January 30, 2008 (LPAC)--Whereas intensified propaganda is launched in the media of Germany alleging that a weak dollar were of benefit for the German economy, because that would make imports cheaper, LaRouche Political Action Committee has learned from discussions with sources in the machine-building sector that the industry does not see any benefit at all, rather the contrary.

For example the argument about imports becoming cheaper, is refuted: One or the other components coming from the dollar zone for German machines may become cheaper, but that is a neglectable effect for the German industry. Most of the end price of the machine is determined by the production value (wertschoepfung) factor, which comes into play inside Germany, and that does necessarily have its high price.

The high quality and precision that German machines usually have, compensates for the high price in the long run, because of reliability, guaranteed repair service. At the moment, the contract books are filled for machine-builders, therefore they do not have to run for clients and offer lower prices.

But a weak dollar instantly makes the euro more expensive. And there is another factor, namely that most of the world is dependent on the dollar, so that any U.S. crisis instantly infects the globe, and that hits back against exporting nations like Germany, because export markets are undermined by shocks that those nations undergo.

Briefed about LaRouche's two-tier rates proposal, a senior source at the VDMA, the German machine-builders' association, said that the idea of building a defense of the dollar is well-meant and deserves unbiased attention, also outside the U.S.A., but he added that it might turn out rather complicated to handle two different rates. But certainly, the proposal deserves study in detail, the source said.