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I knew in my brain what the dollar to euro conversion rate is, but the reality hurts...

I knew in my brain what the dollar to euro conversion rate is, but the reality hurts...

Apr 30th, 2005, 02:13 PM
  #41  
 
Join Date: Jun 2004
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The Big Mac index says it all:

http://www.economist.com/markets/bigmac/index.cfm

A commodity that costs US$3.00 sells for US$2.60 in Canada after you take the Canadian price and apply the currency conversion rate.

In the U.K., the same US$3.00 worth of goods costs US$3.61 - things cost more in the U.K.

In Europe, the Big Mac is US$3.75

The major point is that the Canadian Big Mac does NOT cost $3.00 * .79 (the exchange rate), the U.K. Big Mac does NOT cost $3.00 * 1.90, and the European Big Mac does NOT cost $3.00 * 1.29
Robespierre is offline  
Apr 30th, 2005, 03:31 PM
  #42  
 
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Life and economics cannot be summed up in the price of a Big Mac. You can't generalize from a Big Mac to everything and then state that "a commodity" costs whatever.

I've been to Canada and agree with Patrick regarding pricing. Nothing was really cheaper for me in Canada because I had US dollars, the pricing is just different to make up for the fact that these are two different currencies worth different amounts. A euro doesn't necessarily "cost" a Canadian more than an American in real terms jsut because the currencies are different.

The only real comparison would have to be quite elaborate regarding average wages, govt. benefits, disposable incomes after taxes, etc., to really know the answer to this question, but raw numbers of euros per USD vs. CAD doesn't do it.
Christina is offline  
Apr 30th, 2005, 03:51 PM
  #43  
 
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42

The Big Mac is just an example to illustrate the point that the differential cost of goods and services isn't dependent only on the exchange rate - it also depends to a great extent on the equilibrium price that the commodity reaches at various places in each culture.

Any individual's experience with price differentials also depends greatly on market valuations in the place they came from and the place they're visiting. Going from Kansas City to Vancouver would be a vastly different imbalance than going from Boston to Calgary.

So not only is it impossible to generalize from one commodity, it's also impossible to generalize from one person's anecdotal experience.

The major point is that the Canadian Big Mac does NOT cost $3.00 * .79 (the exchange rate), the U.K. Big Mac does NOT cost $3.00 * 1.90, and the European Big Mac does NOT cost $3.00 * 1.29
Robespierre is offline  
Apr 30th, 2005, 04:14 PM
  #44  
 
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The bottom line here is that if Patrick makes $50,000 a year and I make $50,000 a year I have to dish out a bigger portion of my earnings to buy the same amount of Euro as Patrick or any other American. It's that simple! Who cares what your cost of living is in your home state or province, we are talking about converting our earnings into a different currency and what it costs us individually to do so. If Patrick converted his $50,000 salary into Euro he would have $38,882 as opposed to my $30,846. If he converted into British pounds he would have $26,188 compared to my $20,808. Which conversion rate would you prefer? The simple point I am trying to get across is that as a proud Canadian it sucks that our dollar is valued as low as it is on the world market, and because of this we have to take a bigger chunk out of our bank account to travel to places like Europe.
Canadian6 is offline  
Apr 30th, 2005, 04:18 PM
  #45  
 
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Willtravel, just so you know I did not do any transactions at that rate. We were in a bank in Scotland on the day we came home and that was the rate that was quoted to the tourist that was standing next to us in line by one of the bank employees.

After I was there a while, I just had to think of myself as just spending what I was spending and not converting it into US dollars everytime I bought something. It was just making me crazy.

I think that things also just cost more there. Whether you figure in the exchange rate or not. I mean I saw things in Gap while I was over there that I paid a lot less for even when I converted it to dollars. ( It was almost 2:1 while I was there.) I had a Nine West bag that I got in a major dept store here, just to kick around with. I paid $30.00 here. It was 65 pounds there, which would have been $130.00 US! This was in a store in Glascow.

I had a budget of so many pounds while there, and I spent it. I came back with all of 3 pounds in my pocket.

I am with Robspierre,<< Stuff costs more or less in different places>>

We just have to budget for it and then live with it if we want to travel.

I like going to Canada! Less expensive and we have been to many beautiful places. The exchange rate won't stop me from traveling to Europe though, so I don't complain.
dsm22 is offline  
Apr 30th, 2005, 05:07 PM
  #46  
 
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I'm just jumping in here to support Canadian6. I agree fully with everything you have said.

Maybe you have to be Canadian to understand! It seems to be only the Americans that keep saying it doesn't make any difference.
They are getting more Euros for their money than we are, and yet, they are the ones that keep whining all the time.

I know, I don't have to read the posts, but they pop up often enough to be considered 'whining'.
I guess us Canadians are good at just paying the exchange and enjoying ourselves.

Patrick, your examples are good ones, but very selective. I could go on and on with examples on my side of the coin.
Clothing, food in grocery stores....and on and on.

Canadian 6, I don't think they'll 'get it' til the US dollar drops lower.
wildbill is offline  
Apr 30th, 2005, 05:10 PM
  #47  
 
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you nailed it wildbill........
Canadian6 is offline  
Apr 30th, 2005, 06:28 PM
  #48  
 
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I think it's silly to look back on the exchange rate that used to be. I do remember the Netherland guilder and the Canadian dollar with fondness. BUT if you travel todays rate is what matters!
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Apr 30th, 2005, 08:29 PM
  #49  
 
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OhPatrick just loves to blow a lot of hot air! He is an authority on EVERYTHING, don't you know! NOT!
SoeurAnneLafleur is offline  
Apr 30th, 2005, 10:25 PM
  #50  
sockboy
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My 0.02 CAD.

What makes changes in exchange rates obvious is that local prices and salaries don't change instantly to reflect them.

Let's look at Patrick's example of books and magazines that have both US and Canadian prices on them. The publishers use some some imaginary exchange rate - lets say 30% - to price the books. If the actual exchange is 20% Canadians are paying more for the same article. If the exchange shifts to 40% we get a deal! Right now, Canadians have it badly. Many items were priced back when the dollar was at 63cents. Now its 80cents, no one has adjusted the prices on books or most electronics.

For years Canadians have personally felt the shifting exchange rates because so many things we buy are priced by American companies - so they actually really do get more expensive (to us) when the exchange rate changes - but no one adjusts salaries to go with it!!

Now American's are getting a taste of the same thing when buying Euros. The US dollar is worth less, but no one increased your salary to reflect that - did they?? Some Canadains are paid in US dollars. They are suffering now, and have a real drop in salary because of it. You can't say that changes in exchange rates don't have a real tangible effect.

No one has talked about DVD's and CD's. Amazingly music companies charge about the same # of Canadian dollars, US dollars, Pounds sterling or Euros for a CD in the respective countries - Canadians seemingly get a real deal there if you were to convert all the costs to a common currency. This type of item has to be priced (similarly to a Big Mac, and movie tickets), very carefully to attract the "disposable income" of citizens - they have to have a real understanding of local "buying power".

There is no doubt that things do cost a few Canadian dollars more in Canada than US dollars in the US. I would judge the "true" value of a Canadian $ to be about 0.75US. That seems to be about a balance point. When the Canadian dollar is higher, things in the US seem cheaper - more cross border shopping. When it is lower than that, things seem more expensive states-side, and Canadians shop at home.

Things are priced at higher and lower amounts in different countries, and when you make the exchange to a common currency, prices are SIMILAR - but not exactly the same. It is this difference, and the lag in updating of prices and salaries that makes these changes hard (or pleasant) to deal with.

All this being said, I find the only thing you can do is get in the mind set of the local currency, other wise you'll just depress yourself. The one upside about travelling to Europe is that when I come home everything seems so cheap!! Maybe think of it that way, and it will be easier.
 
Apr 30th, 2005, 11:34 PM
  #51  
 
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Wouldn't it be so easy if all money was the same!

Kelabel is offline  
May 1st, 2005, 04:54 AM
  #52  
ira
 
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>Wouldn't it be so easy if all money was the same!<

Nope.

Let's assume that everyone in the world used the Global. (20 slugs/global, 12 krims/slug)

Who would determine how many globals were necessary to keep proper liquidity?

Who would print or mint globals?

Who would determine interest rates?

How would we determine wage rates?

etc....

ira is offline  
May 1st, 2005, 04:54 AM
  #53  
 
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Willtravel,
Apts we found in Switzerland will run about 30sfr per person, per night and in San Gimignano area, a fattoria outside town, about 22 euro per person per night. So I think we will probably spend more eating out than for accomm.
Traveler863 is offline  
May 1st, 2005, 05:45 AM
  #54  
 
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Bravo , Sockboy! Very well put.
You have nailed it. Our wages don't change to reflect the fluctuating rates.
When the CND dollar was so bad against the US dollar last year or two, our trip to Florida 'cost' us a lot more than it did this past year ( thank goodness) and yet, my wages had not changed at all.

The same thing applies when buying Euros.
There is no doubt that for Americans their trip to Europe this year will cost them more. But all of us lucky enough to travel should feel lucky, not depressed. SO many people cannot travel.
So, it costs more... there are two choices... stay home. or go and enjoy.
wildbill is offline  
May 1st, 2005, 07:37 AM
  #55  
 
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A most entertaining thread for a lurker.

In this thread everybody, even good ole ira, tries their hands at Economics 101. And just like with any economic theory, everybody argues and nobody agrees.
burper is offline  
May 1st, 2005, 07:50 AM
  #56  
 
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"Author: SoeurAnneLafleur
Date: 04/30/2005, 11:29 pm
OhPatrick just loves to blow a lot of hot air! He is an authority on EVERYTHING, don't you know! NOT!"



At least Patrick doesn't keep registering here under different names for the sole purpose of insulting people.

And one doesn't have to be an expert on anything to state simply that ALL THINGS ARE NOT PRICED THE SAME IN US DOLLARS AS THEY ARE IN CANADIAN DOLLARS. That was my only point. Sorry it is too difficult for some to understand.

Patrick is offline  
May 1st, 2005, 09:36 AM
  #57  
 
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It's not just a choice of stay home or go and enjoy, simply choose somewhere else in the world that is not so expensive, and if you stil;l want to go to Europe visit cheaper places like Croatia, Montenegro and Eastern Europe, they are fast getting more expsnsive also though

JamesA is offline  
May 1st, 2005, 10:09 AM
  #58  
ira
 
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Hey burper
>In this thread everybody...tries their hands at Economics 101. And just like with any economic theory, everybody argues and nobody agrees.<

A perspicacious insight.

(Actually, I think that it's ECON 301)



ira is offline  
May 1st, 2005, 10:15 AM
  #59  
 
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I never understand the point of this kind of thread. Things cost what they cost in various places.

SE Asia and to an extent Mexico can be cheaper destinations, Europe and Hawaii are more expensive. This is no secret nor is it rocket science.

Match your destination with your budget. If you can't afford to travel, wait another year & save more for the trip.



suze is online now  
May 1st, 2005, 10:18 AM
  #60  
 
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Traveler863, please post the info about those places. I'd be very interested in such budget accommodation.
WillTravel is offline  

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