impact of the euro on travel costs

Old Aug 22nd, 2014, 10:00 AM
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impact of the euro on travel costs

I haven't been following prices of food and lodging and transportation in Europe until recently, but I'm wondering what impact the Euro is having in those economies, such as Portugal, Greece or Spain which are performing poorly. One would think that without the Euro their own currency would be much weaker, and hence travel much more attractive for people coming from a strong currency country. If anything, extra tourists coming in would be helping those economies in such a case.
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Old Aug 22nd, 2014, 10:06 AM
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>>One would think that without the Euro their own currency would be much weaker, and hence travel much more attractive for people coming from a strong currency country<<

You misunderstand how the € works. Just because something costs say €6 in Germany doesn't mean it costs €6 in Portugal.

Each country in the € zone has its own prices/standard of living. So traveling in Portugal will generally be cheaper than traveling to Germany in Belgium.
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Old Aug 22nd, 2014, 10:42 AM
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I could have stayed 6 weeks in Portugal for what a week cost me in Barcelona.

The Euro is not equal everywhere. Just as it costs more to live in NYC than it does in Benton, Arkansas.

I'm not sure I understand the point of this post.
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Old Aug 22nd, 2014, 10:59 AM
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"One would think that without the Euro their own currency would be much weaker,"

That's absolutely correct - but meaningless.

Spain would certainly be better off it hadn't joined the euro. Greece is so incapable of managing itself it would be just as big a basket case (it joined the euro for the same reason as Italy: to outsource to Europe's grownups the self government it's incapable of), and Portugal's problems are so closely entangled with the Banco Santo Espirito, it's impossible to work out where it would be if it had kept the escudo.

But so what? They're all in the euro, the damage is done and they're not being let out. It's as pointless speculating how things would be if they'd not joined as debating whether Californians would govern themselves sensibly if their economy wasn't underpinned by using the dollar.
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Old Aug 22nd, 2014, 10:59 AM
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To me it sounds like OP is looking at the Euro as a currency conversion that's pegged to the original currency of each country. Which of course isn't true. As Adrienne points out it's just like the US. A dollar is a dollar all over the country. Now since I live in Atlanta my housing costs are higher then someone in Newport, TN but it's the same dollar.

HOwever, if poeople ar earning fewer Euros in Greece or Spain then they are in France or Germany you will see that the vendors reflect that. So you have more "casual" dining then Michelin 5 star for example since that's what the economy can support.
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Old Aug 22nd, 2014, 11:00 AM
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I think Robincal means that the Greek could have devalued their currency, to make Greece cheaper for tourists.

That would have been a disaster for paying back their loans and interest on these loans in Euros, though.
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Old Aug 22nd, 2014, 12:20 PM
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With our income, we could live like royals in Spain or Portugal, even in parts of Italy (Sicily). That's - unfortunately - not the case in Belgium, where we live.
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Old Aug 22nd, 2014, 12:25 PM
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I don't understand the question... or the point.
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Old Aug 22nd, 2014, 03:17 PM
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<<One would think that without the Euro their own currency would be much weaker, and hence travel much more attractive for people coming from a strong currency country.>>

This is pedantic.

Portugal and Spain are two of the initial Eurozone countries and have used the Euro for more than 15 years. Greece has used the Euro for more than 12. The Euro is "their own currency."
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Old Aug 22nd, 2014, 03:58 PM
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Sorry if I was unclear. What I meant was that while prices might be lower in Greece than in Germany, if the weaker countries had their own currencies, prices would be even more attractive because you'd have the double effect of lower prices combined with a weaker currency, a one-two punch so to speak.
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Old Aug 22nd, 2014, 04:05 PM
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If the prices are lower, why does it matter what currency it is in?
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Old Aug 22nd, 2014, 04:36 PM
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Someone in the UK saying that if a country hadn't given up its own currency for the Euro...really unbiased opinion.
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Old Aug 22nd, 2014, 04:52 PM
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<i>prices would be even more attractive because you'd have the double effect of lower prices combined with a weaker currency, a one-two punch so to speak.</i>

Not necessarily. The price of bread might be constant or might even increase in the local currency but the exchange rate to the dollar might fall or go up according to varying (often speculative) circumstances.
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Old Aug 22nd, 2014, 07:35 PM
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Robincal,

Switzerland has kept its own Swiss franc and never used the Euro and it is constantly trying to tamp down the high value of its strong currency to keep itself competitive in global trade and tourists constantly complain about the high cost of visiting Switzerland. So your presumption that if Greece, Spain and Portugal didn't have the euro they would automatically have weaker currencies is false.

An economy, a currency, and the cost of goods and services are not all measured the same way nor are they in lockstep. A country can have a weak currency and a strong economy, or vice versa or both. Whatever the strength of its economy or currency, purchasing goods and services might be expensive due to high labor costs or high energy costs and many other factors.

What matters to you as a traveler is the strength of your currency relative to the euro. If it is expensive for you to buy euros to spend in Greece, your trip to Greece will cost you more than it will cost someone who is using a °better° currency to buy euros. However, if your currency gets stronger to the point that your country can't sell its products abroad and you lose your job, then you can't afford to go to Greece anyway, even if they revert to the drachma.
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Old Aug 22nd, 2014, 07:56 PM
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CarolA,

Adrienne actually said just the opposite of what you are saying. She said a euro is not the same everywhere in Europe. You are saying a dollar is the same everywhere in the US.

You are both confusing the value of a currency (relative to other currencies) with purchasing power (which fluctuates constantly everywhere and may or may not be tied to currency value).

The other thing people in this thread are confusing is the euro (the common currency) with the eurozone (a unified trading area). Germans and Italians both pay the same amount of euros to buy a dollar, but Germans generally pay fewer euros for Italian wine than Italians do in their own restaurants, If you are using dollars to buy euros to travel in Europe, a lot of dynamics of the European trading zone are not readily apparent, but Germany enjoys a high standard of living to no small extent because of structural imbalances that make imports from other areas of the eurozone relatively cheaper for them than for Spaniards, Greeks, Italians. etc.
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Old Aug 22nd, 2014, 08:51 PM
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<< You are both confusing the value of a currency (relative to other currencies) with purchasing power (which fluctuates constantly everywhere and may or may not be tied to currency value). >>

I'm not confusing anything and neither is CarolA. You're not reading properly.

Once again, you're the self-proclaimed authority.
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Old Aug 22nd, 2014, 08:52 PM
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uh -- no - most people aren't >>The other thing people in this thread are confusing is the euro (the common currency) with the eurozone (a unified trading area).<<
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Old Aug 23rd, 2014, 12:27 AM
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I'm with you, adrienne.

<Germans generally pay fewer euros for Italian wine than Italians do in their own restaurants>
This is only true in expensive parts of Italy (Tuscany, Campania, ...) but certainly NOT in Calabria, Puglia, Sicily, ... The situation is such that for Germans (north Europeans in general) life in southern Italy, southern Spain, Portugal is a lot cheaper than in their own country. What I wrote before: <i>With our income, we could live like royals in Spain or Portugal, even in parts of Italy (Sicily). That's - unfortunately - not the case in Belgium, where we live.</i>
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Old Aug 23rd, 2014, 02:59 AM
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"but Germans generally pay fewer euros for Italian wine than Italians do in their own restaurants"

Interesting; are we comparing restaurants to home consumption?

I understand the very best wines can be more expensive in home territories (ah the wonders of marketing), but the general wines I drink (E5 to 10) are normally cheaper at point of source within Europe.

What is noticeable is that "Italian" restaurants in non Italian countries within Europe often buy in wines from their cousins for seriously low prices (I've seen the books) but I thought that was just the usual problem with the Italian black economy (tax evasion, criminality etc)though of course the prices they charge their customers are often higher?
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Old Aug 23rd, 2014, 05:02 AM
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>>It's as pointless speculating how things would be if they'd not joined as debating whether Californians would govern themselves sensibly if their economy wasn't underpinned by using the dollar.<<

Bad comparison. First, are you saying Californians don't govern themselves sensibly? By whose standards? And in comparison to what? Second, there's a law-making, policy-making, governing body (the federal government of the United States of America) that California falls under and has allegiance to. What's the counterpart to that for Greece or any other member of the Eurozone? The Eurogroup? And is it just as likely that California will secede from the Union as it is that Greece will secede from the Eurozone?

I think I get what the OP is saying: If failing countries had full control over monetary policy and the monetary unit, could they make adjustments that would attract tourists and investors. Prices will always be different in different parts of the world (and in different parts of the same country). But would a devalued currency improve a country's economy overall?

I have no idea what the answer is, but the question is reasonable.
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