Merkel’s Coalition Calls for EU ‘Orderly’ Defaults

SAN FRANCISCO (MarketWatch) -- A slumping euro, while great news for tourists on their way to Europe, is creating headaches for U.S. manufacturers whose overseas sales take a dip every time the currency drops a notch.

"Anytime you look at currency fluctuations there are a lot of moving parts, but for U.S. manufacturers the strengthening of the dollar [relative to the euro] will have a negative impact," said Adam Fleck, an equity analyst with Morningstar.

"The weaker euro will help the European manufacturers by making their products inexpensive," said Fariborz Ghadar, director of Penn State's Center Global Business Studies. "Globally, it makes the Europeans more competitive, even compared to Chinese manufacturers, and it hurts those on the outside like Japan and the U.S."

Most U.S. manufacturers claim to be shielded from extreme currency fluctuations following years of placing production facilities closer to their end markets. Revenue may rise and fall on the local currency's performance against the dollar, but profit margins should remain relatively stable.

That event was particularly painful for Caterpillar Inc. /quotes/comstock/13*!cat/quotes/nls/cat (CAT 60.76, -1.30, -2.09%) , which lost market share to its Japanese rival Komatsu Ltd. (JP:6301 1,714, +48.00, +2.88%) /quotes/comstock/11i!kmtuy (KMTUY 18.61, 0.00, 0.00%) . But the tractor maker has since moved its manufacturing facilities closer to their biggest overseas customers, and that helps to limit the risk of a currency suddenly losing value.

"Foreign exchange doesn't have much of an impact one way or another," according to Alex Blanton, an equity analyst with Ingalls & Snyder. "Sales growth would definitely come down (after translating into dollars), but if they make it there and they sell it there, it won't affect the profits as much."

That's a similar situation for 3M Co. /quotes/comstock/13*!mmm/quotes/nls/mmm (MMM 79.31, -2.12, -2.60%) . For years the conglomerate, which makes office products, electronics and transportation equipment, has focused on placing production facilities close to its customers, shortening its supply chain and being more nimble to their customers changing and varied tastes.

THE Greek government has been advised by British economists to leave the euro and default on its €300 billion (£255 billion) debt to save its economy.

The Centre for Economics and Business Research (CEBR), a London-based consultancy, has warned Greek ministers they will be unable to escape their debt trap without devaluing their own currency to boost exports. The only way this can happen is if Greece returns to its own currency.

Greek politicians have played down the prospect of abandoning the euro, which could lead to the break-up of the single currency.

Speaking from Athens yesterday, Doug McWilliams, chief executive of the CEBR, said: “Leaving the euro would mean the new currency will fall by a minimum of 15%. But as the national debt is valued in euros, this would raise the debt from its current level of 120% of GDP to 140% overnight.

ianadds wrote:Euro to fall 'Rapidly' to $1.03 After Breaching $1.19: Charts
http://www.cnbc.com/id/37098886

Like I said before, Euro reaches parity with USD. Yuan undergoes major revaluation. We have one USD = One Euro = One yuan. Voila, Global currency...All major powers can compete on equal footings in the manufacturing sector. No one will complain about the unfairness of currency manipulation by China.
Looks like the elites have come to terms...

Geithner Says He's Confident China Will Allow Yuan to Rise Against Dollar U.S. Treasury Secretary Timothy F. Geithner said he is “confident” China will allow the value of the yuan to rise against the dollar.
http://www.bloomberg.com/apps/news?pid=20601089&sid=av93C2IgVD6g

France, Singapore Officials Say It's in China's Interest to Let Yuan Rise A revaluation of the yuan would improve economic conditions in China, according to finance ministers from France and Singapore.
http://www.bloomberg.com/apps/news?pid=20601089&sid=ajUIWfajB1gQ

China to Resume U.S. Pork Imports in May, Ending Last Year's Swine Flu Ban China, the world’s largest producer and consumer of pork, has agreed to resume imports of U.S. pork produced on or after May 1, ending a ban imposed following the swine flu outbreak last year, according to a unit of the U.S. Department of Agriculture.
http://www.bloomberg.com/apps/news?pid=20601089&sid=aBbXc79Ev7vs

Serbia's central bank said the national currency, the dinar, hit an all-time low on Thursday, forcing the bank to intervene by selling 58 million euros (71.1 million dollars) to slow the trend.

The official currency rate on Thursday was 104.3 dinars for one euro, the lowest ever, the National Bank of Serbia said in a statement on its web site.

Since the beginning of the year the central bank has sold 1.306 billion euros in a bid to halt the steady slide of the dinar.

German unemployment fell for a 12th month in June as business confidence improved, putting the nation’s export-led economic recovery on a broader footing.

The number of people out of work declined a seasonally adjusted 21,000 to 3.23 million, the lowest since December 2008, the Federal Labor Agency in Nuremberg said today. Unemployment was forecast to fall 30,000, according to the median of 29 estimates in a Bloomberg survey. The adjusted jobless rate remained at 7.7 percent.

German companies plan to take on more workers in the second half of the year as economic growth picks up, Ifo said in a survey of executives for WirtschaftsWoche magazine published June 26. Unemployment will fall to 2.9 million by November and 2.8 million a year later, a 20-year low, Allianz SE Chief Economist Michael Heise said.

Most government departments are being asked to produce "illustrative plans" for spending cuts of up to 40%.

The Treasury wants departmental heads to set out how they would cut spending by both 25% and 40% by the end of July.

July 10 (Bloomberg) -- The euro climbed to an eight-week high against the dollar as European Central Bank President Jean- Claude Trichet said the economic recovery is gathering momentum.

The yen and dollar dropped this week against most of their major counterparts as stocks rallied on evidence the world is weathering Europe’s sovereign-debt crisis, spurring demand for riskier assets. Canada’s currency rose the most in almost a month before the central bank’s policy meeting later in July as job creation was almost five times what economists forecast.