European Contagion

There is quite a lot in the news about the Euro crisis. I’m skeptical of claims that a Euro implosion would be disastrous for the U.S. economy. First off, Greece being ejected from the Euro doesn’t mean the end of the Euro. Just that Greece was brought in with an overvalued currency and with the full knowledge that the books were cooked. The U.K. was ejected from the Euro’s predecessor 20 years ago. That event propelled a dramatic economic recovery from disastrous interventions to stabilize its currency. It’s also the primary reason Labor was in government from 1997 to 2011. Even with larger knock on effects, the Euro zone is not a significant growth market for U.S. exports and an economic slow down might have a knock-on effect for materials prices. The U.S. performance this year tracked fairly well with oil. I’m likely wrong about this, but I don’t see this as our greatest challenge.

The most interesting piece that I read was a graphic in today’s Post illustrating U.S. exports to Europe. As I expected, exports to the southern tier countries aren’t that great. I expected the bigger EU countries (U.K., France, Germany) to make up the lion’s share. The shocker to me is that the largest market for us is Benelux (Belgium, Netherlands, Luxembourg), accounting for roughly $55B of U.S. exports per year, well ahead of the U.K. at $42B. One might quibble with me combining the three countries, but our Benelux exports rival those to Germany and France combined ($58B). For the record, here’s the top 10.

Country Imports Exports
Canada $237B $210B
Mexico $196B $146B
China $292B $74B
Japan $92B $49B
United Kingdom $38B $42B
Germany $72B $36B
Korea, South $43B $33B
Netherlands $18B $32B
Brazil $22B $32B
Hong Kong $3B $27B

Incidentally, there is only one country that shows zero imports or exports to the U.S.–Yemen. Unless you included postal bombs.

BB

Killing Democracy In Greece

Nigel Farage (UKIP Leader) doesn’t like the Eurozone. And he doesn’t want a United States of Europe. And he blames the Euro and the whole Eurozone concept for the coming Greek default.

I picked one. I suggest you go to the website and check out on multiple Nigel Farage videos available on YouTube. The Worm as Turned, for example. He’s a bare-knuckles critic of the whole Euro project.

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