Although conventional wisdom holds that Germany remains the only bright spot in Europe and that Italy may be on the verge of imploding, there is another way to look at the situation.
“Now, if you get a substantial weakening in the euro without a substantial weakening in the U.S. economy, then many European industrial businesses will benefit from the flipside of the strong-dollar headwind we’re currently suffering from,” Cramer said.
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But how, exactly, could a weak euro help American investors?
Cramer laid out three points.
- “First, there are always many people around the globe looking for property,” he said, pointing to a strengthening real estate market in Miami, due largely in part to buyers from Germany, Russia and Brazil.
“With a weaker euro, I suspect these wealthy globetrotters will be eager to buy property in unique places like Ireland or Spain or Italy. After all, who wouldn’t?”
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- Second, there’s tourism. Cramer noted that countries having the most trouble — such as Spain, Greece and Italy — are top tourist destinations.
“While tourism can’t be the be-all and end-all of a big country’s growth, we know that if Europe gets cheap enough, as we’ve seen, then the influx of tourists can help immensely,” he said.
- “Third, the comparative advantage of countries like the United States and Japan will diminish quickly, making it so like-for-like goods and services will be more lucrative if you buy them in a weaker currency.”
Cramer also said that many larger European exporters are experiencing a severe handicap because of the euro’s relative strength against the U.S. dollar and Japanese yen, but it’s not a foregone conclusion. “It’s easy to see how that could reverse at, say, parity to the dollar,” he added.
Although it may not be the rosiest scenario, there was a potential bright side amid all the seemingly bad news out of Europe.
“Our own international companies here in the U.S. will lose out on a lot of business,” Cramer said. “But the tourist trade for these countries can be immense, and the foreign exchange advantage can be so demonstrable that we could, finally, wake-up and get some good numbers for a change.”
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