I spend several weeks a year in Spain usually on 2 trips. Being pretty convinced the dollar is going (much) lower vs the euro, I'm thinking about opening a bank account and leaving some dinero "parked" in Spain for a while. Anyone had any experience with this or know how big a hassle it is?
Thanks so much,
Jeorge

In order to get a bank account in Spain, you have to go to the comisaria and request a document called a "certificado de no residencia." In Madrid, you go to the comisaria on c/General Pardiñas. It takes two weeks to get this document. You then take this document to a bank and you can open a non-resident account.

How low do you think it will go? I wouldn't be surprised if in a year's time 1 euro = 1.40 dollars (it's was 1.295 last I checked a couple days ago), but would be surprised if the dollar went much lower.

The question is: will the hassle be worth it? If you bought 10,000 euros now, and the dollar slid to 1.40 later, you'd make about $1,000 on the difference ($13,000 vs. $14,000). And that's probably only borderline worth the trouble....if you're taling about 100k euros, well now that's different....

maripostia wrote: This is what I went to do at this same place about 2 years ago. I got there early before opening time only to find a half-mile-long line which hardly moved in the 2-hours I waited and couldn't wait anymore (had to go to the restroom). I calculated it'd take about 8 hours of standing in line to get to the front so I gave up. Had I gone with someone to hold my place in line that would've been different (but worse for them, of course). It's a pain in the royal arse, let me tell you.

Saludos, MadridMan

Well, the euro hit 1.33 vs. the dollar today, then eased back to 1.326, ....that 1.40 mark might come sooner than I thought.

That's very bad for the UE exports. Our economists are mad about it.

Ignacio,

Many Americans, the is in the U.S., don't understand the advantage of a lower dollar. But you're right, it's a good thing for us. When we were on the gold standard, we never got this opportunity.

True, it's surprising how people is blind to basic finances:

Dollar weak ---> USA exports more ---> rise of the Gross Product ---> more riches and more employent. On the other hand ---> Vacations are more expensive and import goods are inflationary ---> bring inflation to economy.

Dollar strong ---> USA exports less ---> decrease in Gross Product or decrease in it's growth ---> more unemployment, more money goes out through goods foreign balance. On the other hand, vacations are cheaper and imports help prices stay low.

How can be people crying for a strong dollar? Isn't their job more important than their holidays?

Specially, if we relize that the inflation because of imported goods is reduced because of the decrease óf imports because of th rise of the euro.

Just one more example Ignacio, that you do not understand how us "unsophisticated brutes" think.

Well,
It makes life rough on us living on the Spanish economy while we are getting paid in U.S. Dollars! I lose 30+ cents on every dollar I change into Euros. What saves me and my family a lot of money is that we are able to buy U.S. Goods at US Prices and have them shipped here, but we still buy a lot of our goods on the local economy.

Well, DD, I was speaking in a general sense. There is a lot of people here that doesn't realize it, here too.

Once I was in Miami on holidays, and a german girl I met in the group was complaining on the exchange rate (by then a 1:1, when the basket for the euro, according to experts should have been 1.1$/1€ or 1.2$/1€). Then I told her that simple explanation and she answered she wasn't going to lose her job (poor naïve! Germany is the bigger exporter towards outside the EU and the exchange rate is vital for them), but she was suffering a bad exchange rate.

She kind of blamed the eastern germans and countries with formerly weaker currencies, like Spain of the weakness of the euro by then. She even got angry, which surprised me, 'cause I was very relaxed.

According to those "experts", MedicalMan, you would be losing now about 10 or 20 cents of your dollar, and previously you had been benefiting from 10 or 20 cents bargain. I am not so involved in the exchange rate theory to support or deny that estimation.

Ignacio: People do have a tendacy to try and ignor when bad times are coming. The exchange rate is something that effects us all even when we think we are not buying that much of other countries products. The ultimate effect will be felt by eveyone due to the fact that it will result in less good being exported goods being sent to EEUU and less tourist will be going to Europe this tourist season. It can be a vicious cycle.

What is that, Ignacio???

Sounds like you are pro-supply-side!! There may be hope for your socialistic tendancies after all!

No, there is no such as pro-supply or pro-demand.

Equilibrium is necessary, excess of demand = inflation, excess of supply = recession.

But if you mean if I am more partidary of demand policies, ..., I keep on being so, but with severe liimits. I still remember the horrible inflation they brought with socialist about 10-20 years ago.

But inflation is a joke the way it's measured. They should include housing costs (they don't include mortgages costs which are 50-70% of our salaries) and then the calculations would be more close to the real inflation we have: insteado of a 2 to 4%, we'd have 8 to 10% each year.

Being most salary rises indiciated to inflation, we have been losing purchase power of about a 6% each year the four years the flats skyrocketed.

So, it's kind of contradictory, but, being a technician in the matter, I (however) welcome the recent official inflation rise, because salary rises will help this year to lose less purchase power.

Every year we are poorer because of these manipulated data, and it's repercusion on salaries. But not referring salaries to inflation won't help, because people would ask for less money than they could (there is a general idea of what is fair that's wrong because of the exposed, in employers an empoyees), fooled by the wrong data.

Ignacio,

When your housing costs are as high as they are in Spain, you already have a very serious supply/demand issue with wages. It's obvious that all inflation will do is make it even worse for hopeful home owners.

I think the biggest problem has been the hit the Spanish economy took by latching onto the Euro. Your prices skyrocketed, and they've not only remained high, they've risen at a rate that's matching the Germans, who by the way, make about twice as much as the average Spaniard in wages, and can afford housing much easier by comparison.

Guess who's controlling the Euro?

As far as the dollar versus the Euro, that's all relative to what you feel is essential. To the vast majority of people under the dollar, Europe is no longer a choice destination for vacation travel because of the lack of strength in our money. In the end, Europe suffers from it as much as we do.

Wolf

Wolf:

Euro has been good in may aspects like employment, and interest rates. It's amazing the riches it has brought, and it's responsible of the good part of the economical situation nowadays, the bad being due to PP. But PP has made a good marketing campaign, making people believe that the good brought by the EURO, that PSOE brought, is their work.

Inflation is always bad. But inflation is out there by now, it's only that statistics don't take into account the bigger rise (real state) which poderates a lot. Thus, if the rest of the parameters (the ones they input in the consumer basket) go up close to the real inflation, close to the flats price rise, people will see clearly they are losing purchase power and press the Unions for higher rises in salaries, and, thus, the yearly 6% impoverishment will end.

This 6% has taken Spain to gap salaries/prices you and other members are so surprised of.

Unfortunately, I don't know why, not because of productivity, nor infrastructure, maybe because of national control direct or indirect (through banks industrial participations), it seems that investments tend to go to Northern Europe, so, having half the salary of a german is the only way to preserve our jobs. A minor evil.
But prices used to be lesser too! And they are except for housing, after 7 years of sPPculators.

Wolf, I know from long ago that the only ones who controll dollar are the USA. Euro is not going up, it's dollar that's going down, since ALL the currencies are going up against it. The USA is letting, through contradictory declarations and policies, the gas escape from the inflated dollar, helped by the commerce exchange deficit, precisely to reduce it and protect their economy and workplaces through exchange rate.

I knew that, but now I have seen this been published by many experts in many newspapers. It's one of the things they use to hide from the public untis someone is able to expose it, and then everybody echoes.

The tourism from the USA in Spain is only about a 1% if I am not wrong, and it's about an 80% or 90% at least from the EU, so Euro is not affecting the tourism sector. I guess last summer we had similar number of visitors to others, even with the 11-M bombing.

Ignacio,

Actually US tourism accounted for roughly 5 to 8% of the Spanish tourism in people numbers, but because Americans spent more, we were somewhere in the range of 16 to 20% of the total spent across the board by tourists.

What made the American spending even more lucrative is that it came from fewer people taking up fewer lodging facilities, thereby meaning we spent more on luxury items and food, as an example.

That's going to be a major hit in areas that Spain is going to have to live with, because Americans purchased more items with VAT attached, and for the most part, did not recoup the cost when they left for home.

It's going to have a serious trickle down effect on jobs and other areas of Spanish income.

Wolf

Wolf,

According to this link to a document by the Ministry of Economy, in 2002, North american tourists in Spain were under 1,000,000, which represents a maximum of under a 1.27% (1,000,000/78,900,000) that year.

Well, the euro almost reached $1.35 ($1.347) yesterday, but backed down to $1.332 by the end of today.

Anyone want to bet when it hits $1.40? I'll guess Feb 15.

Wolf: You are right it is approx 1 million. Taking that figure from offical Spanish stats and appling approx $3000 average for a two week stay that equates to $3billion of revenue in the tills of the Spanish merchant. Maybe what would make our friend happy is if all of us "unsophisticated brutes" and other such "brownosers"would stay home and spend that $3billion somewhere else. Like going to the Grand Canyon or to see a Packers game.

Deser Dweller,

Good figure for the amount spent during a two week stay. $3 Billion. Now that's almost real money. You would think that would be enough incentive to clean up some of the "non-violent" crime in Madrid.

Gazpacho: I was using the offical numbers from the link that was shown above. Using the average amount that we spent and our friends say they spend when they go over, is where the $3000 comes from. "Thinking" that would be incentive to clean up the crime. One would think so. Then again "thinking" is not one of the things that I ge accused of doing very often.

Yeah Desert Dweller,

I was just agreeing with your $3000 for a two-week stay figure. That's about right. Let's see, 30 police stationed around the central tourist area, at $30,000 a year, ten cops a shift, would be $900,000. 900k/3B = 0.03%. Looks like a no-brainer.

Americans and Japanese have been the "big spenders" in Spain, and they also account for a larger portion of the inland tourism. Europeans who travel to Spain do so mainly during the summer, and head for coastal areas.

In fact, Americans outstrip everyone else in spending, by eating at better restaurants, stay in nice hotels, and even buy more at bookstores at places like Prado.

In other words, we feed the tourist economy that needs feeding, mostly inland, and even more remarkable, Americans travel more during the Spanish off-season, which has made us an even better find.

Now, with the Euro where it is, many of our major cities are finding Spanish travelers visiting the US, stocking up on everything they want, and taking it back home, instead of the other way around. The cycle is swinging more towards Spaniards buying American - here - than it is towards Americans buying Spanish - there.

But what would the Wall Street Journal, American Tourist information sources, and everyone who evaluates tourist spending know? The Spanish government says we "don't matter" that much in their tourist book, which certainly isn't going to say they've got a problem attracting US tourists.

Then the UK and France must be wrong as well... considering both nations are putting millions into projects to advertise and attract the American tourists they've lost over the last few years, and are seeing even fewer of due to the Euro being over rated. They certainly don't know as much as Spain's tourism bureau...

Or do they?

Wolf

Well, Desert Dweller, everyone is welcome in Florida! Actually, the Euro's strength is indeed a bonus for Florida's tourist industry which is already seeing its effects as thousands of Europeans are visiting Mickey earlier than usual.

But, in agreement with you,Gazpacho and Wolf,I just read an engossing article about this very same topic in the Diario de Malaga, Spain.
http://nuevo.diariomalaga.com/noticia.php?id=28345
Essentially, they are bemoaning the loss of American tourists, and is in total agreement with your statements:
roughly translated it says that the North American tourist is specialy attractive, because they spend on the average 13 days and spend an average of 87 euros per day more than other tourists, and about 75% of them stay in hotels.

I know I spent in excess of that per day, more like $150/day between meals, side trips and gifts. I'm not going to tell you what I spent at the Corte Ingles!

Booklady: Thank you for the input. You are right the American tourist has been know to "blow the farm" while on vacation. This constant Yank bashing is having a toll on the tourism industry. I read a report that in 2003 that the French definatly felt the loss of Yankee green backs. The 2004 figures are not in yet but it does not look that much brighter.

You are also right about a trip to Florida. Many of us "unsophisticated brutes" do spend a good vacation in Florida. I have always thought about going down there and helping some Cuban get past the INS officers. That is something that I would enjoy doing. Mickey I never cared much for, and if I want to talk to Goofy all I have to do is log on start reading the post from one of the extreme left wing Spanish members.

Interesting that no one has brought up the impact that the Yuan being pegged to the dollar at an artificially low rate is having. The Chinese government is being asked by most major nations to allow the Yuan to float but so far has resisted. This is a major factor in the dollar's value in the world market, and has a major impact on the balance of trade which also affects the dollar.

Another unmentioned topic is the US savings rate VS the Euro zone savings rate. This has a major effect on the Euro zone economy and again the balance of trade with the US.

We don't save, we spend it all on European vacations ;>)

ernie

Ernie: That mentality of "spend it today, tommorow may not get here" is something that we Ameircans are very guilty of. The baby boomers are going to start to retire in a few more years and it is going to bite them in the butt big time. Some of the stories that our friends are telling about their lack of planning are incrediable. These are not eigth grade drop outs either.

David,
I hope your wrong about the Euro hitting $1.40 by February!! I live in Madrid and get paid by the Dollar so this is definatly putting a dent in my wallet. It was $1.328 today, last time I had to go deposit a check in my bank I lost over $500 to the exchange rate. I am not complaining to much but it sure was a lot nicer when it was 10-15 centimos cheaper!

Following most analysts, probably 1.4 is the higher fluctuation margin as 0.93 (as we saw not so long ago) was the lowest margin limit. General oppinion is the the 1.15-1.2 is a safe bet for average level in the next year and a half.

But you know, monetary markets are completely unpredictible these days.