On December 3, Jean-Claude Trichet, president of the European Central Bank, said, 'In 2008 there will be more inflation (2.5%) and less growth (2%).' European exports will not grow, given the dollar’s current position and the good-value Yuan. The EU and USA are asking China to re-evaluate the Yuan, the EU is worried about US monetary policy and the US is worried about China’s monetary policy. Only the Chinese are keeping quiet, but the tsunami isn’t far off. As these three economies depend on each other, a US recession would bring China and Europe down too.
Strategies of the three super powers
Compromises must be made and exchange rates adjusted, as one currency could floor an economy as well as boost it. With a strong euro, importing is good value but it is difficult to export. With a weak dollar, it’s the opposite. Exchange rates have a strong impact on the balance of trade. The states should therefore adapt the value of their currency to their economic strategy.
In China, a weak yuan, linked to the dollar exchange, means: products have their prices slashed and they are sold in the US. In the USA, a weak dollar means: we are too much in debt and we want to slow down imports in favour of local production. For Europe, well … the strong euro is not a new concept. Even Germany, whose upscale industry is routinely spared by the increases in the euro, is starting to worry. France and Italy fear an accelerated de-industrialisation of their economies.
EU keeping the USA afloat
Currently, the ECB is keeping its interest rates fairly high to keep inflation under control - a bargain for foreign investors, who are flooding in and boosting the price of the euro. Inflation or recession, what a choice! It’s all the more cruel that the value of a currency does not depend solely on the good will of central banks, but is becoming increasingly dependent on the stock markets.
Currency is an investment like any other. When the dollar is weak, alternatives such as the euro are sought. However, these trends do not always reflect the true state of economies: the euro is overvalued, the yuan undervalued, which makes these dilemmas worse. Ultimately, the European union is paying to keep the USA afloat and to avoid a recession stateside. They are getting into debt like never before with China and owe their salvation solely to their financial vitality. 'The dollar is our currency but your problem,' has become 'the yuan is your currency but our problem.'
Where love is most expensive
A crucial question for seducers. Let’s have a quick look at the cost of condoms in Europe … prices vary by a factor of three between countries and depending on quality. Italian Casanovas come off worst in this comparison : 1.25 euros for a condom, three times more than in Bulgaria. With a European average of 90 cents, German romantics must pay 70 cents, while the cost is 60 cents in France and 1 euro in Portugal. Which just goes to show, even in love, some people are better off than others.
Click on the map to check how much you'll be paying for love!