Thursday, August 16, 2007

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.

11 comments:

Calabrisella said...

the change is occurring all around in America, we must acknoledge it... or it will be too late!
like the crisis in Argentina... my famiglia e io, had to leave for that very reason... in 2001 (el corralito) ...sadest thing ever... to witness such a beautiful country fall to chaos...

thank you for touching this subject... this wake up call/ reality check is necessary....


bacini

Tess said...

I changed from Euro to British Pound, left me with the same feeling at first since one Euro equals one Pound [London is very expensive!].

But after a while you will start to see all the benefits, just think of what you will take back from Europe, isn't that worth a lot more? That will be the things money can't buy... "Priceless" ;)

Jessica_in_Rome said...

I actually like that the dollar sucks now because all my (husbands-heehee) money is in euros and that means it goes a long way when i go shopping at home, or need to buy a plane ticket. Even paying my tuition for University isn't so bad because we pay in euros. Once you are here for good, the dollar isn't a big deal.It's that everything eats up your euros until you get stateside!

Farfallina - Roam 2 Rome said...

Calabrisella, So your family had to leave for the Argentine crisis? Wow, heavy!

The only comfort is that they are letting the dollar fall slowly, whereas in Argentina the currency was held up and then one day it fell overnight. Too sad!

I remember clearly the day it happened! I turned on satelite tv and watched the news directly from Argentina and could not hold back tears listening to people's stories! people lost their savings and property value in an instant! just heartwrenching!

Tess, YES!! You are right! What I need to do is look at this from another perspective. Not be nostalgic about canceling my dollar accounts, but step back and see the benefits, like earning Euro and completing med school, yes! you're right :) Thanks!

JESSICA! Ciao! Grazie sai, I had forgotten this other hidden benefit! Since I'll be using Euros to pay my student loans, now those 64,500 have turned to 47k! :) Yea, ouch!

sognatrice said...

I try my hardest not to think about this too much since there's nothing I can do about it; at least half of my annual income comes from the States, and I try to use it for Stateside stuff (book purchases, shipping costs, etc.), but man does it hurt when I have to get it out of the bancomat here. So depressing.

Although, yes, I do like to play it the other way in my head...gee, in dollars, I'm approaching rich this month. Yeah right!

Tina said...

Somehow I'm not worried about you in Rome... ;-)

Seriously, it may seem expensive, but once you're adjusted and know where to buy what, etc., you'll find that it's not too bad.

Re: Argentina... my boyfriend was here in the States during the crisis, and he tells me that he worked extra hours and sent a lot of money home. His family had so many problems that year. Now they are doing well, but it was pretty bad...

Tina said...

What's your second citizenship?

nyc/caribbean ragazza said...

The low dollar freaks me out. I want to move to Rome sooner rather than later but the little bit of money I am making on this movie won't go very far in Euros.

jOolian said...

yeahhh... i think it has been a very long time since the U.S. $ was so weak to the Euro... it kinda freaks me out...like, what's next. Wishin'ya the Best of luck to fulfill your endeavours, forward!

Confessions of Cleopantha said...

Oh, as an aussie l have had this gripe for years believe me! That's why most Aussies going backpacking for a year and spend the next ten making up for it!

daisies said...

i am amazed that our canadian dollar is pretty much on par these days which will make traveling there much easier ...