The US in a new international economy and the plight of the Euro

This Wall Street Journal article listed above summarizes how America's traditional allies, the European Union and Japan have been struggeling since the economic crisis and how it is up to the United States to lead the modernization of the international system ultimately supplying economic security and opportunity to developing countries. Author, Robert Zoellick outlines 5 important strategies for the United States to pursue in a new international economy. The outlined agenda includes: building up the North Atlantic Free Trade Agreement, in hopes of providing energy security and boosting productivity for America, Mexico, and Canada giving the continent an edge in manufacturing. The second strategy is for the United States to anticipate the dangers that can come with its federal reserve setting interest rates at 0%, and if Japan is a predictor for these implications we could expect the US having to competitively devalue its currency. Instead of this the United States needs to push the IMF to set standards about currency manipulation and exchange rate policies, "it should be a referee that blows a whistle, even if it cannot penalize." The third, fourth, and fifth recommendations  are grounded on the idea of using free trade to help develop emerging economies through the WTO and are an interesting take to what we've learned the past week on whether free trade facilitates newborn economies into a world system or if its counterproductive.

Expanding on the idea of a struggling European Union, the question emerges on whether or not some of the EU's members want to keep using the Euro. The second link I'm posting voices concerns of Southern European countries having to return back to a national currency. "Across Europe's southern rim, people recoil at the idea of returning to national currencies, fearing such a step would revive inflation, remove checks on corruption and derail national ambitions to be part of Europe's inner circle." (WSJ, 2013) Only 20% of Italians believe that leaving the Euro will help revive the economy, while 74% of the country thinks it will have detrimental results. An interesting component to the article posted is an interview of an Italian Chocolate Factory owner, who's factory resides in the foothills of the Alps. He argues that the common currency of the Euro has forced producers to act more competitively, saying businesses are forced to compete at higher levels knowing that they don't have the helping hand of currency devaluation, he goes on to contest that Italy would be far more worse off if it had its own national currency.

The last I'm posting is another Wall Street Journal article that reports industrial production in the Euro Zone has fallen to a three year low. While industrial production is at a three year low that is not the only problems that run rampant in the Euro Zone. These issues include minute consumer spending, daily highs in unemployment all while facing massive spending cuts by local governments. A struggling Europe is definitely a salient issue to young Americans like us who may have international business ambitions or maybe just want to spend an extended period of time in the Euro Zone and attempt to make money in a struggling economy. This is an issue that I believe the class will enjoy further discussing.

Thanks for reading!

Lucas DeNardo