The latest trading info on the dollar is dismal - the Euro's up to 1.36 and experts expect it to keep climbing into next year, maybe up to 1.40.

AND the pound traded at 1.92 already today!!! My God, it's twice the cost of the U.S.!

This panicks me because not only am I hopeful to visit Europe again in the near future for vacation, but I am planning on approaching my company after the holidays with my desire to transfer to London from the States within our global parent company by 2006. I'm afraid they'll look at it as more of a dent in their bottom line with the dollar/pound conversion and say no.

Whoa is me. Maybe I've had too much to eat and the sugar is getting to me but I'm feeling quite insecure about all this. I feel like I have a slim to none chance of getting transfered now. Someone talk me down from the ledge...

The "weak dollar" is a fact of life right now and the cost of traveling to Europe in the same manner you may have been used to in the past is becoming more expensive.

One possible "cure" for your admitted "insecurity" would be to either stop thinking about traveling to Europe or accept the fact that it will cost more. That said, just how do you propose we "help" you do that????

First of all get over that silly notion that the pound is twice the "cost" of a dollar. You make it sound as if they should be equal -- or ever were for that matter. You can make many comparisons where things are the same cost in London as in the US. For example a top ticket to The Producers is actually cheaper in London than in New York -- regardless of how many pounds or dollars it is. ($100 in New York -- 49 pounds in London). And you can buy a good latte for just over a pound in London -- not so easy to find one for a dollar in New York. Pounds are not dollars -- never were --never will be. Don't let the numbers confuse you.

Patrick, I had the feeling in my two trips to London within the past year that the pound actually was sort of equivalent to the dollar. Things that would cost ten dollars in the U.S. seemed to cost ten pounds in London. This seemed true in restaurants, taxis, hotel and apartment prices. Prices in stores were so high that we barely bought anything beyond daily needs. The trick was to try to think of the costs as if they were in dollars. It was too depressing to convert them.

Patrick, could you try to rephrase what you want to say in a way that doesn't sound so condescending! " Get over the silly notion...." Do you really talk to people like this? How about a little kindness given its the season to wish good will onto others.
Happy holidays to all!

Hi posh,

>I'm afraid they'll look at it as more of a dent in their bottom line with the dollar/pound conversion and say no. <

If they continue to pay you in dollars, it won't hurt *them* at all.

OTOH, you will find it hard to maintain your current level of living in London.

But, then, you would always have found it difficult.

Stiff upper lip, old man.

geez.

It <i><b>is</b></i> a silly notion to equate pounds and dollars.

And perhaps equally silly to think of silly as such a condescending word!

You silly geese!

Best wishes,

Rex

Is there some problem with calling silly things silly? (To me, this is like social promotion in schools - its time to move to the next grade - even if you didn;t learn anything - somehow ignoring the objective of the education system - to teach children something - not just to waste X number of years. Let's make them feel good about themselves - even though they;re ignorant. How about fixing their ignorance instead?)

So, if something is silly it's just fine to call it so. If someone objects - they shouldn;t say silly things. Really, everyone's job in life is not to protect you from your own inadequacies - it's nice that people care enough to point out a problem so you can address it. If they didn;t bother you would sinply go on being sillier and sillier forever!

Yes, Rex, absolutely right. It IS a silly notion. It's just like before the euro someone from Italy saying, &quot;wow I can't go to the US, everything costs 2000 times more because it takes 2000 lira to equal a dollar!&quot;

And when people say they look at things in pounds in London being equal to the same in the states in dollars, I ask where. Sure prices vary from New York to smaller cities and towns across the country. And we know London is a very expensive city. But I don't find that comparison works when equating similar restaurants or goods in New York with those in London. Also don't forget the benefit in restaurants that when you're finished you aren't adding an addition 6 to 9 percent tax on top plus a 20% tip in London, generally.


By the way MissPraline is this the kind of polite and non-condescending type of post you are referring to? A quick look at your other posts turns up more similar ones.

&quot;Author: misspraline
Date: 12/21/2004, 07:04 pm
Message: Fainagain, you are making no sense at all.&quot;

Courtesy of the Wall Street Journal on Dec. 23, 2004, page C14:

Prior to WWII the British pound was worth $4.86 and in 1981 the synthetic Euro (mathematical combination of the currencies which now make up the Euro) was $1.65.

Feel better about the rates today?

I feel much worse that it cost me $32 today to park for 3 hours at the Center Plaza garage across the street from the JFK building in Boston.

I suggest that those of you bemoaning the decline of the US dollar take a few moments and grapple with the causes of the decline and its consequences.

First a little lesson in contemporary economics. The decline of the dollar is closely related to 4 economic facts:

** the US national debt is about $8 trillion,

** our current accounts balance of international payments is alarmingly negative when viewed as a percentage of the Gross Domestic Product (about 5.6%),

** the domestic US interest rates are too low to be a lucrative attraction to foreign investors.

** The US cannot continue to operate at current standards without foreign investment.

Presently, the encouraging currency forecasts say that the dollar must decline another 20% - 30% to balance out the trade deficit. That means that the price of &euro;1 could well be $1.65 within the next 9 months and &pound;1 could cost $2.35 rather than $1.95.

On the other hand, the proponents of a &quot;hard landing&quot; for the dollar say that the negative economic facts are liable to trigger a fire sale in US debt securities.

That means foreigners who hold better than $4 trillion is US government securities will start dumping them for whatever they can get out of them. That will drive the dollar down hard and fast and lead to an economic recession in the US, and a very disturbing domestic situation.

So those of you who are belittle people for complaining about the falling dollar should take a good look at what is driving the decline, and evaluate what might happen to your economic solidarity should the dollar bust the concrete when it hits bottom.

Of the $4 trillion plus of foreign held US debt, about 47% of it is owned by the Japanese. Currently, Japanese bankers are unloading US T-Bills and T-Bonds.

Fire sale? Will it depress the dollar even more? Will the US economy falter if the dollar declines another 30%? You tell me!

Let me leave you with one thought. Economic arm twisting as a means of foreign policy is hardly unknown. The US has practiced such hardball diplomacy in the past. In 1956, the British and the French attacked Egypt because the Egyptian government nationalized the Suez Canal, a vital waterway that the British and French owned -- by their reasoning.

The Soviet Union sided with the Egyptians; it even sold them MIG fighters on very easy terms. The US, with Eisenhower as president and J. F. Dulles as Secretary of State, realized that the British, our staunch allies, were about to stir up the Cold War pot and bring it to a boil.

At the time, the British economy was heavily in debt because of WW II recovery with the US holding the lion's share of the British securities. To force the British into line with US thinking, Eisenhower threatened to dump British debt securities on the international market.

This move would have caused the pound sterling to plummet and Britain would have suffered greatly economically because the price of food and manufacturing raw materials would have sky rocketed in price. Anthony Eden, the British PM, had little choice but pull back.

My point is this: Is the US in a position where it could be economically arm twisted? Oil money is in the hands of the Muslim nations which are not exactly our best buddies at the moment. What is to keep them from buying US securities at discount prices and dumping them on the international currency market? What impact do you think such a tactic would have? And what do you think can and would stop them? Their love of America?

Food for thought.

Poshspice:

Can't help you with your holiday plans.
But your logic about the transfer request seems topsy-turvy.

Presumably your job at Global Wotsit makes money for the shareholders. And will do so whether you're in London, Poughkeepsie or Timbuktu. Say you contribute $1 million a year to Global Wotsit's bottom line. Doing the equivalent job in London will contribute an unchanged amount to the corporation's net result if it keeps its accounts in a hard currency. And it'll contribute MORE to the corporation if it keeps its accounts in US dollars.

Your costs and the net profit you make in the UK are unaffected by the performance of foreign currencies. Everyone knows (or should) that when a country devalues its currency its exports get cheaper and its imports dearer (or used to when economic theory was being written: it doesn't work quite that way these days, which is part of America's problem). But many people forget that, for a global corporation, operations in the devaluing country become less remunerative while operations in countries with appreciating currencies become more profitable. If your company thinks the dollar's fall will continue for some time, logic would get it to beef up its non-US operations.

&gt;That will drive the dollar down hard and fast and lead to an economic recession in the US, and a very disturbing domestic situation.&lt;

Maybe, maybe not. However, one thing that has the Eurozone banks very worried is what will happen to them if there is a major recession in the US.

Well, the French are alarmed at the decline of the dollar. The French finance minister is not buying the German's contention that the euro is fluctuating within normal limits, what ever those are.

I think the percentage of US debt in foreign hands is alarming. But that should have been true 4 years ago and wan't.

I would not want to bet my financial future on the international financial savvy I read on this board.

Think about stocking up on Euros now at the lower rate and saving them for your future travel. This might work well, even with the conversion commissions, if in fact the Euro does go higher in value against the dollar.

Brookwood, give it a rest. I know you are just itching for doom and gloom to befall the US, but it will not happen.

Japan and the US are huge trading partners. Do you really think they would mess with that vital relationship?

Foreigners invest in the US because we stable, secure and are the world's growth economic engine.

Fortunately, both my husband and I are paid in euros. It has helped a lot in our move to the UK, where things ARE more expensive than in the U.S. or in continental Europe for that matter (aside from tickets to the Producers, which is not exactly an everyday expense). Restaurants are far more expensive than in &quot;real&quot; Europe, esp. when you consider the quality of food you get for the money. And housing prices are simply ridiculous, even if you try not to notice that most houses in the UK are not built to what one would consider the world's highest standards.
jsmith, your comparison to the mythical Euro of 1981 just doesn't wash. I was a student in Paris in 1982. I lived in a large comfortable room directly overlooking the Luxembourg Gardens. The room, breakfast and bath (and communal kitchen facilities) cost me all of $5 a day. I doubt I could have found a similarly spacious and comfortable room overlooking Central Park for the same amount, even in 1982!
However, for tourist purposes, if you want to see London, you simply have to suck it up and decide either to spend more than you imagined or figure out ways to cut back. The good news is that it's still possible to find surprisingly decent hotel rooms in Paris for $100 a night or less and good food at bargain prices.

&gt;...comparison to the mythical Euro of 1981 just doesn't wash. I was a student in Paris in 1982. I lived in a large comfortable room directly overlooking the Luxembourg Gardens. The room, breakfast and bath (and communal kitchen facilities) cost me all of $5 a day. I doubt I could have found a similarly spacious and comfortable room overlooking Central Park for the same amount, even in 1982! &lt;

I think that the point was that Cost of Living is not solely a function of exchange rates.

For example, the GBP has varied between 1.2 and 1.7E between 1986 and 2004 (currently 1.4), yet I don't think that London has ever been less expensive than Paris.

No, I am not going to give it a rest.
If such talk makes you squirm, it should. At some point the declining value of the dollar is going to result in an unwilliness of foreign investors to acquire US dollar denominated debt securities.

In fact, that is happening now. That is why the value of the dollar is declining.

We are NOT any longer the engine that drives the world's economy. Debtors don't drive much for long.

It is a basic question of how long will nations like Japan and China fund American debt?

Don't look now but many investors in Japan are trying to exchange dollar denominated securities for euro denominated ones because they see the US dollar as an unstable currency, one that is losing value and will continue to do for a long time to come.

When and where was the last time you heard talk of foreign central banks taking action to bolster a declining dollar?

In the short term, a weak dollar may help our exports. But, nobody is asking one key question: What does the US have to sell? We are a service based economy selling other nations' exports except for paper products and food stuffs.

Let's put it this way: How many Chevrolets and Fords of American manufacture do you see on the streets of Europe? I see darned few not driven by American military personnel.

Why? Nobody wants them!
Name me one American manufactured item that sits popularly on the shelves in European and Asian stores. Go into an American store, and start counting the different items with the label &quot;Made in China.&quot;

I did that yesterday and I could not even find an electric tea kettle that was not made outside the US. Whisks, fry pans, knives, cooking ware and can openers were all non domestic. Now do that in London. How many &quot;Made in USA&quot; labels do you find?

Now for the next step. I keep asking questions like this: What happens when foreigners don't want dollar securities?
One thing that happens is that US interest rates go up. Inflation sets in. And the dollar declines even more.

I think you folks need to give an answer to these questions rather than telling me to drop it. I can drop it, and you can tell me to all you want, but the problem is not going away.

It sounds a lot like the president of a credit union for which I was the volunter auditor. I confronted him with the fact that the bad loan rate and expenses were excessive to the point, that earnings would not cover the interest payments on the deposit accounts. His response: &quot;We have vast reserves.&quot; Real result: depositors withdrew their funds and the Federal auditor spelled out draconian tactics for getting the credit union back on its feet. The savior ironically enough was death. One huge, egregious loan was in the hands of a notorious deadbeat. It was still carried as an active if greatly defaulted loan. The debtor got himself shot dead in a bar fight and the cu collected on the life insurance. That was all that saved it from a Federal cease and desist order. Well life is not that simple for a nation. When it gets into debt, there is no simple cease and desist solution other than to do what the Russians did in 1918 and repudiate the debt. (And you want a sack full of rubles today??)

We are in debt up to our ear lobes to the tune of nearly $8 trillion. How do we pay it? Run the printing presses?
Ok let's do that. We got the ink and the paper. Now, who takes the money after we print it? You might because you have no choice. The Europeans have a choice, and they are getting to the point they don't want the stuff. If they did the price of the dollar in terms of the euro would not be declining.

One final the questions, and I doubt if you have an answer: How far is too far, and when will the trend reverse?

I have no idea. But the direction is clear.