In spite of the fact that half of the EU is sinking under water, the Euro is rising rapidly. Why?
Because the U.S. Economy, controlled by a group of Money Managers, out to make rich banks richer, have weakened the Dollar, and made unemployment the key feature of the Great Depression of 2008.
This shift in the value of the Euro is hurting the agricultural economies of Southern Europe. Spain, Portugal, Italy and Greece need to sell agricultural products in the world market in order to survive.
The competition for agricultural products is intense.
LATIN AMERICAN PRODUCTS
Spanish farm owners, during the twenty years prior to the 21st Century, had invested heavily in the agricultural industry of South America.
These land owners were seeking cheap farm labor, and they found it in South America. The South American governments required partnership with local capitalists. New groups were formed, mixing Spanish and Portuguese capital with Latin American capital.
In essence, this was the identical modus operandi (formula) of the manufacturing outsourcing to China.
Cheap labor + Helpful Governments = Low Priced Products.
The agricultural countries of Europe, today, cannot compete with the agricultural countries of South America. Especially, if their currency is too expensive.
Euro’s Gain Hurts Exports as Spain Sweats Major Rally
July 19 (Bloomberg) — The euro’s biggest rally in a year is threatening exporters in Europe’s weakest economies as they grow more reliant on international sales for growth.
The 9.5 percent gain to $1.3008 from a four-year low on June 7 reduced speculation that the region’s debt crisis would break up the single currency. At the same time, the head of SpainÃ¢â‚¬â„¢s Exporters Club says the stronger euro will make it harder to counter a “paralyzed”Â domestic market.
European Aeronautic, Defence & Space Co., the maker of Airbus planes, says at $1.20, the currency still wouldn’t be weak. Salvatore Ferragamo SpA says it’s counting on exports to boost sales as austerity measures crimp demand from France to Italy.
“DISASTER FOR EURO ZONE”
If the euro continues to appreciate it would be a disaster for the euro zone, said Ken Wattret, chief euro-area economist at BNP Paribas SA in London. The worst-case scenario for the euro area is you have a sustained exchange-rate appreciation because it would snuff out the recovery.
In this universe, you cannot have it both ways. If you use cheap labor in the global market place, expensive labor cannot compete – especially when your currency increases the price of your products.
We are seeing the populations of Europe and the U.S. losing repeatedly, as their prices under-perform sales from the countries with cheap labor. The trend is steady.
All labor in the world will ultimately be paid identical salaries. The laborer in China, Latin America, Europe and the U.S. will earn exactly the same amount, both in cash and benefits, such as health and retirement.
Escaping from the economic force of price equality is not possible.