JohnRoberts said:
When the US finally raises interest rates the US dollar will get even stronger (I EURO= $1.06). This will make goods priced in other nation's currencies cheaper and more attractive.
Actually, I expect the EUR/USD exchange rate to be 1 to 1 or even lower at something like EUR0.95=USD1 in early 2016, if QE in the EU continues at that fast a pace (and it probably will) or even faster (waiting for Thursday this week). Indeed not bad for EU export companies (esp. when priced in USD, and probably add Chinese Yuan soon).
However, I’m not so sure about stock markets. Even if EU stocks “look” cheap, there is the exchange rate risk for non-EURO-based investors. What could easily happen is that, in the mid run, stock prices in the EU go up further (majority of companies is “fairly” priced at the moment, I think – and markets in Europe are not euphoric), but it will mostly be driven by derivatives and foreign investors (exactly what happened in Japan, I suspect), and then continue along a high-level and highly volatile trajectory (up 10% today, down 10% tomorrow, and so forth, absorbing QE money). Not so attractive for longer-term investors – unless “bought cheap so forget”-strategy.
The US desperately needs to reform corporate tax policy […]
In Japan they are talking about lowering domestic corporate tax to create incentive for companies to move their offshore production sites back to Japan. However, AFAIK, not a single Japanese company has done that yet – despite massive yen devaluation.
Yes we've discussed this before... Germany as a major exporter benefits from a weak Euro. If Germany was using a single country currency, things might be very different.
Not only as an exporter, but WRT interest rate in restructuring their debts: stop making new debts and/or keeping stable and, ideally, even reducing liabilities. Unfortunately, it’ll take many EU countries much longer, so the ECB will continue QE simply to buy time for local governments to finally get their acts together.
A single country currency in any European country not only runs totally counter to that idea, it will also diminish the EU’s overall (and most probably also that specific country’s) importance on the world map. Maybe, for some people, living in a marginal village with an inflation-triggered, imploding economy is the best that can happen. And maybe the game is already lost anyway (I’m thinking China and East Asian countries [ex Japan] as the next centres of world-leading economies -- it’s just a question of how far behind and how quickly the EU and the US will fall, I think 2050 is a good projection for the “Race over”), so why not accelerate the process today and blow up the EU? Though, attention everybody please, better grab your chairs really tightly as the taxman will sure come to take it. Who will benefit most from a future single-country currency? Those same people (in that very country) who hold most of the money today. The biggest chunk of the bill will be paid by the vast majority – and in far more unfavourable proportion than might be the case now (that is, surge in unemployment, paired with cuts in public spending – dark times ahead that’d be).
Frankly, I can't be bothered about Volkswagen. But the government sueing and fining itself? That's funny. They should go for it and thus recompensate all those people who now probably have to pay higher automobile tax
And one from Japan for the laugh:
Japan had raised VAT last year, with the next increase in preparation. And now the joke: the Japanese government has just issued personal “VAT payback cards” to every citizen to be used/shown at counters when shopping. Then, at the end of the fiscal year, people can claim back some of the paid VAT they “collected”. Of course, gov is hoping that people forget carrying their cards with them and showing it all the time. Crazy what bureaucrats dare to come up with. The last “crazy” Japanese joke was much more fun. A couple of yers ago, all taxpayers in Japan got wired approx. USD100 into their private account by the tax office (i.e., dropping money by helicopter). This didn’t change the overall course of the economy, cos they maybe didn’t wire enough money and people didn’t spend it, but they liked it anyway -- it uplifts the spirit
Wouldn't that be an idea for Europe?