Saturday, September 22, 2007
Airbuses And EuroAngst
Airbus, which is controlled by France and Germany, is already in the midst of a radical cost-cutting campaign, forced by heavy losses on its A380 jet. Its voice is the latest in a chorus of complaints from French and Italian leaders that the strong euro could choke off European growth. What concerns economists more, however, is a sharp drop in the monthly survey of purchasing managers in the 13-nation euro zone - evidence that the credit crisis that began in the U.S. mortgage market and infected British and German banks has now seeped into Europe's underlying economy.Etecera. It's worth noting that the Airbus changes were already scheduled to move considerable production essentially out of Europe and the total of the cost cut proposals were due to knock off about 10,000 jobs. The French and the Germans just couldn't agree to shake hands and do it all in Alsace-Lorraine. Oh, no. The A320 subassemblies will be done in China.
In the meantime, Sarkozy's proposed reforms are going to ignite a war with unions (the unions said "war", not me), which will, of course, be fought with the highest principles and on the most enlightened, philosophical plane only. Gurgle. Absolutely no one thinks Sarkozy can win. Eliminate full pensions at 50? Performance reviews for civil servants? Is the man stark, staring mad? Refreshed from their six weeks of vacation, the civil servants of France intend to come back and show him just who's boss.
I wouldn't be too confident about Germany, either. They should do better than France, but that may turn out to be 1.9-2.0 at best? One of the most bizarre indicators yet is the proposed German rule change to make it more difficult for German banks to sell corporate debt, although calls to consolidate German banks were a precursor.
To get an idea of how interconnected this all is, both Commerzbank and Deutsche Bank (Germany's top two) confessed that they would take a hit from the "US subprime crisis", which caused Irish bank shares to fall.
Having hopefully regained my temper and therefore running less risk of incurring another 80,000 years in purgatory, tomorrow I will discuss why this has nothing to do with Zionists. The Zionist accusation, along with a plethora of other suggested villains, has reared its ugly head over at Calculated Risk, a blog which is hardly of the nature to prompt or nurture such blathering. Yet it's there in the most traditional way. Neither Jews nor bicycles have created our problems, and all history should teach us that blaming such matters on Jews, bicycles, Hillary Clinton, or even mosquitoes is self-destructive.
Some traditions just must be discarded; blaming someone else for your own problems just means that your problems will never be solved. It may feel good at the time, but the end result is disastrous for everyone.
BBC: Jobs fears as euro gets stronger:
Money changer exchanges euros for dollars More cuts may have to be made at Airbus if the euro continues to remain strong against the dollar, an executive at the European planemaker has warned.
Chief operating officer Fabrice Bregier told French radio station BFM a further 1bn euros may need to be added to a savings plan based on a $1.35 euro.
On Friday the euro hit a fresh record high against the dollar of $1.4120.
Airbus may also have to buy more goods in the dollar zone - where it currently buys about half its supplies, he added.
Buying more goods in the dollar zone would help lower costs as it would mean cheaper prices.
"If the euro remains durably at $1.45, that would mean we had to find one billion euros in additional savings under Power 8 [restructuring plan]," he told the French station.
"Our reply to a strong euro is, first to be more competitive, second to buy more in the dollar zone," he added.
The weak dollar is good for USA exporters and hurts USA importers.
The weak dollar means AIRBUS must use more USA parts or they will go bust.
"North America is an important region to Airbus in terms of both aircraft sales and suppliers. 2,000 of the total of approximately 5,300 Airbus jetliners sold by Airbus around the world, representing every aircraft in its product line from the 107-seat A318 to the 565-passenger A380, are ordered by North American customers. According to Airbus, US contractors supporting an estimated 120,000 jobs earned estimated $5.5 billion (2003) worth of business. For example, one version of the A380 has 51% American content in terms of work share value.
EADS Airbus will be opening an assembly plant in Tianjin, China for its A320 series airliners, to be operational in 2009. AVIC I and AVIC II will be EADS' local partners for the site, to which subassemblies will be sent from plants around the world."
The Reliapundit link
People forget that globalisation cuts two ways. Not always to our benefit
I think that Sarkozy means business. For a long time, I thought he was offering up all the right rhetoric but that he would never be able to make changes in a stagnant France.
I am starting to rethink my position. He may be France's Margaret Thatcher, or France's Ronald Reagan, a generation behind the structural changes those two leaders imposed upon the Anglo world.
He just may be the real thing.
Time will tell.
That is my prediction.
As far as racism, etc, the other conspiracy theories abound as well. I think this sort of sudden economic change is not understandable to many people, and so appears to be the result of some vast infernal plot.
So the momentum to change may have passed.
The French system is teetering and must be reformed in some way. It's not clear to me that this is a conservative reform, in the classic sense. The French have managed to turn a socialistic system into a system that perpetuates a very good life for the upper middle class and above, and a terrible life for the have nots. There are no jobs and almost no opportunity for the bulk of the younger people.
It wasn't the immigrants who rioted when Sarkozy won. It was the children of the socialist unions and the students in college.
Calculated Risk is a very civilized, intelligent blog run by two extremely decent human beings. There's actually less of it there than elsewhere, but of course it is much more shocking to find it there. It's popping up around and about. Here's a broker thread, and another. Unfortunately the Walt/Mearsheimer book has thrown flames on the fire of paranoia. I would like to have a little personal talk with those two.
I have a hard time arguing with that. In fact, I have a hard time arguing with almost anything you have to say.
However, can't we put some of the blame on the mosquitoes anyway? It is a creature that takes a small part of you and hopes you don't notice.
No wait. I didn't mean mosquitoes. I meant monetary inflation. Nevermind.
I sure hope we can blame someone else for that! It would be a shame to think we simply printed too much money and lived off the kindness of strangers.
I'll have to become more informed about France's problems.
Never the less, there is a season for all isms, and the conservative brand is a bit long in the tooth IMHO, the question is not conservative or socialist, but the political trend. Can a conservative reform or do we wait for a socialist. It was Nixon that went to China and not a left winger after all. Likewise it may take a socialist to make the decisions or have them forced on him because he does not have to fight the opposite ism.
Sorry, I'm starting to sound like Howard.
CF, the thing about Howard is that he might not always be right, but he's always writing based from some sort of a factual basis. So sounding like Howard is not the worst fate.
Rob, when I look at France, I realize that both conservatives and liberals have lost their way in the modern world, and that is why nothing is working. To put it another way, liberalism has its strengths, and conservatism has its strengths. But when liberals turn conservative and conservatives turn liberal, both lose their grasp of their primary principles and become horribly ineffective. Their cores are both based on ideas about human potential, and when either political philosophy stops fact-checking itself against that basis, it goes to hell in a handbasket.
The punchline? The Galileo system is being established to compete with GPS, operated by the US Defense Department and made available without charge. So Brussels is launching a "Euro" satellite network that will compete with a free good.