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Strategies & Market Trends : Booms, Busts, and Recoveries

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To: J. Kerner who wrote (38513)	9/20/2003 6:52:25 PM
From: Haim R. Branisteanu	Read Replies (1) of 74559

Would like to bring some facts why a sharp depreciation of the UDX will bring about economic hardship if not recession around the world. Let's take Germany for example their GDP is around $2 trillion . Germany trade surplus with the US is around 11 billion a month or about $130 billion a year. Their unemployment rate is around 10% or about 4.2 million people. Let's assume that an fast UDX depreciation will bring the trade deficit to ZERO. Germany will need to shrink their GDP $130 billion a year or around 6% as and as a result about 100 thousand people will lose their manufacturing jobs which will have a multiplier effect of 1 to 3 resulting in a rise of unemployed people of around 300,000. Those people will need to receive all the benefits assured by Germany social system on top of unemployment payments abnd loss of tax income which I evaluate at around $30,000 a year. Simple said this will increase the German budget deficit by around 4% to 5% on top of the present 3.8%. Net result Germany will slide in deep recession, and they will be not alone, ....... the whole EZ will follow. Any rebuttals of my theory on firm data are welcomed

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