by mantiq on 8/22/22, 12:28 PM with 276 comments
by unpopularopp on 8/22/22, 1:45 PM
At this point I feel the EU is pretty much done and the war just showed how weak the EU leadership is along how individual member nations acting sometimes totally against each other (see France doubling down on nuclear while Germany does the opposite). Like I don't see any positive outcome for the Union no matter what happens in the war, unless you see the US having an even greater influence over Europe as a positive thing. Personally I'm extremely pessimistic.
by thiago_fm on 8/22/22, 1:51 PM
It generates some inflation as imports are pegged to the dollar(somebody mentioned that it is hedged, it is just by some extent), but overall is actually good for the economic block. The EU needs to export to survive.
The EU has been fighting a possible deflation for most of the 2010s, this is actually not so negative as people might think.
If ECB would raise interest to the same rate as the FED, Euro would become too strong. Inflation is already decreasing in Germany even with that 0% interest rate.
The main inflation concern is the gas prices for this winter and this isn't fixable with monetary policy. If we have no gas, no amount of money will be able to buy it.
by imustbeevil on 8/22/22, 1:31 PM
by joshe on 8/22/22, 3:36 PM
by gls2ro on 8/22/22, 1:40 PM
Like exports from EU to US are now more profitable.
Or am I missing something? Can someone with more understanding/background explain how this might effect production and exports?
by nine_zeros on 8/22/22, 1:58 PM
If the USD falls and oil prices rise, we in America are screwed. We almost had it handed to us this summer.
by rvense on 8/22/22, 2:35 PM
by drpgq on 8/22/22, 5:59 PM
by mg on 8/22/22, 1:43 PM
But the current rise of the Dollar started 15 years ago.
Over these 15 years, it has become more and more apparent, that software is eating the world. And the US keeps extending their lead in this area.
I would not be surprised if that contributes to a long term trend in the EUR/USD ratio.
(I'm sitting in a cafe in Germany, writing this text on laptop made by a US company, running an operating system maintained in the USA, into a browser made in the USA and posting it to a website of a US company.)
by vondur on 8/22/22, 6:29 PM
by KingOfCoders on 8/22/22, 2:12 PM
by randomopining on 8/22/22, 3:41 PM
I'll never understand. If anybody knows the train of thought, please tell.
If Germany was more energy independent, Russia would be crushed this winter.
by debacle on 8/22/22, 1:28 PM
Meanwhile the ruble is stronger than it's been in 4 years.
For people in the EU/UK, how has this currency slide impacted your day to day?
by FollowingTheDao on 8/22/22, 3:30 PM
All that is left is the petro dollar. This is the result.
by viraptor on 8/22/22, 12:49 PM
(yes, I know there's more content and "this week's currency summary" sounds less fun and I should chill out)
by FollowingTheDao on 8/22/22, 3:20 PM
by yuan43 on 8/22/22, 2:03 PM
Yet the article does not explain how a "gas crisis" leads to a weaker currency.
What does lead to a weaker currency? On the EU side, central bank accommodation in the face of inflation ripping higher. Germany recently logged a 37% YoY annual increase in producer prices:
https://www.reuters.com/world/europe/german-economic-outlook...
And the ECB has done basically nothing about it. Deeply negative real rates and little indication that the ECB has the stomach for any substantive action.
On the US side, there have been sizable interest rate hikes, which will continue at least until the midterm elections get underway. Real rates are still deeply negative.
That difference in rates attracts a lot of capital that might otherwise be parked on the EU side.
The US doesn't need to be a pillar of financial responsibility to attract the world's capital. It just has to be the cleanest dirty shirt in the hamper.
by klqquant on 8/22/22, 3:31 PM
For Germany, apparently gas flowing through Nordstream-1 is ideologically pure, but gas flowing through Nordstream-2 is evil.
The West will continue to celebrate its hawkish Ukraine policies as a success. Looks like Taiwan will be the next success.