NEWS: Dollar Under Fire

Originally posted by Seekerof
Questions: Just what is the Euro doing for those EU nations, exactly? Wouldn't a strong Euro be making things better than worse for those European nations?

seekerof

It allows easier trade between nations that use that currency.
It makes it easier for tourists that travel to those nations.
It will make it easier for other nations to trade with those countries.
It should keep interest rates low as they wont need high interest rates to attract other nations into financing their debts.

BTW, in spite of the high Euro German exports are growing.

Overall development in foreign trade
- special trade -
in EUR mn

2002
Imports: 518,532
Exports: 651,320

2003
Imports: 534,534
Exports: 664,455

2004
Imports: 577,375
Exports: 733,456

gesamtentwicklung04.pdf

Germany's exports have gone up every year since the Euro was introduced.

Everything looks great on paper, as par, huh, AceOfBase.
Parade those figures if you will, also.

But the reality is that the European economy is flat-lining and deteriorating more and more ewith each passing quarter. Those combined GNP's aren't helping the rising unemployment numbers, are they? The list can go on.

What is the overvalued Euro doing for the Europeans, exactly?



seekerof

[edit on 11-3-2005 by Seekerof]

German uneployment numbers skyrocketing, left wing ruler out the window in the coming election, doesn't this all seem familiar to some people. Where is Indian Jones to save all the sacred relics before another brutal right wing dictator takes over...LOL. Serious about how ominous these numbers are. Highest unemployment since 1933. That kinda sets off a few red flags. Maybe we need a NWO thread about this.

A low US dollar can make US companies more competitive against other economies.

thanks,
drfunk

A low U.S. dollar can instilll a subtle anxiety about the future of the economy and thusly, the future of any given person's lifestyle maintenance......as I said before, the status of the economy is potentially directed(intentionally or not) by the word ofone man......so the focus should be on the psychological effects of these assessments........a low dollar is especially relevant to the upper-middle/upper class because, and I'm really only making a logical guess, these people are primarily concerned with their money driven lifestyles.....such a focus on their individual concerns allows for them to assume that global and generalized concerns are taken care of by established authorities instead of manipulated. A lower class individual isn't going to care too much about a weak dollar because, relatively speaking, they always deal with a weak dollar and their political/social influence is hardly concerted and better described as "conservative"........Conservative in this case meaning relagated to pre-established outlets.

The EU and the euro are an interesting case because of the widespread adoption of a new currency(a rare occurance today for a major economic power) and the inherhent population unification that is implied. Considering the concerns of the viability of the euro upon its inception, I would have guessed an imminent strength against the dollar as that would instill confidence. Would be incredibly irresponsible to introduce a currency that disrupts an entire continent, especially one that represents a relevant portion of the world's economy.......

Besides, a constant fluctuation iss necassary for healthy growth.......if it were good all the time, how would you know?

A yin yang reference. However i disagree that the Euro is popular because it is strong. It is popular because it is new, fresh and different. Same thing happened with the death trap that was the internet stocks. Hight P/E but nobody understands that anyways. Hell people don't even understand a quarterly report! People need to learn how to invest wisely before they actually do it because in the end they shoot themselves in the foot. Warren Buffet is making a huge amount of money on the Euro because he knew people would jump on it. Watch when he gets off the bandwagon, it will be a good signal of Euro failure. He didn't get rich by luck or born into it remember!

Originally posted by AceOfBase
Germany's exports have gone up every year since the Euro was introduced.

AceofBase, just remember who's buying the German exports, eh? Just because you're stating the numbers of exports from Germany are up doesn't mean it's great for the German economy. It all depends on who is buying the exports and revenues earned of purchased exports from consumers and distributors.

Let's say you're exporting a popular German product to America and see if Americans are buying up that popular item, on the assumption that it's been selling well in Germany, it could sell well in America, right?

So you export 200,000 of that particular product to America and those stuff have been distributed to American stores across the country. Pricewise, it vary based on the costs of distribution, fuel surcharge, processing and stocking from state to state and that before state tax. One major retailer will sell it at a fixed price (your price plus the retailer's price), another will sell it at your price alone, Walmart or Costco will sell it for less than your asking price. It all depends on the retailers or buyers. If stores have sold 100,000 of that product for a month or two, then the company that made it will get revenues. But you still have 100,000 left unsold, then the stores will still have to sell it anyway. However, all stores get all kinds of exported products from all the world, so in order to sell that German products, they can either put it on sale for up to 20% or so. That mean the German company would get less revenues from the sale percentage mark-down set by the retailers.

Let's not forget there's always a chance that few of that German product would be damaged or defective, retailers would treat it as "return-to-vendor" (the German company is considered a "vendor", same for every company that makes a product) and mark it out. The vendor would get "credits", not actual revenues. By the sixth month since it left the German company's floor, there are still less than 75,000 unsold left. To make room for new incoming products, retailers have to further mark down the price to less than what the German vendor have originally set up for. It could be a year before it would be considered return-to-vendor at zero value before the days of Annual Inventory at most retailers.

So far, you have the German company being earned profits, more or less, from those 125,00+ products purchased by American consumers, but still have less than 75,000 unsold in American stores. It would be a long-time before the German company get any profit out of that by the time those unsold products are re-distributed to stores like Big Lots! or other retailers specialized in selling unsold or unused products at extremely mark-down prices. OR the German company can ask to bring all those unsold items back to Germany.

The above is just a hypothetical scenario, mind you.

Bear in mind, the rising numbers of exports are no indicators of a proven economic success. It all depends on who are buying the exported products en masse?

[edit on 3/12/2005 by the_oleneo]

Originally posted by CAConrad0825
Watch when he gets off the bandwagon, it will be a good signal of Euro failure. He didn't get rich by luck or born into it remember!

I disagree with that. It wouldn't be a sign of failure, it would be a sign of a realized integration. By the way, Warren Buffet as a measurement of economic tremds.......I like it!!

Originally posted by the_oleneo
The above is just a hypothetical scenario, mind you.

The figures I gave are not for x number of widgets.
The figures are in millions of Euros worth of items that people from other countries have purched and the 'return to vendor' hasn't made a difference as it's over several years.

Originally posted by MemoryShock

I disagree with that. It wouldn't be a sign of failure, it would be a sign of a realized integration. By the way, Warren Buffet as a measurement of economic tremds.......

I like it!!

You cannot argue with success. Numbers do not lie. People do. That's why Buffet steered clear of the internet stocks and that is why i am going to stay firm with the dollar. The Euro is old news. By the time a "hot stock pick" or other investment has hit the street, the wave has already passed. Now is the time to look for greener pastures before the fad wears out on the Euro and it is too late.

Originally posted by CAConrad0825The Euro is old news. By the time a "hot stock pick" or other investment has hit the street, the wave has already passed. Now is the time to look for greener pastures before the fad wears out on the Euro and it is too late.

The Euro is not even close to being old news.
There will still be new nations adopting the Euro for the next several years.

Here's a list of nations using the Euro and some countries that will be using the Euro soon.

en.wikipedia.org...
Countries using the euro

At present the member states officially using the euro are Austria, Belgium, Finland, France (except Pacific territories using the CFP franc), Germany, Greece, Ireland, Italy, Luxembourg, Netherlands, Portugal and Spain. Overseas territories of some Eurozone countries, such as French Guiana, Réunion, Saint-Pierre et Miquelon, and Martinique, also use the euro....

Monaco, San Marino, and Vatican City previously used currencies that were replaced by the euro, and now mint their own euro coins....

Andorra, Montenegro, and Kosovo also used currencies that were replaced by the euro....

Many of the foreign currencies that were pegged to European currencies are now pegged to the euro. For example, the escudo of Cape Verde used to be pegged to the Portuguese escudo, but is now pegged to the euro. Similarly the CFP franc, CFA franc and Comoros franc, all once pegged to the French franc, are now pegged to the euro.
[edit]

EU-members outside the Eurozone

The ten newest European Union members should eventually use the euro, as EMU membership was part of their accession agreements. Estonia, Latvia,Lithuania, and Slovenia have already joined Denmark in the European Exchange Rate Mechanism, ERM II. The dates these ten states hope to join the EMU vary: 2006 for Estonia, Latvia, Lithuania and Slovenia (since they are already part of ERM II), 2007 for Cyprus, 2008 for Malta and Slovakia, 2009 for the Czech Republic and Poland and finally 2010 for Hungary. Estonia finalized the design for the country's coins' reverse side in late 2004....

Originally posted by drfunk
A low US dollar can make US companies more competitive against other economies.

I think it is actually a fairly wise move on the part of the US to not worry to much about the fall in the dollar's value. It makes their exports a better deal and reduces savings for companies who outsource or import products for sale. I think it will stimulate their economy, and reduce their trade deficit.

Who knows, it could have even been done on purpose for just those reasons. Lots of countries devalue the currency to stimulate economic growth and the export market, I know mine has.

It does have some negative effects, but I'm trying to look at it from a purely 'What would be best for the US economy?' perspective, and it seems like this could be a good short tem strategy. It will encourage consumers and corporations to keep their money in the country, and make them far more competitive in the world export market.

Us Canadians are already starting to get excited about cross-border shopping again, and that's a huge bonus for a lot of smaller northern US communities. I, for one, really missed those baby loafs of Tillamook cheese.

Originally posted by CAConrad0825
You cannot argue with success. Numbers do not lie. People do. That's why Buffet steered clear of the internet stocks and that is why i am going to stay firm with the dollar.

Buffett is steering clear of the dollar so I guess you should jump on board.

Bloomberg
Buffett's Bets

Buffett began betting against the U.S. currency in 2002 on concern about the trade and budget deficits.

``The evidence grows that our trade policies will put unremitting pressure on the dollar for many years to come,'' Buffett said in his annual letter to shareholders March 5. ``The decline in its value has already been substantial, but is nevertheless likely to continue.''

How about Former Fed Chairman Paul Volcker?
He said there's a 75% chance of a dollar crisis within the next five years. link

Originally posted by Duzey
I think it is actually a fairly wise move on the part of the US to not worry to much about the fall in the dollar's value. It makes their exports a better deal and reduces savings for companies who outsource or import products for sale. I think it will stimulate their economy, and reduce their trade deficit.

It hasn't been working.
The dollar has been falling for a couple of years now and the deficit is going up not down.
The deficit in 2004 was the highest ever and the $58.3 billion deficit for January 2005 was the second highest monthly trade deficit ever.

Originally posted by AceOfBase

Originally posted by Duzey
I think it is actually a fairly wise move on the part of the US to not worry to much about the fall in the dollar's value.

It hasn't been working. ...The dollar has been falling for a couple of years now and the deficit is going up not down. ...The deficit in 2004 was the highest ever and the $58.3 billion deficit for January 2005 was the second highest monthly trade deficit ever.

The trade deficit is linked quite strongly to the Mad Cow thing - and likely won't improve until more countries start importing US beef again. Hard to know when that night happen.

...Also, US health is strongly linked to what's happening in financial markets - and eroding confidence in the US market while at the same time putting it on the economic chopping block. See:

US Health and Finance


.

Originally posted by AceOfBase
The deficit in 2004 was the highest ever and the $58.3 billion deficit for January 2005 was the second highest monthly trade deficit ever.

True enough. I guess my theory works a little better if there is not a war going on.

I'll try to help out by leaving plenty of money in Nevada, next time I visit my sister. Everything will seem so much cheaper than it was last time, and I love a deal.

I feel that things will bounce back once we put more of our focus on manufacturing and less on being the worlds police force. Also think of how much better any countries economy will be if you cut government prgms? The US government enfringes too much on growth and limits its way to regulate itself by Laize Fare economy.

The EU is facing the same problem because the strong economies are being held back by the weak. I do not care about how well the treasury markets are doing. This is not the only way to gauge an economy. The US dollar was strong during the early 2000's but was the economy? Everything is different when you look at the big picture. Read a history book every now and then people, not just the newspaper headlines.

soficrow and AceOfBase:
Heads up you two:

EUOBSERVER / BRUSSELS - The US economy is 20 years ahead of that of the EU and it will take decades for Europe to catch up, according to an explosive new study published on Friday (11 March).

The survey, unveiled by pan-EU small business organisation Eurochambres, is intended as a sharp "wake-up call" for EU leaders as they gather on 22 March for a summit on how to boost growth and jobs in the EU economy.

The situation is scarcely better when it comes to income per person. The US attained the current EU performance in 1985 and Europe is expected to close the gap in 2072.

EU economy 'at least 20 years' behind US

Furthermore:

If the European Union were a state in the USA it would belong to the poorest group of states. France, Italy, Great Britain and Germany have lower GDP per capita than all but four of the states in the United States. In fact, GDP per capita is lower in the vast majority of the EU-countries (EU 15) than in most of the individual American states. This puts Europeans at a level of prosperity on par with states such as Arkansas, Mississippi and West Virginia. Only the miniscule country of Luxembourg has higher per capita GDP than the average state in the USA. The results of the new study represent a grave critique of European economic policy.

--snip--

EU versus USA is written by Dr Fredrik Bergström, President of the Swedish Research Institute of Trade, and Mr Robert Gidehag, until recently Chief Economist of the same institute and now President of the Swedish Taxpayer's Association.

New study compares GDP and growth: EU versus USA

Now, I'll ask again (for the thrid time), what exactly is the overvalued Euro doing for the Europeans, as a whole, as separate individual nations, and for their respective peoples/populaces?


Related?
Taiwan says EU plans to lift China arms ban is money over principles
Why is the European economy not growing?
C.I.A. Prediction: EU and NATO to Dissolve In 2020.

[edit on 12-3-2005 by Seekerof]

Originally posted by soficrow
The trade deficit is linked quite strongly to the Mad Cow thing - and likely won't improve until more countries start importing US beef again. Hard to know when that night happen.

I would say you are way off the mark on this one. The trade deficit last year was around 600 billion about half of that was just for oil. Beef is only about 4 billion or so.

Japan was once the largest buyer of U.S. beef, accounting for $1.4 billion of the $3.86 billion in U.S. beef exports in 2003, according to the National Cattlemen's Beef Association.

Article

OF further EU interest in this "Dollar under Fire" debate versus the overvalued Euro:

But if EU governments do not come up with a credible reform of the pact, they could face their reckoning in the financial market, some analysts have warned.

"Extremely profligate fiscal policies in some member countries might harm other, less profligate, members via higher borrowing costs, especially if markets believed that members would have to stand in for peers that became insolvent," said Morgan Stanley economist Joachim Fels.

"If so, the profligate members could free-ride on the back of the others. It doesn't take a PhD in political science to understand that such a scenario would create serious political conflicts in the union and would thus threaten its (very) foundation."

Although EU leaders are expected to try to breathe new life into the Lisbon agenda at the upcoming summit, many analysts consider the programme to be a lost cause.

A recent revision of the plan, while urging EU governments to accelerate reforms to their labour markets and to cut red tape, has already ditched the EU's long-stated ambition of forging the "world's most dynamic economy" by 2010.

The Organisation for Economic Cooperation and Development stressed the need for Europe to accelerate its reforms in a recent study, saying that the gap in growth between countries like EU heavyweights France, Germany and Italy compared to the United States had grown sharply over the past two decades.

EU economic credibility at risk in fresh reform push

And this concerning the US trade deficit:
America's Maligned and Misunderstood Trade Deficit (1998)




seekerof