but to go along. Especially since their push for brutal spending cuts, tax hikes and confiscation of bank deposits has hit a dead end and seriously damaged the credibility of the euro area financial system.

The inability of Spain and France to drastically cut budget deficits in a recessionary economy is a clear proof – if one was needed – that the German austerity mantra is nonsense and has always been. These two countries are the "declared" cases of budgetary slippages, but others will follow.

Confiscations of bank deposits are a much more dangerous nonsense. A failure of financial authorities to supervise the banking system is a failure of public policy, a failure of people whose salaries are paid by depositors as taxpayers to provide an essential public good: a sound and a reliable financial system. By reaching into depositors' – taxpayers' – pockets to pay for errors of public policy, the German-Dutch-Finnish disciplinarians are not only violating the rules of public service, but they are also running afoul of basic principles of social equity and justice.

(Read More: Bank of Cyprus Big Savers to Lose Up to 60 Percent)

In fact, the whole euro area crisis is a comedy of public policy errors paid for by taxpayers and wasted lives of millions of unemployed. Cyprus is the latest example. The German idea that there could be a water-tight cordon sanitaire around the destruction of a small island economy of one million people is a grave error of judgment in a monetary union whose weak financial system continues to be damaged by a worsening recession and soaring unemployment.

Just like in cases of Greece, Ireland, Portugal, Spain and Italy, Germany failed to lead – or simply could not lead - in a timely and effective manner, allowing again relatively simple and minor problems in the Greek Cypriot state to develop into a crisis of major proportions.

The Euro Crisis Is a Threat to Peace

I hope Washington will take all this very seriously. Surely, some Beltway pundits will probably gloat about German incompetence. And they might also like the fact that the U.S. is benefiting from the flight of capital to its safe, deep and broad financial markets – as shown by the dollar's 5.3 percent gain against the euro since the Cyprus crisis entered its acute phase in early February.

But that would be wrong and short-sighted. This large capital outflow from euro assets is a sign of major distress that can easily spill over into other markets and damage institutions of systemic importance.

More ominously, recessions, rising unemployment and the difficulty of seeing an early end to all that are leading us back to security problems. The euro area economic fault lines have now become serious political fissures. Resentment of Germany, recent Italian elections run on anti-German themes, vicious invectives, pervasive hate talk and ghosts of the Nazi past are now flying around a continent that was supposed to swim in solidarity and brotherly love of an ever closer European Union.

Here is what the Luxembourg's Prime Minister Jean-Claude Juncker – the man who accused Germany of playing domestic politics on the back of the euro - told the German magazine Der Spiegel on March 11, 2013: "Anyone who believes that the eternal issue of war and peace in Europe has been permanently laid to rest could be making a monumental error. The demons haven't been banished; they are merely sleeping … I am chilled by the realization of how similar the circumstances in Europe in 2013 are to those of 100 years ago … In 1913, many people believed that there would never again be a war in Europe. The great European powers were economically so strongly inter-twined that there was a widespread opinion that they could no longer afford to engage in military conflicts. Primarily in Western and Northern Europe, there was a complete sense of complacency based on the assumption that peace had been secured forever."

(Read More: Hands Off Our Banking Sector, Luxembourg Tells Euro Zone)

The late French President Francois Mitterrand said the same thing more bluntly, and more directly, in his speech to the European Parliament on January 17, 1995: "…we have to vanquish our history…nationalisms lead to war! The war is not just part of our past; it could also be part of our future."

Clearly, a wake-up call for Washington. Or as the astronauts were saying when calling their base: "Houston, we have a problem."

Michael Ivanovitch is president of MSI Global, a New York-based economic research company. He also served as a senior economist at the OECD in Paris, international economist at the Federal Reserve Bank of New York and taught economics at Columbia.

Cyprus did not manufacture its banking crisis. The European Central Bank and European Union bear that responsibility, yet Cypriots will pay the price for their dysfunctions.

Until recently, Cyprus was a prosperous island economy with robust tourism, shipping and a significant international banking sector. Its big banks, like others in Europe, attracted large overseas deposits and invested heavily in sovereign debt. In Cyprus, much of the money came from Russia and was invested in Greek bonds.

Singapore's economy is undergoing a clear soft patch. Consider the following:

Industrial production (excluding volatile biomedical goods) has been down by 6 percent year on year or more in recent months; Non-oil domestic exports have been down, on average, by 15 percent year on year since December; Data on the productivity front is also poor and inflation remains high by historical standards - over 4 percent in recent months despite a tight monetary policy stance for over 2 years.

Business sentiment is weak, with the Purchasing Manager's Index exceeding 50 just once since June 2012 (a reading above 50 indicates expansion and below that contraction).

Although gross domestic product (GDP) growth is expected to pick up this year on the back of rising demand in the U.S. and China, the data seen so far this year suggest Singapore will lag the Southeast Asian region in the pace and magnitude of recovery.

But does slow growth really matter? Against the apparently weak data reported above, we need to consider the following context.

(Read More: After the Dire Data, Singapore Risks Another Contraction)

The economy is operating at full employment. The rate of unemployment has been around 2 percent for the last couple of years, at the very low end of reported figures since the 1997 Asian crisis.

Wages have been rising steadily, reflecting both a tight labor market and public sector initiatives to raise the standard of living.

While the year-on-year percentage change in real GDP may appear small (1.5 percent in October-December), Singapore's real GDP recovered its lost output from the 2008-09 global crisis rapidly and the present level of real GDP is 29 percent higher than the bottom reached in early 2009. The economy is operating fairly close to its potential level of output.

Asset markets are buoyant, with stock prices up about 11 percent year on year and property prices about 20 percent higher than the previous cycle's peak in mid-2008.

(Read More: Singapore 2013 Growth Tipped at 2.8%: Central Bank Survey)

Monetary and financial conditions remain exceptionally easy. Interest rates are at an all-time low, capital inflows are ample, and the appreciating currency has increased the purchasing power of Singaporeans considerably.

It is not difficult to reconcile the first group of negative figures with the second group of positive ones. Singapore's growth depends largely on external demand, which has been weak for a while, affecting exports and production, but the economy's fundamentals remain strong, thanks to low interest rates supporting thriving domestic demand. If anything, some slowdown in growth is desirable as that could relieve some cost pressure on the economy.

(Read More: Singapore February Exports Fall Sharply on Rigs, Pharmaceuticals)

Policy Dilemma

With this backdrop I don't expect the authorities to have much desire to support the economy.

Interestingly, the thrust of policy measures lately has been in the opposite direction, with the Monetary Authority of Singapore (MAS) steepening the slope on the nominal effective exchange rate (NEER) appreciation last year and a series of macro prudential measures being put in place since 2010 to cool the property market.

As long as interest rates remain at their floor and global liquidity abundant, there will be only limited traction from steps to cool the property market. As cost of financing remains cheap, money will find its way to the property market and associated activities.

The curious characteristic of the Singaporean economy is that it is compelled to maintain a policy of exchange rate appreciation to fight tradable price inflation, which in turn brings in flows and keeps rates low, and consequently fuels non-tradable inflation (e.g.rent and transportation).

(Read More: Singapore February Inflation Up 4.9% From Year Earlier)

The authorities have taken an array of measures to stem the latter, but the impact has been limited so far. The MAS will likely maintain an unchanged policy stance during its policy review later this month, and more property cooling measures could well be in the pipeline, but I am not convinced if this policy mix will bring about the desired result. Like it or not, Singapore's fortunes will continue to remain tied to the vagaries of global macro-economy and developed country monetary policy for years to come.

Taimur Baig is the Chief Economist for India, and ASEAN, Global Markets Research at Deutsche Bank AG. He is a regular guest on CNBC TV.

In the long history of gold, dating back at least 6,000 years to the first trinkets in the Transylvanian Alps, owning gold meant actually having it in hand. Gold adorned a beloved's neck or was stored in a strongbox. The point being – the owner could get at it – behold its luminous glow, and hold the weight of the gold.

That has changed. More than ever before, there are new ways to own gold.

(Read More: Gold Is Trendless, Don't Expect A Lot From It: Bob Doll )