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BBC 24 has special features sprinkled throughout today's news that try to explain what terms like "weak dollar" and "strong euro" mean, and what it might mean for normal people. I've been paying attention because I've never quite understood it. So far they've directly contradicted themselves at least once.

First, we saw a package put together at Macy's in New York, where the reporter explained that a pound now buys more in relation to the dollar. Shots of happy tourist shoppers, etc. Reporter goes on to explain that a weak dollar is actually good news for the US economy, because Brit and Euro investors can buy more American goods. "But," warned the reporter, if the dollar fell too faar it could spark inflation. Okay so that's understandable. But just now they have an interview with an expert of some sort, and he says that the US is exporting more than it's importing.

Now these two things seem irreconcileable. Can any of you dear readers unmuddle my brane? I'd be interested in any kind of view beyond tourist shopping too, if you've got one.

― Tracer Hand (tracerhand), Wednesday, 7 January 2004 10:49 (twenty-two years ago)

No that's not irrec.

Brits buying more, so exports from US go up. That's it.

― mark grout (mark grout), Wednesday, 7 January 2004 10:54 (twenty-two years ago)

Haha I got that backwards, I think. The fellow was trying to explain why people weren't buying dollars at the pace they were buying Euro and sterling, and one of his explanations (besides it being a "yield issue" - eg investment in currency tends to happen with those currencies with a high interest rate) was that the US trade deficit scared people a bit. First, I assume a trade deficit means the US is buying more than it's selling. And second, why would the trade deficit scare people?

― Tracer Hand (tracerhand), Wednesday, 7 January 2004 11:00 (twenty-two years ago)

Trade deficit -> the worth of the dollar might go down -> currency speculators won't buy dollars. I'm not an expert on this, can someone tell if I'm right?

― Tuomas (Tuomas), Wednesday, 7 January 2004 11:14 (twenty-two years ago)

Also use this space to enumerate ridiculous BBC 24 statements, to wit: doctor goes to work in hospital one day six months ago, just like every day; is recorded on lobby surveillance entering the building at his customary time; doesn't come home. His car is still in the lot. His jacket and briefcase are still in his office. Today his body was found in a disused slate mine. "Police say the death is not thought to be an accident but there are no suspicious circumstances in the case."

― Tracer Hand (tracerhand), Wednesday, 7 January 2004 11:39 (twenty-two years ago)

Means, "we think he topped himself".

― Matt DC (Matt DC), Wednesday, 7 January 2004 11:41 (twenty-two years ago)

"Police say the death is not thought to be an accident but there are no suspicious circumstances in the case." = long way of saying suicide. Presumably they have a note or know why, but can't say so publicly... (xpost)

― mark grout (mark grout), Wednesday, 7 January 2004 11:42 (twenty-two years ago)

I'm not really thinking here am I. I think this euro thing is eating my brane. Here's another expert now:

"The trade deficit means that there are more US dollars are over here [in Europe). As the US economy heats up, US consumers are increasing in their confidence; so the likelihood of US consumers buying goods from the UK, Europe, and Japan actually increases - they're more likely to buy goods in Europe, so that causes the Euro to go up and the dollar to go down."

Now this is just a flat contradiction of the first program I mentioned, and would appear to make no sense if European products cost so much more relative to what the dollar can buy at home in the US???

― Tracer Hand (tracerhand), Wednesday, 7 January 2004 11:47 (twenty-two years ago)

BBC always focuses on consumers, but there's more to capitalism than that, ie return on US investments overseas.

― Enrique (Enrique), Wednesday, 7 January 2004 11:49 (twenty-two years ago)

Can you explain what you mean by that last part, and how it relates to the rest of the thread?

― Tracer Hand (tracerhand), Wednesday, 7 January 2004 11:51 (twenty-two years ago)

Or in Aja-speak, What?

― Tracer Hand (tracerhand), Wednesday, 7 January 2004 11:53 (twenty-two years ago)

Well, it means that tourists will go spend their hard earned cash in another country (meaning that America will be importing money) rather than in their own. It's a bit of a double edged sword.

I'm buying a new Mac, and if it's the same price with the exchange rate to fly to NYC and buy a Mac (with the flight included) that it is to buy a computer in the UK, then that's #1000 that's out of the British economy and into the American one. Magnify that by a couple of thousand tourists, and a strong pound and weak dollar is a financial loss for the UK.

Or, erm, something. I don't pretend to understand economics. It's even more confusing than the Grand Unification Theory.

― the river fleet, Wednesday, 7 January 2004 11:56 (twenty-two years ago)

I can't explain really, but I think the strength of the dollar must relate not only to trade (ie Europeans buying US products) but to the success of US investments, the rate of return on, for example, oil extraction.

I don't understand economics much, but definitely the strenghth of an economy is not just about shopping.
Reporter goes on to explain that a weak dollar is actually good news for the US economy, because Brit and Euro investors can buy more American goods. "But," warned the reporter, if the dollar fell too faar it could spark inflation
Well, it's good news for 'the economy,' but not for consumers in the US, I would have thunk.

― Enrique (Enrique), Wednesday, 7 January 2004 11:57 (twenty-two years ago)

Something D O O economics? anyone? anyone?

― chris (chris), Wednesday, 7 January 2004 12:01 (twenty-two years ago)

we're an educated bunch, right? so why are we so lame at economics? they shd teach economics rather than k-lame useless stuff like chemistry at skool.

― Enrique (Enrique), Wednesday, 7 January 2004 12:03 (twenty-two years ago)

I did Economics A-level, but I've forgotten most of it. Interest rates play a big part in deciding the strength of the currencies from what I remember, and it all goes in boom-bust cycles.

― chris (chris), Wednesday, 7 January 2004 12:09 (twenty-two years ago)

Well, the problem is that economics is such a soft science. It's even less clear than, say, psychology. People can study it in retrospect and say *why* things happened, but prediction is unbelievably difficult, because it's so complex, and most actual economists are often honest about the fact that they don't even really know why things are happening.

― the river fleet, Wednesday, 7 January 2004 12:10 (twenty-two years ago)

Well, from what I know of politics, the belief that balanced budgets=healthy economy is shaky, as proven by Keynes commes les autres.

Also the notion of 'healthy economy' is tough -- because it avoids talking classes. Now everybody is locked into the stock exchange via pensions I suppose the notion of economically separate classes is hard to maintain.

And then you have the insanity of the housing market.

Jeez. I must go back to school.

― Enrique (Enrique), Wednesday, 7 January 2004 12:17 (twenty-two years ago)

basically the US is 'printing' money to cover the trade deficit. More dollars =cheaper, dollars = inflation. Conversely a more expensive poiund cripples british exporters and pushes us closer to deflation as manufacturers cut prices.

― Ed (dali), Wednesday, 7 January 2004 12:29 (twenty-two years ago)

i don't pretend to understand the underlying factors right now. but i have to keep track of how much my english paycheck is worth in dollars on the day it's issued for tax reasons, and it's been brilliant the last few months. i'm earning several hundred dollars extra a month just for living in the right country. wooeee!

― colette (a2lette), Wednesday, 7 January 2004 13:21 (twenty-two years ago)

So the "British consumers abroad" story is actually about US exporters and how cheap their goods are. That makes sense.

― Tracer Hand (tracerhand), Wednesday, 7 January 2004 13:25 (twenty-two years ago)

It was all those delighted British faces in Macy's, they blinded me!

― Tracer Hand (tracerhand), Wednesday, 7 January 2004 13:30 (twenty-two years ago)

ha ha Vicky's six hour Macy's marathon to thread

― chris (chris), Wednesday, 7 January 2004 13:40 (twenty-two years ago)

heh, I was amazed at how many brits were in Macys. I think there must have been 1 brit for every 4 people shopping. It'll be even better shopping in April, if the exchange rate keeps going the same way.

― Vicky (Vicky), Wednesday, 7 January 2004 13:52 (twenty-two years ago)

let's hope so, we can buy America back! or at least all their Stussy t-shirts and cheap game boy advance games.

― chris (chris), Wednesday, 7 January 2004 13:54 (twenty-two years ago)

So if I go on amazon.com, i can get me some cheap dvds? will the pound get even cooler?

― Enrique (Enrique), Wednesday, 7 January 2004 13:56 (twenty-two years ago)

Four months is more than enough time for the exchange rates to reverse, though I suspect they won't. Still tempted to buy me a few greenbacks in advance, mind.

― Markelby (Mark C), Wednesday, 7 January 2004 14:04 (twenty-two years ago)

I thought that when they was $1.76 to the £1, it's a gamble....

― Vicky (Vicky), Wednesday, 7 January 2004 14:18 (twenty-two years ago)

blah blah, terms of trade, inelasticity/elasticity of demand for imports, yadda yadda yadda.

― DV (dirtyvicar), Wednesday, 7 January 2004 16:48 (twenty-two years ago)

Well, it's good enough for the pundits!

― Tracer Hand (tracerhand), Wednesday, 7 January 2004 16:57 (twenty-two years ago)

The US Feds have been keeping its interest rates low to help the economy (1% or so aint it?), which means that investors are selling off the yankee dollar and investing it in other currencies with higher returns, such as the Euro and the Loonie (at 11 year high).
All the hints are that the people in charge (your accounting nerds with blue collars, not the white house) aren't going to raise it. So this encourages people to further prop up other currencies until such a time that they have a reason to buy.

― Mr Noodles (Mr Noodles), Wednesday, 7 January 2004 23:39 (twenty-two years ago)

one month passes...

Fuck me, I just heard from a rather well-placed economist friend that the dollar is predicted to hit 2:1 on the pound come this summer. I'm going to be so poor this summer...

― Girolamo Savonarola, Wednesday, 18 February 2004 22:40 (twenty-two years ago)

it's basically that right now, especially if you wind up getting charged any kind of bullshit fees.

― anthony kyle monday (akmonday), Wednesday, 18 February 2004 22:48 (twenty-two years ago)

Yeah, I heard that today too. I suppose if everyone piles in and buys sterling now on this expectation it will become a self-fulfilling prophesy. I love capitalism.

― N. (nickdastoor), Wednesday, 18 February 2004 22:49 (twenty-two years ago)

a good time to visit the united states.

― RJG (RJG), Wednesday, 18 February 2004 23:01 (twenty-two years ago)

And laugh at their relative poverty.

― N. (nickdastoor), Wednesday, 18 February 2004 23:12 (twenty-two years ago)

hahaha

― joan (joan), Wednesday, 18 February 2004 23:25 (twenty-two years ago)

one year passes...

So I'm away to the €urozone for the weekend, which means I will need €uros if I'm to waste hard cash on dodgy 1970s vinyl from ropey-looking street stalls. What's the best way to cash myself up? IF figure the options are:

(a) buy thenm at a bank or post office this end
(b) buy them at a bureau de change at the airport(s)
(c) get them out of a hole in the wall when I'm there

Any tips?

― Tim (Tim), Thursday, 19 January 2006 11:36 (twenty years ago)

meh, i just use the atm's. then again i give about as much shit about the exchange rate as i do about my future.

― Ste (Fuzzy), Thursday, 19 January 2006 11:47 (twenty years ago)

Not (b).

I usually do (c), but get out lots at once, because you get charged a flat fee per withdrawal (about 2 euro, maybe?) unless you're with some banks like Nationwide, I think, who have no such charge. (a) should be fine too, but rates and fees vary. I think American Express bureaux tend to be good value, and the Post Office isn't bad. But my info may be out of date.

Oh, if you plan to do (c) then ring your bank to let them know you're going abroad. Might not be necessary but sometimes they limit your withdrawals/card purchases while abroad as they think it might be a sign of card fraud.

Pay for as much as you can with a card, rather than cash - that's the cheapest way of all.

― Alba (Alba), Thursday, 19 January 2006 11:50 (twenty years ago)

I always just use a hole in the wall. The rates aren't bad and the commission is not exorbitant if you get enough out (typically 1.5% with a £1.50 minimum, get out more than £100 at a time). If you go abroad a lot it's worth getting an account with the nationwide as they don't charge commission on overseas withdrawal and give the best rates.

― Ed (dali), Thursday, 19 January 2006 12:34 (twenty years ago)

And they aren't a bank but a building society, said the mutual moonie pedant.

― Dave B (daveb), Thursday, 19 January 2006 12:39 (twenty years ago)

>> Pay for as much as you can with a card, rather than cash - that's the cheapest way of all.

I think my bank (Lloyds) have introduced charges for using debit cards abroad now. The cunts. Otherwise yes, using cards is a good way to do it.

― Colonel Poo (Colonel Poo), Thursday, 19 January 2006 12:39 (twenty years ago)

post office generally pretty decent, i think.

― emsk ( emsk), Thursday, 19 January 2006 13:57 (twenty years ago)

one year passes...

post office excellent - 0% handling charge.

not so excellent at changing foreign money back into £, tho. I found some Romanian lei lying abt at home, like you do, so took them to my local sub-Post Office, who, it transpired, were being very sub-Post Office. The woman behind the counter got a big book which I could see had pictures of all different types of banknotes in it. She peered at the Romanian ones, then peered back at my money again. I began to wonder if the Romanian revaluation was the reason behind her confusion (some 18 months or so ago they knocked three noughts off the leu as it was becoming unwieldy, so 1,000 lei became 1). I explained that this had happened. She shook her head and said I needed to go to the main post office. This I did, only to find a HUGE queue as it was nearing lunchtime, but luckily I knew of another sub-Post Office in a posher part of town which true to form had an up to date book and they were able to present me with the princely sum of....£3.49!

― Grandpont Genie, Tuesday, 17 April 2007 14:09 (eighteen years ago)

Hey, that a pint, let's not be too down.

― The Wayward Johnny B, Tuesday, 17 April 2007 14:19 (eighteen years ago)

three years pass...

As of today, $1 Canadian is worth exactly $1 US.

― progressive cuts (Tracer Hand), Thursday, 24 February 2011 12:23 (fifteen years ago)

last weak it was slightly above parity...

lol @ US$ savings :///////

― polymath & psychics club (Lamp), Thursday, 24 February 2011 17:43 (fifteen years ago)

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