Dollar Woes!

The dollar has fallen, and medicine cannot help him!

I look back with nostalgia to the days when the dollar equaled 1.35 euros, and now I have to settle for 0.74! Economists expect it to tumble 20% more!

5 years ago, a 700 euro bedroom in downtown Rome meant I paid 518 dollars.

Now that very same 700 euro bedroom means I have to fork out 946 dollars!

That means that in 5 years our dollar has lost almost HALF it's value, and falling! Woa!…

"The dollar has fallen for a simple reason: Americans spend a lot more than they save. American consumers, of course, are known for living on credit, and they buy hundreds of billions of dollars’ worth a year of foreign goods. We don’t have enough money at home to pay for all this spending, so we borrow from foreigners" which creates a deficit that erodes the dollar.

With a weak dollar, foreign goods are expensive, domestic goods more affordable, and in theory the deficit gap should close! Though Asia is buying dollars to keep it from crashing, and foreign businesses are absorbing many losses; all in self-interest that keeps feeding American rampant consumerism, and show no signs of wanting to change their ways!

I think back to the Argentine currency crisis and wonder; Is this another cruel joke? Another staring game where the last investor out looses! Meanwhile, many economists warn us that a dollar sell-off is looming! The dollar could loose it's place as the international currency! The Titanic is sinking but music is playing and people are dancing! Then again, the American economy defies gravity and is very, very, very FLEXIBLE. I know that.

Warren Buffet puts it best: "In general, the batting average of doomsayers in the U.S. is terrible. Our country has consistently made fools of those who were skeptical about either our economic potential or our resiliency. Many pessimistic seers simply underestimated the dynamism that has allowed us to overcome problems that once seemed ominous. We still have a truly remarkable country and economy."

In any case, meanwhile a correction takes place, us expats at the ATM machine are left saying; OUCH!

I have learned two lessons from medicine:

#1 The physiological function of pain is to notify you that something is wrong, and force you to stop and react.

#2 The first step to treatment is accepting a condition, and taking the steps to correct it.

Reading on the dollar woes left me worried today. I must look at the situation, accept it, adjust and plan accordingly.

Having to get myself through med school independently without student loans means I must plan ahead... for the next 6 YEARS! Rome is expensive! I can cover my expenses, but I'm not able to build my savings, and I need to save half my income just in case my study hours become overwhelming (as I expect they will). So, I must sadly look towards building up again my European clients, and dropping my beloved American medical clients.

A few months ago, I canceled 4 contracts with European agencies that paid me in Euros, since I had to work through the night but had to stay up during the day as well, so I took on American clients where I chose my own hours. Now as I'm about to move abroad, I regret that decision, and will spend the next month building my European contracts again.