By Jess Smee
spring-time days when the euro traded as high as $1.60.
The euro also took an overnight battering against the yen early on Thursday -- sinking to its lowest level since December 2002.
Initial European outbursts of schadenfreude about the US financial crisis have ground to a halt. Instead, evidence is piling up that Europe is facing a serious slowdown. Meanwhile there are doubts whether Europe is reacting quickly enough.
"Now there is clearly no chance of Europe decoupling from the US," Stefan Schneider of Deutsche Bank's research department, told SPIEGEL ONLINE, adding that Europe lacks the flexibility of its big neighbor across the Atlantic.
"History confirms that if the US enters recession first, it will be the first to emerge. ... The lack of European political coordination has not exactly helped and the ECB is known for its tendency towards 'too little too late.'"
Some of the greenback's gain this week was underpinned by Federal Reserve Chairman Ben Bernanke's announcement of support for a second US economic stimulus package. In remarks made on Monday, he kept quiet about the possible contents of such a package -- but the hint bolstered hopes of a faster-than-expected US recovery.
And, Joerg Kraemer, chief economist at Frankfurt-based Commerzbank, said as well as factoring in ECB rate cuts, the euro has borne the brunt of worries about Europe's economic outlook.
"The market has long been pessimistic as far as US growth goes, but in the euro zone people are now realizing what they are facing. The negative surprises are currently coming out of the euro zone," he told SPIEGEL ONLINE.
One such surprise came earlier this month when Finance Minister Peer Steinbrück said that Germany's economic growth will be slightly above zero in 2009. "The last estimate was for 0.9 percent. We can't fool ourselves. There's no point in putting on rose-tinted glasses, he told the weekly newspaper Die Zeit.
But some said ailing German exporters could benefit from the falling euro in combination with the low cost of oil (on Thursday the benchmark US crude traded below $68, halving its price tag from last July).
In the daily Die Welt, Christian Dreger, chief economist at the German Institute for Economic Research in Berlin, even described the weak euro, low oil price cocktail as "an economic stimulus program for Germany."
But even if relief is in store, it will take time to filter through to the real economy: any upturn in exports will take as long as three to four quarters, some predict.
In the mean time, the news from Germany, the world's biggest exporter of goods, has gone from bad to worse. Two weeks ago, statistics were released showing that exports saw their biggest annual decline in five years in August, a hard-hitting signal of the impact of the global economic slowdown.
And Commerzbank's Kraemer said it was too soon for exporters to breath a sigh of relief: "Taken in isolation, the fall in the oil price is a positive, but the reason for the fall is worries about the global growth outlook and that is negative for Germany and exports," he said. "You can't say the rising oil is a positive when the reaons behind it are so bad."
-- jas with wires
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