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Home Publications Blogs Beat the Press Do the Euro Zone Countries Really Want Fewer Net Exports?

Do the Euro Zone Countries Really Want Fewer Net Exports?

Wednesday, 01 January 2014 09:35

That's what readers of a NYT article on Latvia entering the euro would assume. The piece presented it as good news that the euro had risen against the dollar over the last year. This increase will make the goods and services produced by euro zone countries less competitive in the world economy, reducing their exports and increasing their imports. With nearly all of the euro zone countries operating at levels of output well below potential GDP, it is difficult to see why they would view this loss of demand as a positive development.

The article also quoted a statement by Olli Rehn, vice president of the European Commission responsible for economic and monetary affairs, in which he referred to Latvia's strong recovery. It would have been useful to note that even with the recent growth it has experienced Lativia's economy is still almost 10 percent smaller than its pre-recession peak in 2007.

Comments (6)Add Comment
written by djb, January 01, 2014 1:53
guess the people who have a lot of euros already think its good
written by JDM, January 01, 2014 8:10
They assume everybody has a big, constant salary and merely wants to buy cheap imported goods.
Because WE are #1
written by John Puma, January 02, 2014 3:38
The NYT does a great deal to promulgate the notion that the rest of the world exists to do the bidding of the USA. It, informing, instructing and mimicking the average American, is incapable of seeing any situation from a perspective outside the borders of the US

The Euro zone is happy, don'cha know, to crumble as long as this allows an American to buy another toaster (usable life span < 6mos.) to prove that the US has no poverty and, therefore, the rich need not be taxed and the massive banks deserve $1 trillion per year government largesse.

written by JDM, January 02, 2014 4:05
I think their problem is that they accept the lay wisdom (better to put ironic quotes around "wisdom") you always want your currency to be "strong". It certainly sounds right - who doesn't want to be strong?

And if you the individual are planning a trip or buying something imported, maybe you do. But you the country probably don't. People reporting financial news for major newspapers should understand this. But often they don't.
written by sherparick, January 02, 2014 7:18
The writers and editors of the NY Times reflect the upper middle class lifestyle that still contains plenty of job security and high income, and such people benefit from the stronger dollar, something they notice because this is a group that does travel in foreign countries. It is not a particularly conscious conspiracy, but rather a lack of consciousness that what seems good from one's own particular angle, or the angle of your particular social group, is not necessarily good for the economy and the nation as a whole. Still, one would expect economic writers and editors to understand the identity equations in national accounts.

Latvia still has the worse unemployment rate among the Baltic countries. Also, contrary to Olli Rehnn's idiocy, the primary reasons for its recovery is strong demand for its exports of goods and services from its main trading partners, Russia, Sweden, Poland, Finland, and Germany, with only the latter two being fellow Euro countries. Also, like Ireland, a lot of the unemployed Latvians have immigrated to Finland, Sweden, Germany, etc.

Finally, this Euro project real is about terminating democracy in Europe and replacing it with rule by a technocratic, financial aristocracy. Even the Times seems to acknowledge that: http://www.nytimes.com/2014/01...rtain.html
Thoughtless editorializing
written by Ryan, January 02, 2014 7:54
I think this is simple thoughtlessness. It's analogous to the idea that of course, we want a strong dollar. That, and we want China to stop manipulating currency. In this case, a strengtening Euro value must be good.

Unfortunately, it seems to me that the reporters actually get paid to explain stuff only in my happy fantasy world.

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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.