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.