You’ve probably heard about the evil problems Airbus has had in launching their new flagship product, the enormous four-engine A-380. This product is based on a bet that the explosively-growing East Asian economies will generate sustained demand-growth for long-haul air travel over the next few decades.

(Airbus competitor, Boeing’s Commercial Airplanes division, made a very different bet. They believe that future travel patterns will favor more flight legs, with passenger-counts not as high as in the Airbus vision, which led them to invest in the 787 Dreamliner platform. The competition among Boeing and Airbus will ultimately be decided by how well each firm has read their tea leaves.)

The A-380 (which has now had its successful maiden flights) will join the world’s commercial fleets. Notice I was careful not to say that the product will be commercially successful, as this term means something different in Europe. As I wrote here several months ago, Airbus is more than a business. It’s also an industrial “champion,” a source of pride for the European governments that part-own it, and a focus for labor unrest as they’ve tried to cut costs by shedding jobs. Airbus doesn’t define success only in euros and eurocents.

But the A-380’s road to production has been studded with terrible execution problems. I’m working very hard now to resist the urge to say that the American way of management (which demands strict performance to quarterly financial metrics) necessarily results in better execution. We have our own problems.

But on the whole, American businesses don’t have to deal with problems like internal corruption:

France’s stock market regulator is investigating top executives at Airbus, its parent company European Aeronautic Defense And Space…, and major EADS shareholders DaimlerChrysler… and defense conglomerate Lagardere… over alleged insider trading that occurred between late 2005 and mid-2006.
…
According to Le Figaro, the investigation will focus on 21 executives across the three companies involved, who apparently sold EADS shares with insider knowledge that mounting delays and manufacturing problems in 2005 were becoming insurmountable. When the damage became public in mid-June 2006, after the executives had allegedly completed their stock sales, it caused EADS’ share price to fall 26% in one day.

What I loved most about the story was this reaction by senior management at Airbus’ parent company:

“EADS is most surprised by the publication of information in today’s press concerning the investigation currently conducted by the French stock market authority,” said EADS on Wednesday. “EADS considers that such leaks constitute an unlawful violation of the confidentiality of the current investigations and of the principle of the presumption of innocence.”

Riiiiiiight: they think the problem is not self-dealing and criminal malfeasance by corporate managers. It’s the press. As you can see, journalists are an occupational hazard even in places without a First Amendment.

All of these are problems of Airbus’ own making. The more important and more general story relates to value of the US dollar:

The Franco-German plane-maker said… that it would have to find an extra 1 billion euros ($1.4 billion) in savings if the strong euro continued to outpace the dollar at such an alarming rate…
A spokesman for Airbus said that for every 10 cent increase in the euro’s value, the company stands to lose 1 billion euros ($1.4 billion). He declined to comment further on whether more job losses could be expected as a result of the exchange rate…
Airbus, like other peer firms in the aerospace industry… already has some tactics in place to mitigate the effect of a weaker greenback. These include hedging the dollar in the financial markets, as well as “dollarizing” the supply chain by sourcing more suppliers from the U.S.

I like that phrase: “dollarizing the supply chain.” I think I’ll lift it for my own use. It basically means more jobs and more industrial output for Americans. That’s the inexorable logic of how exchange rates interact with global trade flows: it’s a self-correcting feedback loop of gargantuan size.

But the reason this story caught my eye is because it follows right along with the theme I sounded here:

Europe’s monetary policy is being whipsawed by the Federal Reserve’s recent cut in interest rates. And Europe’s large economies, particularly Germany, are considerably more export-driven than ours, so the strong euro hits them hard.

Europe, and its top central banker Jean-Claude Trichet, are facing an extremely tricky decision matrix with regard to short-term interest rates in the next few months. Especially with French President Nicolas Sarkozy nipping at Trichet’s heels to lower rates, largely for political reasons.

Inflation is already hot and getting hotter in Germany. If Trichet cuts the benchmark euro interest rate, the inflation fires will probably burn even brighter and hotter, eventually causing an economic slowdown.

But if he tightens or stands pat, then overstrength in the euro (now at an all-time high of nearly $1.43) may do the job for him.

Update: Here’s a wire story about today’s ECB meeting in Vienna.

As a final note about American inflation: partly as a result of the continuous waves of Ron Paul insanity rolling through RedState recently, I’ve been poring through the Federal Reserve’s published data on money-creation here at home.

I’m now confirmed in a suspicion I’ve had for several months now: the US economy suffers more from deflation in certain sectors than from inflation. I’ve got a complete story in the works on this subject, so stay tuned.