It’s never been this bad though. The decline of our manufacturing, our booming population of “consumers”, and our ongoing oil addiction to petroleum (and vulnerability to oil prices) have all become much more acute since the last time we went through a dollar crisis.
In my admittedly clumsy way, not having the necessary exact figures at hand, I estimate that if the Deutsche Mark were still being used instead of the Euro, the dollar would be worth somewhere around 1.20DM. This kind of decline is undoubtedly forcing some American students and other expats, if they are paid in dollars, to return home.
I really, really despair for America. I see almost no likelihood that we will deal constructively with the massive problems that face us. After all, half the population thinks the first man and woman were created by divine act out of dust, 6000 years ago, just because, when you really look at it, it makes them happy to believe that. I don’t mean to single out fundamentalists, but they provide an example, of the ear-plugging and singing “la-la-la I can’t hear you!” that is so endemic here.
It seems from my point of view ,thank OG, that that my little corner of the US is doing fine, our housing values arent falling through the floor(except for some McMansions), I work in maufacturing and could have 2 or 3 other jobs within a week at a decent wage if need be,and now with the week dollar my shop is starting to do more export work.
Well, with inflation a serious concern here in Europe, I wouldn’t expect the European Central Bank to do any interest rate cuts of its own in the near future. Combined with the (US) Fed’s aggressive rate-cutting, I doubt there’ll be any shifts in the dollar/euro exchange rate in the US’ favor anytime soon.
Me, I’m saving up euros to bring back to the States, so from my selfish perspective, this is great. I just hope there’ll be something worth returning to in a couple years…
Not all that bad over the long term; when I was a nipper, the dollar:pound rate was well over 1:2.3 for a while. As I got older, the pound came down steadily, and then stabilized at $1.60ish around the time I moved here.
I don’t know if that says more about the weakness of Britain’s economy during the 90s, though.
They great thing about NYC is that you can find any sterotype you want on the street. Then you edit your bit to show exactly what you wanted to say in the first place.
There is a LOT less manufacturing now than in the 1970s. Entire areas of business have moved overseas. How this will affect things, I don’t know, but our current economy is very different from what it was 30+ years ago.
I agree that there are differences, but there are also a lot of similarities.
Back then, people were bemoaning the loss of manufacturing to overseas competitors. Practically every night on the evening news they would be interviewing some out-of-work rust belt worker. It was really sad and depressing.
Anyway, if manufacturing is less important to the American economy now than in the past, it’s arguably less of a problem if manufacturing declines further.
I’m not trying to dismiss the economic pain we’re experiencing, I’m only saying that it’s not doomsday.
When I lived in England in the mid-70s it was £1 = $2.50. I also remember it being about £1 = $1.33; luckily for me as a tourist in the late 80s or mid 90s.
As for Bush’s comments, one of the roles of the President is to be a cheerleader and to express confidence for the citizens. The problem for me (and I am sure for many others) is that I no longer have any confidence in anything the Administration has to say. If Bush were to state that the USA is located between Canada and Mexico, I would check Google Maps to make sure we had not magically relocated elsewhere on the globe.
Sure was, I spent the academic year 1977 - 78 in Germany as an exchange student. Back then we were jittery when the dollar temporarily dipped from its more or less usual rate of 1.80DM to about 1.50DM.
I traveled around Western Europe with a rail pass, and stayed in hostels. I didn’t mind it then. The one in Amsterdam was a blast, especially with Heineken beer for one guilder. At all the hostels, at any meal I took there, I was seated at a table full of interesting fellow travelers. But situated as I am now hostels, with their midday lockouts just aren’t practical. We need the option of being able to stay in the room. I know, that isn’t what you go traveling for, but the last time we took a fairly long trip my wife got sick and did spend a lot of time in the room wherever we were (ship, hotel, and train).
The value of a currency in the world relies heavily on how much faith is invested in it by the financial institutions of the world. It is not very different than you or me choosing a bank to put our money into. We will invariably try and invest our savings with an institution or in an instrument that we feel will not let us down, in other words that we will not lose our money with. If the bank takes our money and invests it wisely in such ways as to generate profits, we consider that bank to be a good bank to bank upon (pun intended). If it does otherwise, then we would take our money out of said bank and move to another bank that appears safer.
What has happened with the US dollar is something similar. The investors of the financial world (the exchequers of countries, banks etc) for some reasons, and those are not difficult to guess, have started feeling that docking their money in the the form of US currency is becoming a rather risky proposition. So, they sell their USD and convert it to some other currency that they feel provides more stability. Since the currency being purchased is now in demand it increases in value and the currency being sold loses demand and in turn loses value.
The reasons that have led to the loss of credibility of the US dollar could be many. The housing market crisis was IMO more of a trigger than an actual cause as is common in such cases. The faith does not erode overnight because of any one particular mistake committed by your favorite bank. It does so slowly and you let your money stay with it until one day you see something happening and you go, “That’s it…I am moving my money out of this bank before it is too late!”.
My wife and I go to Germany every year to visit her family. Last year when we went it was about 1 dollar for 1.3 euro. I cost us a fortune, and we have free accommodations all over the southern part.
This year the damned airline tickets cost 1300 each and add to that this miserable dollar. The worst part is she spent the last of her Euro savings last year. How the hell could we afford to move over there or even visit for a few month’s?
We’ve got my stepdaughter here on a visit right now. She lives in Berlin where she gets paid in Euros to teach English, she doesn’t need to drive or own a car, and she has traveled so much her passport is running out of room for stamps. Living in America on dollars, it doesn’t seem feasible to go to any other country in the developed world.
arrrggh.
We’re going to Amsterdam on Friday for a day on our way to Egypt (and then returning for a second day a the end of the trip). I just noticed this fun article
Maybe I’ll load up on euros and hope for the best (worst).
Glenn Beck with US Comptroller General David Walker.
Disturbing stuff. Some conclusions: if the US were a company, we’d be bankrupt, out of business and some leaders would be in jail. Our dollar is our stock and it grows more worthless around the world by the day.
Sounds like the edge of the waterfall has been reached.
I will say though that I’ve always found it very difficult to exchange foreign currency here in America. Away from the airport, or the retail currency exchange companies that are few and far between, it’s almost impossible.
