tag:blogger.com,1999:blog-8529397808101838812.post1060609608837600559..comments2009-09-22T11:13:32.560-07:00Comments on German Economy Watch: German Business Confidence Still Improving In MayUnknownnoreply@blogger.comBlogger5125tag:blogger.com,1999:blog-8529397808101838812.post-36399455383049581612009-05-25T23:28:45.246-07:002009-05-25T23:28:45.246-07:00Thanks Edward for the comments you made to my obse...Thanks Edward for the comments you made to my observations and questions. I honestly feel that the Euro zones ¨green shoots¨ are in serous jeopardy of becoming dried out wilting weeds..(if they haven´t already) all due in large part to the strong Euro..Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-8529397808101838812.post-23346588241612015222009-05-25T22:35:16.476-07:002009-05-25T22:35:16.476-07:00Hello,
Thanks for the comments. I think we broadl...Hello,<br /><br />Thanks for the comments. I think we broadly agree.<br /><br />"The euro is around 1.40 to the US dollar, in your opinion will this effect in a negative fashion German exports?"<br /><br />Well, I think the thing is, the German economy was previously "waterproof" to euro/USD when:<br /><br />i) Eurozone economies like Spain and Italy were still growing and eating up exports<br /><br />ii) The UK pound was moving in the same direction as the euro<br /><br />iii) East Europe and Russia were booming<br /><br />Now none of these conditions exist. Only France is more or less holding up (even if in recession). So Germany will look further afield for exports, even as the US and Japan struggle themselves to become more competitive.<br /><br />So the annswer is yes. The weaker dollar will now hurt Germany. How much so we are about to see. <br /><br />"I think that the stronger Euro will not be at all welcome by the ECB and they in turn may be forced to do something about it..."<br /><br />Well, it is not at all clear what they can do. In my view - with US interest rates near zero, and possibly set to stay there for some time - the USD has replaced the Japanese yen as the favoured "carry" currency (see my recent "Don't Get Carried Away", on Global Economy Matters), and thus will be inherently weak as people borrow dollars to convert into Brazilian real, Indian rupee, Turkish lira, or whatever.<br /><br />"The ECB´s so called dis-inflation<br />is heading even more rapidly for deflation"<br /><br />Definitely.<br /><br />"And since Germany is the heart of the EU to me this suggests that any real recovery for Europe is a long way off."<br /><br />Ditto. Stabilising a contraction is not the same as recovery, and saying the "worst is over", simply means we won't again be contracting at a 15% annual rate. But for how long can we continue to contract at a 5% annual rate, or a 3% one?Edward Hughhttps://www.blogger.com/profile/10384039867580949531noreply@blogger.comtag:blogger.com,1999:blog-8529397808101838812.post-56982724519973501812009-05-25T14:36:05.745-07:002009-05-25T14:36:05.745-07:00Final comment,
The ECB´s so called dis-inflation
i...Final comment,<br />The ECB´s so called dis-inflation<br />is heading even more rapidly for deflation if the EURO continues to strengthen or stays at current levels(oil must stay at current levels and not rise further). In my opinion the strong EURO is the last thing the export driven economy of Germany needs at this juncture in the recession. And since Germany is the heart of the EU to me this suggests that any real recovery for Europe is a long way off.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-8529397808101838812.post-59780493925138352062009-05-25T14:09:54.012-07:002009-05-25T14:09:54.012-07:00Also,
I look forward to seeing the next German bus...Also,<br />I look forward to seeing the next German business confidence survey especially if the Euro stays above or at 1.40 to the US dollar.<br />I think that the stronger Euro will not be at all welcome by the ECB and they in turn may be forced to do something about it...what that is I have no idea(q-easing etc..)..Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-8529397808101838812.post-16305320760131010282009-05-25T13:58:48.470-07:002009-05-25T13:58:48.470-07:00The euro is around 1.40 to the US dollar, in your ...The euro is around 1.40 to the US dollar, in your opinion will this effect in a negative fashion German exports?Anonymousnoreply@blogger.com