It’s a snow day here in New York City, with a foot and a half of the white stuff muffling the traffic noise and frosting the trees in my uptown neighborhood. Downtown on Wall Street there’s snow too, but a slightly different story: Greece is being buried by traders. They have been betting big money that the Aegean nation, familiar to many people as a warm vacation spot, can’t make good on its massive debt load. The short money has been so big that Greece was forced to postpone a bond offering scheduled for this week.
Since Greece is part of the EU, the traders have also attacked the euro, sending it from a high of $1.51 (when I was traveling in Europe, natch) to a more recent $1.35. There’s even talk of parity with the dollar. If you are planning a vacation to Corfu, this is good news. But if you do business planning in an industry that buys and sells in Europe this is a nightmare, particularly for manufacturers, who have benefitted from a stronger euro. The Manufacturers Alliance/MAPI this morning noted that a modest recovery is underway. It is predicting that non-high-tech industries will increase output by 3.3% in 2010 and by 4.8% in 2011. For high-tech manufacturing, the numbers are even better: 14.6% growth in 2010 followed by “robust” 17.8% growth in 2011. That’s encouraging, but across the country the folks whose job it is to forecast the range of the euro and its effect on sales, or on imported raw material costs, are creating some snow, too. They are feeding their forecasts into the shredder.