Posted on 07/13/2022 10:17:43 PM PDT by DallasBiff
The euro briefly dropped below $1 Wednesday on a stronger-than-expected inflation rate in the U.S., breaking the parity threshold for the first time in 20 years.
The shared currency of 19 European countries fell to $0.9998 before ticking up slightly to $1.0021 by midmorning. The last time that the euro hit parity with the dollar was 2002.
In the past year, the euro has declined more than 15%. Much of the slide, though, has come since Russia’s invasion of Ukraine in late February. The war has rocked the euro-area’s fragile economy, fueling inflation by pushing up energy prices and threatening to tamp down economic growth
(Excerpt) Read more at barrons.com ...
The effort by various past US administrations to make the dollar ‘cheap’....has finally been overcome by the EU necessity to make the EURO look ‘cheap’.
From your previous posts, I believe you live in Germany, and I was listening to a guest on a talk radio show and he said that German electricity costs have gone through the roof.
And it means it sucks more if you want to visit Europe for some reason too... right?
In theory no. A strong dollar makes things cheaper for American tourists in euro denomination countries.
Just the opposite.
You’re right. I know five ladies who are all widows and experienced travelers who have cancelled their trip to Italy this fall. Besides higher costs, they are worried about unrest like in the Netherlands and other parts of Europe, including strikes in Italy. And they are concerned with the expected influx of refugees from north Africa.
Other way around - more expensive for Euro tourists to come to the US and do things here.
The dollar is up very strongly vs almost everything. Yen, Euro, Pound, Yuan, etc. Some more so than the euro. Uncertainty creates demand for dollars.
Btw, the dollar is also up vs the Philippine and Mexican pesos, but by less so than most of these others.
Your ladies are being silly.
I was in Spain for six weeks this year, May and June. It was just fine, and lovely.
Exactly so. The US is quite an expensive destination in any case, much more so now.
Absolutely not. Europe is a great bargain at the moment.
Hotels are cheap, trains are cheap, restaurants are cheap, and wine is cheap. Just dont buy gas or run an airconditioner.
True, central Germany.
Electrical costs....even before all the inflation occurred....was the second highest rate of any European country.
If you buy the newer appliances, and just pay attention...electricity isn’t the ‘killer’, it’s natural gas, gasoline, and grocery items that have escalated.
Natural gas is probably double what it was, and will likely escalate another 50-percent by spring of next year. Whatever groceries you bought each month a year ago....is probably 150 Euro more today.
Interest rates for home loans went up enough....that the market is cooling off rapidly, and renovations are difficult because the hardware stores are having a problem in getting lumber/nails.
Is looking cheap different than being cheap?
No one can give a rational explanation why the rate has been on ‘fire’ like this since early 2021. ECB strategies were set into motion to change (probably going back three years ago). Some analysts are saying the US economy is doing stronger than expected.
Anyone who was around West Germany in 1985, with the 3.4 DM to the dollar...will remember how remarkable it was to travel across Europe with just $500 in your pocket. We certainly aren’t going to that level.
Three odd things I’ll point at:
1. Frankfurt Airport has a massive mess in dealing with bags destined to planes leaving. They brought in some Croat folks, and then they signed up something like 300 Turks to fly in and be summer employees. People are flying out and finding the bags don’t get there for 3 or 4 days at the vacation resort.
2. About half the shops in Wiesbaden have a ‘we-hire’ sign up. Looking for part-time, full-time or mini-job status....cafes, bakeries, discount, bars, restaurants, etc. Some bars are shutting down by 9 PM because of a lack of staff support.
3. Across Germany, apprentice kids are in short-supply. Forecast going on for a decade in the future....they won’t have the number of technicians needed to perform regular work.
Europe seems headed for a takedown from within and without—as we are. If things get worse and Russian gas is fully shut down this winter, look out. In that light, the Euro for now being weaker to the dollar doesn’t seem surprising to me.
We’ve got an unwinding of our economy going on similarly over here, of course. I noted recently that one local supermarket just cut its hours, after they already they had specific departments within their stores closing early. Another supermarket has taken to similarly closing departments (meats, seafood, deli) early.
This is the result of the huge increase in energy costs in Europe and the collapse of their economies. They don’t want this currency crash, which is likely to get worse. Look for $.90 or lower if the economic suicide of the “sanctions” and “Green Energy” continues.
Prior to 1990s...energy was strategically run on the idea of best cost practice. 1990s changed the dynamic entirely for most of Europe....nuke energy got blasted, and demands for ‘clean’ energy destroyed the business element.
France stayed on with nuke energy and refused to really get into this clean talk.
When you look at how the Germans screwed up...they talked themselves into a electricity policy that relied upon solar, hydro, wind, and natural gas (naturally coming from the Russians). They are so deep into the ‘hole’, that resolving this...means identifying nuke/coal energy as ‘green’ (which is what the EU did in the last couple of weeks) is the only exit point. Green environmentalists are furious at what happened, but they are the key people to blame for the current saga, and how bad the winter will be for working-class people.
I can look at the wife’s house...new windows, air-tight, new furnace (runs on natural gas), LED lights, low-energy washer/dryer/freezer, etc. There is no way to improve our situation. But I expect the heating bill for spring of 2023 to be 3 times what it was in 2018, and electricity bill is probably double of what was in 2018.
That’s a very well informed post. I laughed when I saw the article reporting that coal is now “Green”. Of course, the coal plants can’t be brought back on line in any relevant time frame. We may be seeing the end of the EU if the energy situation isn’t fixed soon, and the only fix is now begging the Russians for gas for the winter.
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