Re: Forbes: "Budget To Nowhere"

On Thu, 7 Feb 2008 12:45:54 -0600, "John Galt"
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"Rumpelstiltskin" <PleaseDoNotReplyByEmail@xxxxxxxxxxx> wrote in message
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On Thu, 7 Feb 2008 00:06:26 -0600, "John Galt"
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"Rumpelstiltskin" <PleaseDoNotReplyByEmail@xxxxxxxxxxx> wrote in message
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On Wed, 6 Feb 2008 19:38:00 -0600, "John Galt"
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"Rumpelstiltskin" <PleaseDoNotReplyByEmail@xxxxxxxxxxx> wrote in message
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On Wed, 6 Feb 2008 17:06:04 -0600, "John Galt"
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"Rumpelstiltskin" <PleaseDoNotReplyByEmail@xxxxxxxxxxx> wrote in
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<snip>


There's nothing to swallow. Lower dollar against other currencies
makes
your
goods look cheaper to them. That's as obvious as the sun in the sky.
Why
do
you think all these Europeans were flying over here to go shopping?



I'd much rather be flying over there to go shopping,
and touring, as the days of America's greatness, but
things cost twice as much now in American razbuckniks.

And there you have it. You know as well as I do how few Americans cross
the
pond in their lifetimes. The few of us that do, it sucks, but to the
vast
majority of Americans, not a major issue.


What about the cost of imported goods?

Seems to be a mixed bag. If there's local competition, the imported goods
still have to meet the cheaper price standard or get ignored. Despite the
regrettable state of US manufacturing, there are still domestic
alternatives
in almost every class of goods, with consumer electronics being the major
exception (I don't think we have any domestically produced shoes anymore
either, but I may be wrong.) I haven't noticed any discernable increase in
the cost of imported wines, for one example, since imports have to price
to
meet the cost of domestics or remain unsold, and the aforementioned
consumer
electronics remains very cheap here, because they're not commodities and
the
sellors price them at whatever the market will bear. I've shopped for so
much stuff in Tokyo and Hong Kong and Shanghai, and the prices are always
cheaper here. My relatives in Europe just stare in shock at what we pay
for
laptops -- it's much more expensive for them there. Same with autos - the
imports have to cut margins to stay competitive, because if the import
premium grows too large, buyers either buy American or buy used.


OTOH, we all know that the value of the dollar is killing us on
commodities
like gasoline.


Oil is not the only thing we get from overseas.

No, but it does cause the most pain to the average individual, since there
are precisely no alternatives.


As do lots of other things, Toyotas, TV's, etc.

They're all going to cost more, things we don't even think
about as being wholly or partly foreign. They have to cost
more. People overseas selling stuff to the US on a 10%
profit can't sustain a 40% drop in the dollar.



I just made a boatload of reservations to spend June in the Eurozone.
Here's
what was weird -- airfares are dirt cheap. A double leg from Stockholm to
Istanbul then on to Paris was like $350 a person. I'm going from Stockholm
to Thessaloniki to Paris, about the same fare. Getting from Houston to
Stockholm, also pretty cheap -- under 1200 per round trip.


I flew San Francisco to Zurich for $600 each round trip about
2000, then $500 round trip San Francisco to Paris a year later.

One thing I've noticed is that taxes have gone up considerably. I noticed
that one round was under 800, but with taxes it was up around 1150.



In England, my cousin's boyfriend arranged for the ferry from
Dover to France. When he got to paying for the tickets, the
taxes and surcharges more than doubled the price of the
tickets themselves. He'd only been told the price of the tickets
themselves when he'd made the reservations.





What wasn't cheap was the ferry and trains. To go from Stockholm to
Gotenburg by train (about four hours) is $75 per person. Ideally, we
wanted
to fly to Hamburg and then drive up and take the ferry from Kiel to
Gotenberg, but the cost of the ferry kaboshed that idea -- like 250 Euros
per person (a 14 hour ferry ride, to be sure, but I can take a three day
cruise out of Ft. Lauderdale, all food included, for that much money.)


Back in 1972, the Eurailpass was a good deal. I remembered that
when I set up the trip to Zurich mentioned above, and got eurailpasses
for myself and my friend. It was a waste of money. You can only get
first class tickets, but we never once were able to ride first class
because there weren't any first class trains going where we wanted
when we wanted. You'd pretty much have to travel on the trains every
other day to make it worthwhile. One thing that was worthwhile about
having the Eurailpasses was avoiding the queues to get tickets in
the train stations. We saw one queue that hairpinned around six or
seven times, and it didn't seem to be moving fast, so it might have
been a two-hour wait if we didn't have the passes.

We took the ferry from Rödby (Denmark) to Puttgarten (near
Hamburg) during the Zurich trip. It was part of a train fare.
Here's a site on the Scandinavian ferries:
http://www.scandlines.de/en/passage/prices/main.htm

Here's a site on ferries from England to Holland, also
often offered as a leg of a train trip.
http://www.directferries.co.uk/harwich_ferry.htm

Thanks.





There is, of course, the matter of currencies always moving against one
another. Europe is now starting to slow, and their central bankers are
coming under pressure to ease. When they do, the downward pressure on
the
dollar stops (actually, the dollar is either flat or up a bit since the
middle of last month just on that reason.)

America has never in my lifetime been this low.
Or been so deep in hock.

I don't think there's any question that we were "lower" economically in
the
late 70's. We easily forget that people were taking out mortgages at 15%
interest.



I never took out a mortgage. The mortgages lately, of course,
have been an extremely well publicized problem.

Sure, but that's a different matter entirely. It;s the Bubble-Du-Jour.


Oh yeah, that's what I've been arguing, that it's as big a
problem as it is because the country is already in such deep
do-do that there's no margin of safety. We're barely staying
afloat without any shocks.






We weren't as deep in hock, of course.




Everything we buy from overseas is going to cost more now,
after we've already eliminated our ability to make our own stuff.
Do you think other nations are going to sell goods to us below
their cost out of charity because our dollars aren't worth much
to them anymore?

No. I think if the condition is prolonged and looks permanent,
Americans
will start manufacturing businesses again, particularly as wages
overseas
escalate.


So parity with Mexico will be "Mission Accomplished"
What a shame, what a disaster, what a sad end for
the USA. Thank you, Reagan, Bush 1, and Bush 2.
Good job. Who could possibly think otherwise?

What matters is standard of living. Snark aside, that's an issue not
necessarily correlated to relative currency values.

Standard of living goes down when one can no longer
afford foreign goods, and when foreign sources for
domestic goods cost more because of a collapsed dollar.

However, outside of gasoline and food (the first affected by the dollar
valuation, the second only indirectly affected by it) that sort of
inflation
doesn't seem to be occurring. The core CPI remains low. As I said, a mixed
bag.

Oh it will occur. It has to. People with ten-euro costs
aren't going to sell stuff to us for long for ten American
dollars now that the dollar is worth less than the Euro
(a lot less), if they want to stay in business. Oil is just
the beginning.

If the devalued dollar is so little of a problem, why not
reduce it by half again, or even to a quarter, that way
cutting our nine-trillion dollar debt to two trillion dollars
or even just one trillion dollars in 2000 dollars? We
could just "print money" until the dollar falls that far,
and use that depreciated money to pay off the debt.
Does that sound like a good idea? If you really
believe what you write, it should sound like a great
idea. It may be what we eventually have to do
anyway.

So, if drinking one glass of wine with dinner is enjoyable, then we should
all go out and drink fifteen? And if I admit that I like one glass but
choose not to join you in 2 through 14, I must have not really enjoyed #1?


I don't see the connection.



Like any marketable security, currencies have an optimal relative value
where they deliver the best benefit, on balance, to all involved in trade
involving it. Although it's popular to blame the loss of manufacturing jobs
on Bush, it should be remembered that (1) trade agreement reform (such as
NAFTA) was just as high a priority in the prior adminstration as it has been
in this one, AND (2) the country that we've lost the most jobs with (China)
we do not have a trade agreement with.



Yes, there was an optimal - 2000 dollars. Actually I'd say
the stronger the dollar is, the better for real people in America.
You chose to disregard my mention of my Canadian cousins
presumably because it's inconvenient, but as I said, I'm sure
they're happier that their money is worth more than ours now
because they can buy American goods cheaper. I don't
think anyone would attempt to deny that. Why then, is it so
difficult to accept the inescapable corollary that Americans
should be unhappy that their dollars are worth less than
other currencies now? The dollar didn't have to sink like
this. It was government fiscal policy that sank it.



The fact is that a large proportion of manufacturing job loss has come for
monetary reasons, meaning that our currency was just flat out too high. Now,
I think it correct to say that it's now too low, and further adjustments are
in order.


No, it came from utterly stupid fiscal policy.



But, it's simply not going back to where it was, if for no other reason that
it was detrimental to job growth.


It's not going back where it was because we're running
scared now. Things are very difficult if not already beyond
repair, because of the stupidity of running up fantastic debt.



.

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