WBEZ | Euro http://www.wbez.org/tags/euro Latest from WBEZ Chicago Public Radio en How a too-strong dollar might lead to a too-weak world http://www.wbez.org/news/how-too-strong-dollar-might-lead-too-weak-world-111346 <img typeof="foaf:Image" src="http://llnw.wbez.org/main-images/ap851119269057_wide-c3b91a4ad0260c6a4fdac02dae45ec8b89c83482-s600-c85.jpg" alt="" /><p><p>It&#39;s flattering to be King of the Hill.</p><p>And these days, the U.S. dollar is wearing the crown. It has climbed to its highest point in 11 years, with global investors pushing it ahead of the euro and other major currencies.</p><p>But while it&#39;s a compliment to have a strong dollar, the honor is not without its downsides. When the dollar rises against other currencies, it increases risks to U.S. manufacturers.</p><p>So economists are looking for signs that a good thing may be starting to go too far. These questions and answers may help explain what&#39;s happening.</p><p><strong>First, has the dollar really moved that much?</strong></p><p>Yes, the WSJ Dollar Index, which tracks the dollar&#39;s performance against 16 other currencies, had a 12 percent rally in 2014. In these early days of the new year, the dollar has been continuing to rise.</p><p><strong>Why is this happening?</strong></p><p>Currency traders are betting the U.S. economy will be growing so quickly in 2015 that the Federal Reserve will nudge up interest rates from recent historic lows.</p><p>The opposite is likely to happen in Europe. There, growth is weak and Greece&#39;s political troubles are creating uncertainties.</p><p>So if you were a saver, where would you put your money &mdash; in a strong, stable country offering rising interest payouts, or in a region with a shaky economic outlook and falling interest rates? Common sense says more people will turn to the United States as a safe haven.</p><p>&quot;As dollar assets become more attractive, more money comes into the U.S., pushing up the value of the dollar,&quot; said Nariman Behravesh, chief economist for IHS Global Insight. &quot;And as more money leaves Europe, it pushes down the value of the euro.&quot;</p><p><strong>So what&#39;s wrong with having people love the United States?</strong></p><p>It is good to have everyone wanting to stash their savings in the United States. But investors&#39; embrace of the dollar can start to feel like a death grip if it goes too far. Here&#39;s why:</p><p>U.S. companies that make goods and equipment want to compete on a global stage. If the dollar gets too expensive, U.S. exports can get priced out of the market. For example, if a customer in Brazil wants to purchase an earth mover, it could buy one from Caterpillar, or it could turn to companies in Germany or Japan.</p><p>If the dollar&#39;s value is very high, then it could tip the Brazilian&#39;s decision in favor of the Germans or Japanese.</p><p>It&#39;s not just U.S. manufacturers who worry about the rising dollar. The U.S. tourist industry also could take a hit if Germans, Brits and others can no longer afford to visit Florida this winter.</p><p>&quot;A strong dollar is a double-edged sword that could hurt a lot of U.S. companies,&quot; said Lindsey Piegza, chief economist for Sterne Agee.</p><p><strong>How is this likely to play out over time?</strong></p><p>It could turn out just fine over the next year or two. In this good scenario, the European Central Bank would lower interest rates just enough to encourage European companies to borrow money and expand. With energy being so cheap now, this could indeed be the perfect time to take a chance on expanding a plant.</p><p>That would lead to more hiring, which would help consumer spending in Europe. Once growth picked up, the euro&#39;s value would rise. In the end, the United States would have a healthy trading partner again and a more reasonably priced currency, allowing for fair global competition.</p><p>But there could be a bad scenario: Europe&#39;s economy could keep shrinking, with the euro becoming unstable and the dollar getting way overpriced. The bottom line would be less business for U.S. manufacturing and tourism, and the U.S. economy would start to sink too.</p><p><em>&mdash; <a href="http://www.npr.org/2015/01/06/375201124/how-a-too-strong-dollar-might-lead-to-a-too-weak-world" target="_blank">via NPR</a></em></p></p> Tue, 06 Jan 2015 15:08:00 -0600 http://www.wbez.org/news/how-too-strong-dollar-might-lead-too-weak-world-111346 Craig Wright: Don't just blame the Greeks for their debt crisis http://www.wbez.org/blogs/onstagebackstage/2012-05/craig-wright-dont-just-blame-greeks-their-debt-crisis-99687 <p><p><img alt="" class="image-original_image" src="http://www.wbez.org/system/files/styles/original_image/llo/insert-images/Greek%20Debt%20%28ap.Thanassis%20Stavrakis%29.jpg" style="float: right; width: 300px; height: 209px; " title="A woman passes in front of chart with the stock prices at the Greek Stock Exchange in Athens, Monday, May 7, 2012. (AP/Thanassis Stavrakis)" />There&#39;s a big debt crisis going on in Greece right now, one that so few people really understand that <em>This American Life</em> even teamed up with <em>Planet Money<a href="http://www.thisamericanlife.org/radio-archives/episode/455/continental-breakup"> </a></em><a href="http://www.thisamericanlife.org/radio-archives/episode/455/continental-breakup">for a whole episode to explain it</a>.</p><p>But you can skip that hour (sorry <em>TAL</em>!) because screenwriter and playwright Craig Wright&nbsp;has a shorter explanation of what&#39;s happened in Europe. And, he&#39;s aiming for German Chancellor Angela Merkel: &quot;It&#39;s not that you can&#39;t blame the Greeks. But don&#39;t you have to acknowledge, Angela, the forces that you fed into their current insufficiencies, especially since they have so much to do with you?&quot; Read an excerpt below or listen above:</p><p><em>So I wanted to talk today about the Greek debt crisis. When I looked at the news this week </em><em>&ndash;</em><em> and I don&#39;t look at the news that often, so this is really big </em><em>&ndash;</em><em> I noticed that the Germans had decided that the best way to deal with the current economic paranoia in Europe was to throw the Greeks out of the European Union.</em></p><p><em>Which many of you probably don&#39;t know, and so I looked it up: In <a href="http://topics.nytimes.com/top/news/international/countriesandterritories/greece/index.html">a summary on the </a></em><a href="http://topics.nytimes.com/top/news/international/countriesandterritories/greece/index.html">New York Times</a><em><a href="http://topics.nytimes.com/top/news/international/countriesandterritories/greece/index.html"> website</a> provided by Peter Poulos, the genesis of the Greek debt crisis was that they sort of binged on debt for the past decade and then in 2009 it all fell apart. And then the EU constructed two giant bailouts, when then created a bunch of internal unrest inside of Greece which then took the government down, so now the people of Greece no longer want to do the bailouts that the EU arranged, and so the Germans decided that the best thing to do was to kick them out.</em></p><p><em>This whole summary of the situation was written, I think, by Peter Poulos. It&#39;s not credited to him, but its sitting next to a picture of him next to a slideshow link where you can see all the cool vintage stuff hes bought in Athens while he&#39;s been stationed there.</em></p><p><em>Now you have to really appreciate </em><em>&ndash;</em><em> or hate </em><em>&ndash;</em><em> the irony or lack thereof of the </em>New York Times<em>, to put his sort-of shopping spree link next to his account of a giant economic global disaster. That being said, no one appreciates an amphora more than me so...Opa!</em></p><p><a href="http://thepapermacheteshow.com/" target="_blank">The Paper Machete</a>&nbsp;<em>is a weekly live magazine at the Horseshoe in North Center. It&#39;s always at 3 p.m., it&#39;s always on Saturday, and it&#39;s always free. Get all your</em>&nbsp;The Paper Machete Radio Magazine<em>&nbsp;needs filled&nbsp;<a href="http://www.wbez.org/tags/paper-machete" target="_blank">here</a>, or download the podcast from iTunes&nbsp;<a href="http://itunes.apple.com/podcast/the-paper-machete-radio-magazine/id450280345" target="_blank">here</a>.</em></p></p> Thu, 31 May 2012 10:07:00 -0500 http://www.wbez.org/blogs/onstagebackstage/2012-05/craig-wright-dont-just-blame-greeks-their-debt-crisis-99687 Europe’s economic crisis and the future of the euro http://www.wbez.org/worldview/2012-04-24/segment/europe%E2%80%99s-economic-crisis-and-future-euro-98508 <img typeof="foaf:Image" src="http://llnw.wbez.org/main-images/AP120412123206.jpg" alt="" /><p><p>As economic uncertainty continues to spread across Europe, it remains to be seen whether the euro can withstand the challenge. The economy has already taken a very public toll on the continent&rsquo;s political leaders. <a href="http://www.google.com/url?sa=t&amp;rct=j&amp;q=&amp;esrc=s&amp;source=web&amp;cd=1&amp;ved=0CDIQFjAA&amp;url=http%3A%2F%2Fwww.ft.com%2Fcomment%2Fcolumnists%2Fmartin-wolf&amp;ei=bNaWT4aTF4OY8gSpiuS1Dg&amp;usg=AFQjCNFNbWv3AA4Q8O_W8bjHy_RrZpGp4A" onclick="window.open(this.href, '', 'resizable=no,status=no,location=no,toolbar=no,menubar=no,fullscreen=no,scrollbars=no,dependent=no'); return false;">Martin Wolf</a> is the chief economics commentator and the associate editor for <em><a href="http://www.ft.com/home/us" onclick="window.open(this.href, '', 'resizable=no,status=no,location=no,toolbar=no,menubar=no,fullscreen=no,scrollbars=no,dependent=no'); return false;">The Financial Times</a>.</em> He says although there has been popular opposition to the current policies, it&rsquo;s important not to exaggerate the significance of the political changes. Martin joins <em>Worldview </em>to make sense of Europe&#39;s financial crisis and offer his take on reasonable solutions for the region&#39;s economy.</p></p> Tue, 24 Apr 2012 13:58:00 -0500 http://www.wbez.org/worldview/2012-04-24/segment/europe%E2%80%99s-economic-crisis-and-future-euro-98508 Former IMF official says Greece should default and drop the Euro http://www.wbez.org/episode-segments/2011-07-07/former-imf-official-says-greece-should-default-and-drop-euro-88838 <img typeof="foaf:Image" src="http://llnw.wbez.org/segment/photo/2011-July/2011-07-07/greece1.JPG" alt="" /><p><p>Eurozone finance ministers and economists from around the world now argue over the best solution to Greece’s spiraling economic crisis. Some want more rigorous austerity measures, while others believe Greece should default on its debt and abandon the Euro. <a href="http://www.aei.org/scholar/72" target="_blank">Desmond Lachman</a>, former deputy director at the International Monetary Fund in its Policy Development and Review Department, tells us why he favors the latter. Desmond is now Resident Fellow at the American Enterprise Institute. His most recent article on the Greek debt crisis is <a href="http://www.american.com/archive/2011/july/a-tale-of-a-euro-exit-foretold" target="_blank">“A Tale of a Euro Exit Foretold”</a> in <em>The American</em>.</p></p> Thu, 07 Jul 2011 16:38:00 -0500 http://www.wbez.org/episode-segments/2011-07-07/former-imf-official-says-greece-should-default-and-drop-euro-88838