A strong euro/weak dollar seems to be a two edged sword.
BTW, why are the buchanan pitchforkers all in a tizzy, a weak dollar is a tariff on foreign goods, exactly what they have been screaming for.
The Germans have plenty of Mexican investments. What are they unhappy about again ?
Europe ping
Currency exchange rate is a measure of relative strength. I wouldn’t call it a two-edged sword, really - it is what it is - the free market determines the value of the currencies one vs the other. For what it is worth, I believe that the USD is heavily undervalued, or, EUR overvalued.
CNBC ran an interesting segment they called the ‘iPod’ index, i.e., what is a price of an iPod in USD in various places in the world. There is absolutely no reason what so ever, that an iPod should cost $99 in the US, and $150+ or so in Europe. It is a commodity gadget, extremely widely available. So why the surcharge ? That, to me, represents a system out of balance that will correct itself - either EUR will go down, or the USD will strenghten.
But none of it is of much concern, unless you’re thinking about going to vacation to Paris.
Except for the price of foreign oil - and that is another story - surging foreign currencies means products from those countries will be more expensive in the US and US products will be cheaper in those countries - unless those governments raise tarriffs to protect their products.
The US consumer hardly notices monetary exchange rates unless he buys foreign goods. In addition, travel abroad may be more expensive.
The biggest danger is that foreign countries which hold US dollars may start dumping those dollars for more attractive, valuable currencies. However, with the US government one of the most stable in the world and the strength of the US economy, vast dumping of US dollars is doubtful.
And that is what I been waiting for, the dropping of the other shoe.
What do they export besides Beemers and military style walks?
Not to jack the thread, but that's scary right there. Everyone knows German stuff is expensive, but often it's the sole source of the level of quality needed.
(If only they had a series frozen pizza industry :^(
Your typical equiped BMW 3 series will now run you over 50,000 at sign on the papers time.
Its a fine car, but man o man, for a entry level BMW, thats getting insane.
SSSSSSHHHHHHHHHHH!
(this is the reason why the dollar is sliding....it’s a dirty little secret....conservatives decry Bush for selling out the dollar....He’s not! He’s selling American goods, and lots of them!)
OTOH, Asian currencies are still lower vs the $ today than they were 12 years ago, despite all the doom and gloom, sky is falling idiocy we keep reading here on FR. Somehow, these Asian countries still plod along, with booming economies...somehow...
Granted it’s not the late 1990’s but they still have growth.
VCI Quarterly Report
The business situation of the German
chemical industry in the 2nd quarter 2007
Lasting upswing for German chemical industry
Outlook: Lasting upward trend. Never before was the worldwide demand for chemicals ‘made in Germany’ stronger. The upward trend for the German chemical industry persisted also
in the 2nd quarter 2007: Chemical output continued to increase at a high level compared with the previous quarter, reaching a new record mark. VCI President Werner Wenning comments:
‘The robust industry business situation in Germany and throughout Europe gives further strong impulses to our business. All important indicators are pointing upward.We think that we can expect a strong positive development for the chemical market also in the 2nd half of the present year.’ For 2007 as a whole, VCI expects an output growth by circa 4 percent, chemical industry sales should increase by 7.5 percent.
Increase in production. Compared with the period from January to March the production of chemicals grew by 1 percent in the 2nd quarter 2007, exceeding the 2nd quarter 2006 by 6.2
percent. Particularly strong growth was recorded in pharmaceutical production. With just under 87 percent, production capacity utilisation continued to be high in the chemical industry.
Rising producer prices. In the 2nd quarter 2007 prices of chemicalproducts were, on average, 0.6 percent higher than in the1st quarter and had increased by 2.2 percent in the annual comparison.Main reasons underlying these developments from Aprilto June 2007 were further rising crude oil prices at internationalcommodity exchanges. The situation on energy and raw materialmarkets is not expected to relax in the 3rd quarter.
Sales hit record mark. In the 2nd quarter 2007 sales of the German chemical industry amounted to 42.2 billion euros. This is a new sales record in quarterly statistics, exceeding the good previous quarter by 0.7 percent, seasonally adjusted. Compared with the 2nd quarter 2006, chemical companies achieved a sales increase by 9.4 percent. Sales growth relied equally on domestic and foreign sales.
Trend reversal in employment. Growth in the German chemical industry is now reflected also in the labour market. In the period from April to June 2007 chemical companies in Germany had, on average, ca. 436,000 staff. Staff figures in the German chemical industry went up by 0.6 percent against the 2nd quarter 2006.
The lower dollar has many POSITIVE effects, most of which get glossed over in the gas price hysteria...
US Exports are UP because of the cheaper dollar. Last week there was an article on FR about Television/Plasma TV production returning to the United States, for the first time in DECADES.
The lower dollar, and higher transport costs make China trade less profitable...
Now, if we could just get LOWER TAXES, and a cap on UNLIMITED CIVIL LIABILITY, we might actually be able to compete again!