When dollar falls, European exporters count their bruises

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.

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.

The alternative is hard assets with no fractional reserve

You should do that then.

aka money printed out of thin air.

When a bank loans out a fraction of customer deposits, that fraction is less than 1 so they are not printing money out of thin air.

Try to get some info from someplace other than goldbug sites. You might learn something.

When a bank loans out a fraction of customer deposits, that fraction is less than 1 so they are not printing money out of thin air.

The entire banking system creates money out of thin air - not one individual bank. We've discussed this before. It's a failed system that never works long term. Collapse and gov't bailout wipes the slate clean and a new generation of suckers buys into it.

You saying the system (fractional reserve lending) works, while at the same time watching the financials either go bankrupt or lose 90% of their value is like bagdad bob saying Iraq is winning the war...it's hilarious but in a way sad - you'll only wake up when it's too late

Weak dollar

http://www.forbes.com/2007/11/23/airbus-eads-dollar-markets-equity-cx_ll_1121markets05.html (Ask Airbus and Boeing)

Weak dollar

http://www.autonews24h.com/Auto-Industry/DaimlerChrysler/Chrysler/1812.html (Ask Chrysler in Europe)

You're just smart enough to cherry pick that information in the news which support your “belief.” Let's forget concepts like supply being outstripped by demand...... Sure, whatever makes you feel good and fits into your system of “beliefs.”

I know nothing about a weak dollar as a PM at a major IT firm; after all it just makes us more COMPETETIVE on a world market and we’re competing for customers. You live in Texas? Then ask EDS, Perot Systems, Dell, what a high valued dollar does to their competitiveness on the world stage. Next we'll hear you complain about off shoring, right? Do you like US industrial and high tech jobs leaving, US products being to expensive abroad and foreign products being dirt cheap on US shelves? Sure, I guess. While a dollar that goes too low is bad, a high valued dollar is also not good for us. Example 1980s when the dollar hit DM3.50+:1 and was valued high elsewhere too (Lira, Yen, Pound, French and Swiss Franc, Drachma…etc). That was horrible! You had US firms that no longer could compete, not because they were less efficient, less innovative, lower quality, etc., but because we could not match an equal grade product in cost and were essentially as an economy getting clobbered buy our own high valued currency. More and bigger isn't always better, but you might have to think a bit deeper to get to that conclusion.

BTW, I love how “your type” always resorts to BS. How about $3.81 gas ( http://www.dallasgasprices.com/ ). You know, if you round $5 to the nearest 10 you could claim $10 gas! OMG, the sky is falling. It's a quagmire, miserable failure, we're bogged down, stuck, and can't drill our way out of the problem!!!!!! I got it.

Cheap. Better than a 7.0% yield.

Hahah...what a schmuck. I'll bet you like it twice as much now that the price is 1/2 off and the yield is the same? How's ING doing BTW?

You federal reserve worshiping fools will never learn. Gold is holding it's value nicely against everything in this brief deflationary cycle. Once the hyper-inflationary next phase kicks in, gold is really going take off.

"Why are goldbugs so bad at math" LOL...hahahahah. That was a good one Toadler. Wall street idiots - learn your history.

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