Feb 6, 2017

Draghi vs. Trump: the latest front in currency wars

Michael Probst/AP

European Central Bank President Mario Draghi took exception Monday with Trump Administration accusations that the Euro is undervalued and that this has propped up Germany's export sector to the detriment of the U.S.

Draghi's view: because Germany doesn't have the authority to manipulate the value of the Euro, the accusations of the Trump Administration are baseless. The real reason for Germany's trade surplus is that it is more "competitive" than other economies.

Trump's view: If Germany had its own currency, the value of that currency would be much higher than the Euro to reflect its higher productivity. Germany is the beneficiary of the lack of competitiveness in places like Italy and Spain, and just because the German government isn't directly responsible for the Euro being too cheap, that doesn't mean that the U.S. worker isn't being harmed by its low value.

Our thought bubble: Germany benefitting from a cheap Euro is just another reason for the Trump Administration to dislike the European Union, and to support events that might help end the currency union.

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  1. Global: Total confirmed cases as of 12:30 p.m. ET: 885,687 — Total deaths: 44,216 — Total recoveries: 185,447Map.
  2. U.S.: Total confirmed cases as of 12:30 p.m. ET: 190,089 — Total deaths: 4,127 — Total recoveries: 7,141Map.
  3. Federal government latest: Vice President Mike Pence said that White House modeling suggests "Italy may be the most comparable area to the United States" in terms of the impact of the coronavirus pandemic.
  4. State updates: Washington and California appear to have slowed their surges of new cases — Florida cases have been doubling the past four days, approaching 7,000.
  5. China: The coronavirus could threaten D.C.'s bipartisan China consensus.
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Podcast: The Defense Production Act

The Trump administration has been hesitant to fully invoke the Defense Production Act to address medical supply shortages during the novel coronavirus outbreak. The New York Times reports that the Department of Defense has implemented DPA regularly during Trump’s presidency. Dan goes deeper with the Times' Zolan Kanno-Youngs.

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Pence: Coronavirus impact in U.S. may be "most comparable" to Italy

Vice President Mike Pence told CNN Wednesday that White House modeling suggests "Italy may be the most comparable area to the United States" in terms of the impact of the coronavirus pandemic.

Why it matters: Italy has become one of the global epicenters of the pandemic, with 105,792 cases and 12,428 deaths. Public health experts have warned for weeks that the U.S. would be on the same path if it didn't take drastic measures to stem the spread of the virus.

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