Posted on 11/17/2007 10:16:45 AM PST by shrinkermd
The euro's rise and dollar's slide are squeezing European exporters' profits or multiplying their losses, prompting layoffs and plant closings. Companies are not only curbing production of goods headed to U.S. buyers but also rethinking the way they do business.
The euro recently passed the record $1.47 mark, gaining 11.5% since the beginning of the year against the greenback. It closed Friday at $1.46; a dollar bought 0.68 euro.
Most emblematic of the problem has been the impact of the euro-dollar relationship on the aeronautics industry -- and particularly on France's Airbus, whose main rival is U.S.-based Boeing.
With a falling dollar making Boeing's products cheaper outside the U.S. and Airbus' more expensive, Louis Gallois, chief executive of Airbus' parent EADS, recently described the sinking U.S. currency as a "sword of Damocles" hanging over the company's future. He vowed to cut an additional 1 billion euros in operating costs by 2010 or 2011.
This would mean more layoffs at a company that is already purging 10,000 jobs, a decision made when one euro equaled $1.35.
Survival strategies
Less dramatic but no less crucial is the impact on other European companies that export sophisticated equipment, technology, cosmetics, cars and luxury goods. For firms that make a large portion of their sales in the United States or compete with firms that deal in dollars, survival depends on raising prices, cutting costs or hedging currencies.
The strong British pound, moribund Japanese yen and undervalued Chinese yuan also play roles in this tale of currency chaos, from a European exporter's perspective. Nearly every day, another company announces more lost earnings and job cuts and blames the currency commotion.
(Excerpt) Read more at latimes.com ...
Well, here in our little corner of Missouri, my husband's plant is working four-day weeks. They make U.S. Safety equipment. They are certainly not working seven days a week. Maybe we need to move?
Carolyn
I was you, I believe that made a statement to the effect that the Fed prints money and hands it to the treasury.
We have debated myriad points on these threads. How can I possibly answer such a broad question?
If you're concerned about the growth of jumbo cd's, eurodollar depostits and repos you can probably find it somewhere.
Please tell us why you're so concerned.
Can we just get one straight answer to a question out of you two, namely?
When Alan Greenspan said that the government creates money to finance itself was he wrong?
How should I know? When did he say it? In what context?
BTW, I answered your question earlier and asked you why it was a concern of yours. Since I answered the question you could at least be civil and reply.
Money can be created in two ways, the FOMC and banking activity. We have been over that on these threads a lot. Deficit financing doesn’t create money, as far as I can tell, it creates debt.
Please see post 93 on this thread for summary of the links b/t government deficit financing and the increase in the money supply (inflation).
Nevertheless I will answer yours. I have been concerned for some time that the expansion of credit in the economy has been reckless, and has led to a bubble in asset valuations, such as real estate speculation. It would appear that this is now starting to deflate. The bubble didn't do me any good on the way up, and it appears to be doing a lot of harm on the way down.
We have been through that before too. And how is money created in the system to finance that debt? Greenspan has a nice article explaining the whole mess.
Was he wrong?
1. By banking activity, I presume you mean the process by which fractional reserve banking multiplies the amount in circulation through a chain of deposits and loans-correct?
If so, then that has never been a source of argument.
2. And by FOMC you mean that money is created and injected into the banking system by the Federal Reserve as we have also discussed ad nauseum, correct? And if so,
3. Then is it not correct that the Federal Reserve is the original source of all US$ in circulation?
I take it those are rhetorical questions, and that you already know about the Fed, interest rates, monetary policy, and that the Fed has nothing to do with financing the debt (fiscal policy).. Glad we're together on the Fed not printing money.
See post 93 on this thread
Sir Alan seems to be messing things up worse now that he's retired. Back when he was Fed chief he was only irrelevant, like when he was warning everyone about Y2K while ignoring the impending dot-com bubble.
Then why did sir Allan write an article saying that one of the roles of a fiat currency is to create money to finance the deficit? Was he wrong?
Sir Alan blamed the 1929 bubble on the federal reserves failure to restrain monetary growth in the preceding years?
Did the Federal Reserve's monetary policy, in your opinion have anything to do with the then "impending dot-com" bubble?
In your opinion did it have anything to do with the current "sub-prime" mess?
post 94.
By your logic, would a further 50% fall in the dollar be good?
How about a 90% fall? Down that path lies madness - see Zimbabwe.
You can’t devalue way to prosperity.
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