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The World From Berlin

Follow the Falling Dollar

With the dollar at its weakest ever, the CEO of Airbus shared grim visions of cuts to come with employees this week. German commentators, meanwhile, searched for meaning in the mess.

European aviation giant EADS may be the weak dollar's biggest victim yet. As the greenback edged to its lowest point ever on Thursday, at almost $1.50 to the euro, EADS chief Thomas Enders took a hard line with the company's works council, claiming that the currency imbalance was a threat to the company's future: subsidiary Airbus sells planes in dollars and pays workers in euros, a situation Enders said was "life-threatening" in light of the rapidly declining dollar. "We have to re-evaluate the whole business model," Enders said. "There are no taboos any more -- this involves the whole production chain."

The company employs 22,000 Germans and tens of thousands more across Europe. Options on the table include massive layoffs and selling up to six factories. On Friday, the manufacturer's concerns had German commentators taking a hard look at just how bad the dollar crisis has become.

The center-right Frankfurter Allgemeine Zeitung takes the long view:

"For a company that pays to produce its products in euros but charges its customers in dollars, this is an uncomfortable trend. The worst news yet comes from aircraft and manufacturing firm EADS … Thomas Enders presented the dollar's decline to his works council as life-threatening, and said there should be no taboos when it comes to cost-cutting. … One might get the idea that Enders was using the dollar as an instrument of torture against the unions. But the company is protected against currency fluctuations through 2007 and 2008. The weak dollar will only begin to hurt it in 2009. With so few orders on the books, there's definitely a need for action. But 'life-threatening' is something else altogether -- after all, who knows where the dollar will be in two years."

Center-left Süddeutsche Zeitung's opinion pages prescribe tough love for the battered US economy:

"Buying currency is like buying a little bit of an economy. A euro represents a bit of Europe, a franc a piece of Switzerland, a dollar a piece of America. Therefore the value of a currency reflects the value buyers and sellers place on the economy it represents. … That's why the fall of the US currency has political and economic implications far beyond the present financial market crisis. Until recently, American politicians could nod along with Nixon-era Treasury Secretary John Connally, who said 'The dollar is our currency, but your problem.' … This summer, that changed. Many investors fear a recession in America, and, even more importantly, they doubt their money is really well taken care of in the hands of the world's superpower."

"Measured in terms of buying power, the dollar is 25 percent undervalued. Such numbers have led some to draw hasty conclusions. It's not just enemies of America like the presidents of Iran and Venezuela, Mahmoud Ahmadinejad and Hugo Chavez, who are ridiculing the US. In Europe too, some dream of the end of the superpower. They should remember that just seven years ago the euro could only buy 82 American cents and there was speculation over the end of the EU's currency. That was just as hasty as the current talk of America's collapse. But the dollar may well lose its role as the world's unofficial currency. As long as the shift isn't too abrupt, that could be good news for the global economy -- and for America."

"The weak dollar isn't just a diagnosis, but a part of the therapy. US exports will be cheaper, imports more expensive -- and both will improve the American trade deficit. Dangerous imbalances in the global economy may now be taken care of more easily."

In the Financial Times Deutschland, the view is decidedly more pessimistic.

"It's clear, in theory. With the currency cheaper, exports will be more affordable and the export market will be stimulated. That takes care of the trade deficit. But in the US' case, things are more complicated. The dollar's troubles didn't start three weeks ago. Rather, they've been getting worse since 2002. Since then, the dollar has lost almost one-third of its value compared to the currencies of its major trading partners, with sobering consequences."

"In all that time, America's exports haven't grown faster than the global average."

"If the dollar's decline of a third since 2002 has had so little positive effect, it would be best to take the most efficient path and let the US economy grow a little slower than others to improve the US trade deficit. Either that will cause a slide into recession, or allow others to grow stronger -- which would undoubtedly be more harmonious."

"Europeans shouldn't be fooled by this doomed dollar fairy tale. Buy dollars! You might lose money. But you could say you contributed to a better world. And then the dollar will climb too."

-- Andrew Curry, 1 p.m. CET