EU to China and the US: sort your shit out
Also from the AP, via Yahoo:
Europe is starting to feel the bite as the U.S. dollar plummets, making French wine, Italian fashion and German cars expensive purchases for the EU’s main export market in the U.S.
Last week, the employers federation BusinessEurope said that, by crossing 1.40 against the US dollar, the euro exchange rate had reached a “pain threshold” for European companies. It also complained the euro was appreciating too fast against the Chinese yuan and Japanese yen.
While echoing their concern, the finance ministers of the 13 euro-zone nations will reiterate Europe is an innocent victim of others and that the euro-dollar exchange rate issue is part of a broader set of problems triggered by China’s trade surplus and America’s huge debts that require concerted steps to undo.
Luxembourg’s Prime Minister Jean-Claude Juncker set the tone last week when he said the Europeans should not have to bear the consequences of other countries’ inaction.
As opposed to anybody else on Earth? Are we to suppose that we should have to bear the consequences of other countries’ actions (or inaction)?
This is called foreign exposure, for Cliff’s sake. Other countries act according to their self-interest. I’m sure, even in Luxembourg, we can find, say, one man being mightily inconvenienced by the inaction of a neighbour, or a local authority.
Also a part of the overall story, including the growth rate of the US (2.5%? No problem, right? I mean inflation in the US is only 1.7% anyway – it’s not as though the economy in the real world isn’t growing at all), are the seeming advances the EU finance ministers are making, relative to the rest of us, in closing down how debt is packaged and sold (Germany was hit particularly hard, but I haven’t come across the sorts of dodgy rule-changing in for which British, Australian and US central banks are going).
This will, of course, most likely close up significantly one of the outlets for repackaged debt. How much impact this may have on the US economy remains to be seen. Meanwhile, the appreciating Euro, making everything in the EU expensive, also may tempt yet more of them to come over here and make the trade deficit worse.
Speaking, further, of the resilience of the Euro in the face of the Summer’s oil ‘shortage’ – China’s oil imports are up 18%, as it invests in refining capacity of its own (more of which means China can really play for crude, the way the US does – they have boatloads of cash, and didn’t the Saudis recently not, for the first time, follow US interest rates? I’m just saying).