Euro More Likely Than Not to Benefit U.S.

I’m usually in pretty close agreement with James Flanigan. However, I think he has overlooked some factors with regard to the euro (“Understanding All the Changes Europe’s New Euro Can Buy,” June 1).

Not mentioned is one of the major benefits to U.S. companies doing business overseas: a more stable exchange rate. Although there may be initial consequences for the dollar in terms of valuation versus this new currency, each member country remains a sovereign and, as such, continues to have its own treasury.

While European central banks will be converting to this currency, much of the conversion will come from converting current European currencies to the new currency. Essentially, this gives a member country with a weaker currency the same buying power as Germany. On the other hand, European central banks will be compelled to maintain reasonably strong reserves of the U.S. dollar in order, first, to ensure stability in conversion rates and, second, to help maintain the economic stability of the member nations.

If the U.S. dollar were to dramatically decline in value, U.S. goods which are already making strong penetration into European markets will decline in price. This would exacerbate the current economic problems all over Europe. It would also make U.S. goods more attractive than European goods in other international markets.

From that standpoint alone, it’s in the best interest of the European Community to continue to support the U.S. dollar. Also, this single new unified European currency will bring added strength to member nations. It will increase their purchasing power, allowing several countries to buy as one and to take advantage of large-quantity purchases, which should benefit both them and us.

This should certainly help in job creation, and, rather than hurt us, increased employment in Europe should create increased consumption, not only of consumer goods, but of services and infrastructure.

In an era of free trade, our economy does not benefit from the weakness of others and a stronger, unified European currency does not necessarily equate to a weak U.S. dollar. This new currency is something from which we both can benefit.

MICHAEL SOLOMON

Los Angeles