The EU countries are afraid they will have to become more efficient because they can no longer get big and fat on exports to the US. The value of the US dollar is killing Socialism all over the world that feeds from Americans buying their earth polluting products .
http://www.csmonitor.com/2002/0718/p01s03-woeu.htmlThe euro's surge this week makes exports more expensive and businesses nervous.
By Peter Ford | Staff writer of The Christian Science Monitor
PARIS – When Europe's common currency, the euro, reached one-to-one parity with the US dollar this week for the first time in over two years, one might have expected some proud chest thumping on this side of the Atlantic.
In fact, the few cheers that went up were distinctly muted.
The rapidly sliding dollar poses as many problems for Europe as it does for the United States, economists say.
Among the concerns:
• A weak dollar means a strong euro, and that hurts European exports. French cheese and Scandinavian furniture, not to mention steel and automobiles, are now more expensive abroad. Every 10 percent appreciation of the euro knocks a percentage point off the European Union's GDP, say economists at the German bank Dresdner Kleinwort Wasserstein.
• Central European currencies and stock markets are rising quickly – too quickly. That's destabilizing for developing economies.
"The sharp jump in the value of the [Czech] koruna was caused by speculative capital," says Marketa Sichtarova, chief economist at Volksbank CZ. "These are short-term investments .... They are not real businesses," and carry with them the risk of future collapse.
The psychological boost of equality with the world's preeminent currency will soon wear off, they forecast, as the implications sink in.
"The story is dollar-negative, but it is not euro-positive," warns Mikael Schubert, an economic analyst at Commerzbank in Frankfurt.
The heart of the problem is that a higher euro will make exports from the 15- member European Union less competitive on international markets. And for the last three years, it has been exports that have largely driven economic growth in the EU.
The picture is even bleaker in central European countries, whose emerging economies are dangerously export-dependent. The rise of local currencies there against the dollar threatens thousands of bankruptcies and tens of thousands of layoffs, just as the former Soviet bloc nations are finding their economic feet.
