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This is kind of ridiculous. The purpose of reserves is not to send political messages. It's to provide a mechanism to manage monetary policy and it does that th
by slivym 9y ago
This is kind of ridiculous. The purpose of reserves is not to send political messages. It's to provide a mechanism to manage monetary policy and it does that through buying back its liabilities.
To do this effectively you must hold a strong currency as your reserve- there's no point holding Zimbabwe dollars. So any reasonable reserves for a European country today will be part Dollar, Pound, Yen and Yuan. How much of each should be proportional to how stable that currency is and how highly correlated it is to your own currency.
This is not a political message, the ECB is just neutrally moving more towards Yuan as the Chinese economy gains importance relative to the US economy. That's all. It's not a good sign for the US, but the ECB has better ways to send political messages than buying $X00m dollars or Yuan.
- tylerhou 9y ago> It's not a good sign for the US IMHO this isn't necessarily true. A weaker dollar could mean stronger exports.
- PietdeVries 9y agoExports of what? iPhones? These are all made in China, and with the dollar dropping against the Yuan, anything the US imports from China (and also from Europe) will be getting more expensive. And with the dollar dropping, bonds in dollars will be less interesting for investors. Basically, the article suggests that where Trump is aiming to MAGA, the entire opposite seems to happen: the rest of the world accellerates where Trump hits the breaks. Take the example of solar panels: what good will this do to the US? It will make solar-companies doing less research as the Chinese competition is gone. It will impact consumers, and the environment. But it will hardly impact the Chinese - their export will be used internally and in Europe. Edit: yeah - the Europeans make cars... Volkswagen is the second largest in the world, after Toyota. Daimler (Mercedes) is fourth. Apparently, the top-16 based on revenue includes only 3 American companies...
- swarnie_ 9y agoDo you make any cars which are viable in Europe?
- emodendroket 9y agoI'm not sure who "you" is here but, yes, lots of American cars are sold in Europe.
- BrandoElFollito 9y ago"lots" would need to be quantified. Mentally scanning the garage at work, I do not think I saw one American car (France, very large company). I casually glanced through a few Google images matches for "traffic in Paris". I do not know much about cars but all seemed to be European or Japanese.
- emodendroket 9y agoI shared some links with the other guy, but anyway about 8% of Europe's market is Ford and 4% GM. FCA (sort of a joint Italo-American venture) is another 7% if you want to count them. So that's almost a fifth of the market if you add all those up.
- NicoJuicy 9y agoWhat do you mean? I only know some people who own a Tesla, otherwise, that's it
- emodendroket 9y agoFor instance, Ford still makes up something like 8% of Europe's market (http://shareholder.ford.com/~/media/Files/F/Ford-IR/events-and-presentations/2017/07-03-17-June-Sales/Ford-Europe-Sales-June-2017-Final.pdf http://shareholder.ford.com/~/media/Files/F/Ford-IR/events-a...) -- maybe not the unstoppable juggernaut of the continent, but a lot of vehicles. And there are a number of European Ford models not even available for sale in the US (mostly hatchbacks). That's just one maker. Perhaps they sell better in the UK than continental Europe or something, I don't know, but tens of thousands of cars sold per month is not nothing. Another chart shows that even the largest maker, VW, only has like 23% of the market: https://www.statista.com/statistics/263421/market-share-of-selected-car-maunfacturers-in-europe/ https://www.statista.com/statistics/263421/market-share-of-s...
- stale2002 9y agoNo. Even better. Exports of America's best product, which is our information economy. We give the world informational products and they send us physical goods. Seems like a good deal to me.
- guitarbill 9y agoMight change quite quickly depending on Microsoft v. DoJ
- tehlike 9y agoWeaker dollar could fuel housing bubble, too.
- joyeuse6701 9y agoUnfortunately I don't think currency and the decisions behind it can be divorced from politics, especially currencies tied to a government.
- cryptonector 9y ago> It's not a good sign for the US, but... Why isn't it good for the U.S. that the rest of the world get wealthier? Of course it is.
- deleted 9y ago[deleted]
- adventured 9y ago> It's not a good sign for the US Ideally the rest of the developing world grows far richer than they are today, which gives the US (and everybody else) more lucrative trading partners. Countries like: Vietnam, Indonesia, Brazil, Colombia, India, Nigeria. Even present mid-tier nations like Estonia, Czech, Slovakia, etc you want to see them go on to become the next Austrias and Denmarks. It's all very beneficial to the US and everybody else.
- PietdeVries 9y agoWell, if wealth is spread more evenly around the globe, this will indeed be good. Less unrest, less war, less refugees. Not sure if it's beneficial for the US as well though - the money flowing to Vietnam/Slovakia/Nigeria, etc has to come from someone...
- jonathanyc 9y agoNo, otherwise the world would have the same aggregate welfare as it did in the 18th century (or some arbitrary time in the past). The idea of this being some zero-sum game is not only naive but dangerous.
- MichaelMoser123 9y agoIt is hard to say much of substance on macro economic stuff - because all knowledge in this area is not within the realm of personal experience of any person. I therefore find it hard to trust anybody on such issues.