I disagree with conclusion. Germany does not really want a strong Euro. Germany wants a weak Euro and this is why it’s had a hand in collapsing states like Greece. But yea, currency wars are real and at the moment there is widespread collusion to crash the Yen as a funding source for corrupt gov’ts to buy their own bonds and keep the banks from having to come clean about their fraud.
Max Keiser
Financial War Reports
Nope, once again you don´t want to understand a different culture. Germany, her population and her political class want a strong currency, because this is the way to prevail for Germany. Most every day consumption products and oil products are imported to Germany so a strong currency makes these imports much cheaper. This gives the German industry the opportunity to keep wages relativly low since people gain in purchasing power because of the stronger currency. And a stronger currency doesn´t matter too much for the German export industry since they sell high end industrial products and not cheap consumer stuff so prices do not matter in the end. Germany will do everything she can to keep the Euro strong and in the end the Euro will be the worlds main reserve currency.
Agreed Wolferl, Germany is still competitive with a $1.65 Euro while the rest of the EZ isn’t, with Italy and France as the most obvious. Germany’s hand in the Greek collapse was rather minor compared to Goldman for example. Credit was extended and the Greeks hung themselves just like the Americans. The yen is being pushed over the edge by China mostly:
http://www.atimes.com/atimes/China/NL01Ad01.html
i disagree. although psychologically germans do want a strong euro nothing much has been done and will be done technically that supports this. the stability of the euro compared to other currencies that are depreciating is not a good sign. its no sign at all! david marsh sometimes spews such weird stuff, i remember him in a german talkshow saying something along the lines of ‘when the euro collapses we will happily print pounds to help you out’…
I think it’s a load of bollocks. Surely innovation is more important than a weak currency. Historically Germany & Japan have always had strong currencies simply because they were always strong in the innovation department. China has always needed a weak currency because it lacks expertise in the innovation department. The only advantage China has is low wage labour.
Money is power and national pride really is a hoax for the proles to get excited about.
@Amy Scott. Never heard of technology transfer? The Chinese have been biding their time and essentially got all that they need from the Germans and Japanese. The Chinese next stage is to compete with these two nations in terms of quality, but at much lower prices.
@Wolferl – The plight of the people is rarely – if ever – the object of compassion from the powerful. They rather prefer it, as it keeps the population yielding, pliable,and supplicant. They can, and do make a lot of money from high internal consumer prices on essentials and general necessities.
A weak currency, on the other hand, enriches them beyond measure. As you said, they have an added economic buffer available, from selling production and high-end machinery to the mass producers. They are higher up on the feeding pyramid. They accumulate more densely concentrated profits.
Should they need to produce cheaper and more massively, they can still rationalize their automation – which still looks like cottage-industry with robots, in many places – and increase the social pull-down thing. That alone can buy them another 10 years or so.
When Mr. Kohl referred to politics as sausage-making, he mentioned it being better for the people not to knopw how either was done. I have seen sausage-making done, at least. They take the thing apart, chop it to bits, mix it with blubber and spices, and put it into the ram that pushed the pieces into the tripe that gives teh mass a “shape”. Optionally, it can be tied and constricted into regular sections, tomake it easier to parcel and dole out. That, of course, is how quality stuff is made.
I don’t think that the powerfuyl are too worried about quality, at this point, except their own. They can make 2, 3, 4,’n’ games in parallel.The population has far lesser options.
Get together think big and generates the new world. More earnings creates more competition which not good, in log run it makes depression.
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The France / Germany relationship is the key one to watch in Europe. Germany may end up having more in common with Russia & China wanting a hard currency to trade in. If Germany breaks ranks with France, she would be concurrently jettisoning the UK/US Dollar axis too.
How do France and Germany have a currency war? They both use the same currency. The difference between France and Germany is that France is not industrially competitive. A weaker Euro could benefit Airbus in Toulouse but that’s about it. The steel industry in France is pretty much finished. The auto industry can’t compete with products like Kia which are made under license in other parts of the EU. The big market for Peugeot in Iran was closed by France!
France has pretty much the same problem as the UK You could weaken the currency but it doesn’t really do anything for exports. All it does is cause stagflation (Inflation with no growth).
Germany is haunted by the ghost of Weimar past. Just look at the DM from 1950 to 2001. This was one of the most stable constantly appreciating currency in the world. German exported goods kept costing more and more for foreigners to buy and they still kept buying them. No German politician wants to be known for causing inflation and weakening the currency. Their entire post war success has been based on a strong currency.
It may be true that since 2001 their exports have benefited but Germany was a net loser from joining the Euro in the first place. If they had kept the DM, their trade surplus would have by now been a huge sovereign wealth fund. Instead it’s been frittered away by child abusing Brussels eurocrats and other harebrained schemes to redistribute wealth.
The big French success story was supposed to be it’s high speed rail technology which is actually excellent. Unfortunately they exported it to Malaysia at a very high price a few years ago. To get some of their money back Malaysia sold all the blueprints to China who copied it and are now half way through building the biggest high speed railway network on the face of the planet. Later they will be exporting this hi-speed railway system to other countries who they want to build infrastructure for in exchange for resources.
Of course the Chinese deny that they stole and copied the designs and they need to build up a track record on safety but it is much cheaper then the French offering (and everybody knows it’s basically the same thing with cosmetic changes to lend plausibility to denial).
Thanks Danny !!!
If anyone is interested in profiting off of the decline in the Yen, buy YCS. It is a X2 yen short ETF. Double leverage is appealing because of the lower volatility than a high volume stock. Also, gas prices in the US are going up. UGA is the gas ETF. Buy and hold. I personally own UGA and YCS.