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Why A New York Cheese Buyer Hangs On The Euro's Fate

Aaron Foster, with cheese. (NPR)

Among the chilly aisles at Murray's Cheese Shop in Manhattan, the entire continent of Europe is represented. Something like 60 percent of the cheese in Murray's comes from the continent, according to Aaron Foster, a cheese buyer at the store.

For all the talk about how the European debt crisis is effecting the global economy, it can be hard to connect it with daily life here in the U.S. Here's one link: Aaron Foster's bonus depends on how cheaply he can buy cheese from Europe. And the price of that cheese is driven largely by the strength (or weakness) of the euro.

Through his cheese deals, Foster essentially trades in global currency markets. When he buys cheese from Europe, he doesn't pay for it in dollars. He has to pay in euros.

"It's funny to think about buying money," he tells me. "We have an accountant who will call up the bank and say, 'I need this many euros,' and the bank will call around and see what they can do."

Foster takes me to the cheese cave beneath the store. (Yes there is a cheese cave under Bleecker Street in Greenwich Village, New York.) On the shelf he points to wheels of French Ossau-Iraty. To get those he has to pay the cheesemaker in euros. Then he has to pay someone to drive the cheese from southern France to the port, also in euros.

We stand at the counter and play a game. I name a troubled country, he names a cheese.

Cheese from Portugal?

"Amantigado."

Ireland?

"Cashel blue."

Greece?

"Manouri. Halloumi. Feta."

Spain?

"Manchego."

Italy?

"We have Parmigiano Reggiano --a lot of it." He shows me a huge stack of Parmesan wheels in the back room, 2,500 pounds of it, give or take.

In normal times, the exchange rate from dollars to euros is pretty steady. But these days, because of the sovereign debt crisis over there, the exchange rate is jumping all over the place.

And here's how the European debt crisis affects Foster: the cheaper he can buy the cheese, the bigger a bonus he gets. When things get worse in Europe the euro drops in value, and the cheese gets cheaper. And when this happens Foster's bonus gets bigger.

Things got really weird for him the other week, when it looked like Greece was going to have a nationwide referendum on whether to accept the latest bailout terms.

"The Greek prime minister said, 'Ah, I'm gonna put it up to a vote.' And the euro started to tank immediately. Then I was like YES THIS IS GREAT!" Foster recalls. "Then I realized these people half a world away could be determining my margins and my bonus--the Greek man on the street. At first I thought it shouldn't make that difference, but a five or ten cent difference in the exchange rate makes a huge difference thousands and thousands of dollars' difference in cost."

A good bonus this year would help Foster pay off his student loans. But actually he's hoping Europe can sort things out. Not only does he have a friend in Greece, he has a more long-term financial incentive. If the euro mess gets worse, it could drag the U.S. and the rest of the world into another recession. And that would not be good for cheese sales.

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Transcript

RENEE MONTAGNE, HOST:

For all the talk about how the European debt crisis is affecting the global economy, it can be hard to see how it affects daily life. But we have a story for you, now, about a cheese monger in New York City who is following the news in Europe very closely, because his Christmas bonus is riding on it. David Kestenbaum with our Planet Money team, reports.

DAVID KESTENBAUM, BYLINE: At Murray's Cheese Shop in Manhattan, the entire continent of Europe is represented - represented in cheese.

AARON FOSTER: We've got - gosh, like 250 different cheeses at least.

KESTENBAUM: This is Aaron Foster, the cheese buyer here. We stand at the cheese counter and play a game. I name a troubled country. He names a cheese.

So, do you have cheese from Portugal?

FOSTER: Yes. Amantigado.

KESTENBAUM: Ireland?

FOSTER: Ireland we have Cashel blue.

KESTENBAUM: Greece?

FOSTER: Greece we have Monoru, we have Chalume, we have Feta.

KESTENBAUM: Spain?

FOSTER: Manchego.

KESTENBAUM: Italy?

FOSTER: Italy, we have Parmesan regiano, a lot of it.

KESTENBAUM: Cheese from different countries, all sharing a common currency: the euro. He's not kidding about lots of parmesan. In a back room we pass a huge stack of parmesan wheels.

That's a pallet of parmesan!

FOSTER: Pallet of parmesan.

KESTENBAUM: Taller than me, actually. How many pounds?

FOSTER: So, four wide and one, two, three, four, five, six – 2500 pounds, give or take.

KESTENBAUM: Over one ton of cheese.

FOSTER: That's just one pallet. That's early in the day.

KESTENBAUM: When you read about how the U.S. imports $2 trillion worth of stuff in a year, maybe you think of cars from japan, or computers from china. Add to that, cheese. Something like 60 percent of the cheese in this store comes from Europe. Aaron's paycheck is going to depend on how cheaply he can buy that cheese.

FOSTER: I don't think of myself as importer. But that's absolutely what I do, day in day out. It's not on business card, but I'm an importer.

KESTENBAUM: Another thing his business card does not say: Aaron trades in the global currency markets. When Aaron buys cheese from Europe, he does not pay for it in dollars. No, no, he has to pay in euros.

FOSTER: It's funny to think of buying money. But we have an accountant who will call up the bank and say hey, I need this many euros, what kind of exchange rate can you get me? And the bank will sort of look around and see what they can do.

KESTENBAUM: For example, Aaron took me down to the cheese cave underneath the store. Yes, there's a cheese cave under Bleecker Street in Greenwich Village, New York. On the shelf he pointed to wheels of Ossau Iraty cheese from France. To get those, he explains, he's gotta pay the cheese maker in euros. Then he's gotta pay someone to drive the cheese from southern France to the port, also in euros. He's got a whole fancy spreadsheet.

And in normal times, the exchange rate from dollars to euros is pretty steady. But these days – because of the debt crisis over there - the exchange rate is jumping all over the place. And this is how the European debt crisis affects Aaron: the cheaper he can buy the cheese, the bigger a bonus he gets. Basically, when things get worse in Europe, the euro drops in value, the cheese gets cheaper, and his bonus gets bigger.

Things got really weird for him the other week, when it looked like Greece was going to have a nationwide referendum on whether to accept the latest bailout terms.

FOSTER: The Greek prime minister said eh, I'm going to put it up to a vote. And the euro started to tank immediately. And I'm like, yes, this is great. And then I realized that these strangers, half a world away, could be determining my margins and my bonus, the Greek man on the street. And at first I was thinking, no, that couldn't be the case, it must not make that big of a difference. But five or ten cents on the exchange rate makes a huge difference, thousands and thousands of dollars difference in cost.

KESTENBAUM: A good bonus would help him pay off his student loans. But Aaron says he is actually hoping Europe can sort things out. He's got a friend in Greece. And he does have this other financial incentive. If the euro mess gets worse, it could drag us and the rest of the world into another recession which would not be good for cheese sales.

David Kestenbaum, NPR News.

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