The Euro and Dollar Reach Parity
Many Americans who have visited Europe know the pain of exchanging dollars for euros. At one point, the Euro was worth $1.60 compared to the dollar.
The Euro began the year valued at $1.15 to the dollar. Since then, it has plummeted to a point where the two currencies are at parity for the first time in twenty years. That’s good news if you are a traveler. Your American dollar goes a lot further. However, if you are trying to export from the U.S., your products cost Europeans a lot more. That’s bad news because Europeans will buy less.
Why has the Euro dropped in value? Here is how Libby Cherry’s Bloomberg News article explains it:
Europe suffers most from the war, which has sparked an energy crisis and could lead to potentially a long and deep recession… At the same time, the US Federal Reserve is raising interest rates much faster than the 19-nation euro area. That makes yields on US Treasury bonds higher than those on Europe’s debt, driving investors to the dollar and away from the euro. What’s more, the greenback benefits from its status as a haven, meaning that as the war drags on and the fallout gets worse, the euro keeps sliding.
Will the Euro turn around? Probably not until the world economy strengthens and the Russian war ends. How long will that take? Ask Mr. Putin.
Blame the Baby Boomers for Shipping Delays
I am a proud Baby Boomer, so I was pulled in by a GCaptain article entitled, “Boomers Are To Blame For Shipping’s Woes.” It’s certainly a provocative headline. Its also a fascinating piece of reporting by the author, John Konrad. Here is how he puts it:
The baby boomer generation is not only the largest generation but also the best trained and educated. This generation built the most complicated but successful system of international trade the world has ever seen. The problem is now they are retiring en masse resulting in major skill shortages throughout the maritime world.“Boomers Are To Blame For Shipping’s Woes,” John Konrad, freightways, July 7, 2022
The author goes on to say that Generation X is getting the positions the Boomers are leaving. The problem is that Generation X is a much smaller generation, so there are fewer of them.
This is going to be an issue in all industries and countries.
(I once read that as the Baby Boomer generation exits the stage, it will launch the greatest transfer of wealth in the history of the world.)
Locomotive Engineers Vote to Strike
Locomotive Engineers voted n July 13 to strike if there is no agreement. That is according to an article in Railway Age.
Nearly 100% of Brotherhood of Locomotive Engineers and Trainmen members have voted in support of a nationwide strike, which BLET National President Dennis R. Pierce is calling “a showing of solidarity and unity.”“BLET Members Vote ‘Yes’ on Nationwide Strike Authorization,” Marybeth Luczak, Railway Age.
If there is no agreement by July 18, 2022, there could be a strike unless President Biden intervenes. The President has the power to stop a strike or lockout.
What the supply chain does not need is a railroad strike. Let’s hope it doesn’t come to pass.