Thu Feb 2nd, 2017 at 12:29:12 AM EST
This is interesting.
Trump's trade adviser says Germany uses euro to 'exploit' US and EU
The relationship between Germany and the Euro has long been one of interest here. Let's discuss.
Frontpaged - Frank Schnittger
From the article in the Guardian ...
Donald Trump's top trade adviser has hit out at Germany and accused the country of gaining an unfair trade advantage from the "grossly undervalued" euro.
In a sign that the Trump administration is targeting currencies in its approach to trade deals, Peter Navarro, the head of the US president's new National Trade Council, told the Financial Times (£) that the euro was like an "implicit Deutsche Mark".
Germany "continues to exploit other countries in the EU as well as the US with an `implicit Deutsche Mark' that is grossly undervalued", he said.
So, Navarro is accusing the Germans of pushing the ECB to deliberately undervalue the Euro in order to increase the competetivieness of German exports outside the Euro.
It bears mentioning that Navarro is somewhat crazy. 'Brutal, amoral, ruthless, cheating': how Trump's new trade tsar sees China
Navarro has penned a number of vociferously anti-China tomes including Death by China and Crouching Tiger: What China's Militarism Means for the World.
In The Coming China Wars - a 2006 book that Trump has called one of his favourite on China - Navarro portrays the Asian country as a nightmarish realm where "the raw stench of a gut-wrenching, sweat-stained fear" hangs in the air and myopic, venal and incompetent Communist party officials rule the roost.
Top Trump adviser: News Corp bashes him due to commercial interest in China
The Harvard-educated hardliner accuses "cheating China" of destroying both American factories and lives by flooding the US with illegally subsidised and "contaminated, defective and cancerous" exports.
American politicians must "aggressively and comprehensively address the China problem" before it leads to full-blown conflict, Navarro writes.
The majority of news coverage is rather critical of Navarro and his accusation. A common line of criticism can be seen in this article from CNBC. Trump's beef with Berlin - Why accusations of euro exploitation are simply `nonsense'
The article goes on to explain the German aversion to inflation and preference for a strong currency, and that ECB has been pushed into quantative easing against German opposition. Strangely, the Euro crisis of a few years back was not mentioned at all.
There is an interesting tidbit at the end, though, on the German trade surplus within the Euro.
Navarro, whose comments have been widely interpreted as anattempt to talk down the U.S. dollar in conjunction with recent remarks of asimilar hue by President Trump, does have some supportable basis for hisstatement, John Redwood, chief global strategist at Charles Stanley, told CNBC Wednesday.
"They have a point. The German surplus is colossal. It is causing enormous strains in the euro zone itself which are not helpful. The Greeks and the Italians and the Spaniards are on the wrong end of it," Redwood argued.
"Germany as the strong area with the big surplus has to share that money more willingly with Greece, Spain, Italy and Portugal, otherwise they will have a series of crises and in the end they undermine the very customer base for Germany industry that has driven that surplus in the first place," the global strategist warned.
Tim Worstall at Forbes has a rather different take on the matter. Trump Trade Team Gets One Right - Germany Benefits On Trade From Weak Euro
As regular readers will know I've very little time for Navarro and his odd views on trade. But this part of it is indeed true. The euro is a much weaker currency than an independent DMark would be. That makes Germany's exports markedly (sorry) cheaper than they would be without the presence of the euro. It also, obviously, makes Germans poorer than they would be without the euro but that's not something that does or should worry Navarro.