the sky is falling... no wait, it's just the dollar
#4
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The dollar is hardly "falling". It had been on a slowly rising bubble over the last four months. It's been drifting slowly down for the last few weeks. It's now just about where it was at the beginning of the year. <BR> <BR>Hardly a fall. Just the normal day-to-day, month to month variations. <BR> <BR>As to exchange rates and such, they're almost meaningless. <BR> <BR>Typically, exachange rates fluctuate 5-10%, sometime up, sometimes down over long periods of time. <BR> <BR>In contrast, inflation in much of Europe has, at times, run over 15 or 20%. Worse, in isolated cases hotelier greed has increased hotel rates even faster than inflation. Greed and inflation have influenced prices of travel far more than exchange rates. <BR> <BR>When I first went to Europe the dollar bought "only" 625 lire. Now it buys over 2000. Whoopee! <BR> <BR>I could stay in a 5-star hotel for about $25 back then. So you'd think that hotel room should only cost $8 now? Heck no! An equivalent 5-star hotel for the same commercial rate runs over $200. <BR> <BR>Inflation over the last years has made touring in Europe far more expensive than it once was. Exchange rates have had surprisingly little to do with it, relatively. <BR> <BR>One needs to be looking at what a month's salary (or a month's pension) will buy in Europe, as opposed to the meaningless exchange rates.
#6
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The main difference this time is that the devaluation is based on an official statement from the IMF. <BR> <BR>Quoting from an article in today's Times: <BR> <BR>FEARS of a slump in the dollar were reignited yesterday by a strongly worded warning from the International Monetary Fund (IMF) that sent the US currency tumbling on the foreign exchanges. <BR>The dollar dropped to its lowest level in almost four months against the euro, and also lost ground against the yen and the pound, after the IMF said that America’s ballooning current account deficit had put the currency at serious risk. <BR> <BR>The influential institution argued that the US economic outlook was highly uncertain, unnerving a market that was already pessimistic about the prospects for an American bounceback. <BR> <BR>The IMF urged the Federal Reserve to stand ready to cut interest rates again, and highlighted America’s record-breaking current account deficit as a key risk in the months ahead. “Directors (of the IMF) indicated that the size of the US external current account deficit did not appear sustainable in the longer term,” the institution’s annual assessment read. “It (the deficit) raised concerns that the dollar might be at risk for a sharp depreciation, particularly if productivity performance remained disappointing.” <BR> <BR>link to the full article (hope I did this right - if not just go to the Times website): http://www.thetimes.co.uk/article/0,...282724,00.html
#8
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It's all relative. Right now, the buck is @ 2200 lire or so. That's down from a few months (or even weeks) ago. But the last time I was in Italy, I would have been dancing in the streets if I got 1300. Actually, I did dance a little in the streets...in Verona, I think it was.
#9
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Much ado about nothing. As the economy recovers from its stumble the numbers will turn. <BR> <BR>In the meantime you might take a look at the history of the dollar and the euro over the last 18 months. (And the euro, of course, is a proxy for a dozen European currencies.) See <BR>http://twenj.com/eurowhy.htm#exchange <BR> <BR>Note that until four weeks ago the dollar was up against those currencies about 30%. Now the dollar is up only 25% against them. <BR> <BR>The euromavens forecast at the beginning of the year that the euro would average about 90 US cents for the year. Perhaps the IMF made their announcement to make the euromavens look a little better ... they've been off the mark for much of the year.