….is that it’s been a blessing in disguise for the EU. Before the crisis the Euro was heading towards 1.50, now it is down to a more reasonable 1.35. If Greece defaulted on its debt, it would probably go down to 1.2. Would that be bad for Europe? Most would say no. In a world of competitive devaluations in which China has been amassing $2.4 trillion in reserves thanks to an artificially devalued currency, exporters in the EU would welcome the fall of the Euro. Moreover, the only real danger of a declining currency, inflation, looks very well under control: labor costs are down because of unemployment and energy costs are down because of lack of demand. No wonder it’s taking so long to bail out Greece.

Follow Martin Varsavsky on Twitter: twitter.com/martinvars

No Comments

Entrepreneur Solo on March 23, 2010  · 

That is a very interesting point. However as all countries are trying to do the same what will happen with the race to the bottom long term? The UK has effectively devalued the pound by 25% since Oct 2008 and it hasn’t seemed to help out exporters at all.

3.0 rating

kahunablogger on March 24, 2010  · 

Sure, a weak currency is always good for exports, especially for a country like Germany – as long as the USD-based oil prices do not increase more than the Euro decreases against the USD. Personally though I prefer a strong Euro, otherwise it gets too expensive to live / travel outside the Euro zone for more than a few months per year.

3.0 rating

A. T. on March 24, 2010  · 

There is one little problem with this – it is again “capitalize on profit, socialize on losses” attitude, which in turn means taxpayers are to pay for this, not entrepreneurs. And this is the reason why all entrepreneurs are applauded but social responce is “go pay yourself”. Whenever exporters are in cheer mood, all consumers are NOT happy. So, yes, we understand your point but… Go pay yourself the bill.

3.0 rating

Leave a Comment

Español / English

Subscribe to e-mail bulletin:
Recent Tweets