9261 Euro Rate

Money, Money, Money. Seems that it was not that long ago when I got some Euros at 1.49 and now I am looking at 1.25=£1. That increases costs by 19%........ However, Its also been a worldwide time of cost increases with bills, fuel and food all on the up.

I think this may possibly prove to be a good thing for both Italians and many European nations. Why? Its just been too easy for a while and people have gone credit crazy. The 'have it now generation'. House prices have become stupid as a multiple of earnings.

However, its still sucks! The exchange rate does not seem set for any improvements in the short term either.

Category

General chat about Italy

[quote=nigelaxis;87104]Money, Money, Money. Seems that it was not that long ago when I got some Euros at 1.49 and now I am looking at 1.25=£1. That increases costs by 19%........ However, Its also been a worldwide time of cost increases with bills, fuel and food all on the up.

I share your dismay at the exchange rate - as I'm sure 95% of members here probably do too. I'm not too sure that the situation will be of much benefit to italy though? I don't think italians are anywhere near as debt saddled as the Brits, and barring tourist hot spots and crackpot get-rich-quick investment property builds on the coast, the Italian property market is one of the least inflated IMO.

I think britains national indebtedness is now over £1 trillion - the highest in the world per head of capita ... another unwanted record :-(

As someone who owns a fair amount of property outright (having spent the last 10 years working my @rse off to get to that point) it's horribly depressing to see its potential liquid value outwith the UK sliding down the pan as we approach the inevitable point when we join the Euro.

On the other hand, I have a house in Italy too, so suppose my bets are somewhat hedged on that front even if it's painful placing thoe € trades right now.

Does anyone actually foresee the £ recovering substantially, or has it found its level?

I can't see how a weak pound helps Italy either. Not unless you think Italians are going to start buying cheap UK items?

The Euro sooner or later is going to pop. Doesn't mean it can't go on for awhile yet. Nor does it have to mean the pound will get pulled up.

At some point the strong Euro is going to kill exporters and tourism. Companies can't be hedged forever. They can't hike prices in the US which is already slow. It's only going to push more companies out of the Euro zone.

It is very difficult to predict what is going to happen. Think at the exchange rate for the US dollar only a year ago.... I do not think that we could predict today's levels. Obviously, there are some clear imbalances in the different economies within the EU. Pigro, I think that your wife is Spanish and I guess that you may speak the language. I found this article in today's paper and I have not been able to contrast the information. I am sure that others can manage a rough translation but it says a lot about how much people have to work in different countries to get the same food item, in this case bread. There was no mention about Italy in the paper, but I think that the results will be very close to the Spanish situation. Anyway, have a look, I think that it illustrates the current situation:

[url=http://www.que.es/index.php/200804071974/Actualidad/Nacional/%BFTrabajar-el-triple-para-comprar-lo-mismo.html]Qu! - Trabajar el triple para comprar lo mismo?[/url]
(Which means to work three times more to buy the same thing)

By the way, if you don't hear from me for a while I will be away for a couple of weeks. Going to New York to visit my eldest daughter and to have a ball, including an evening at the Metropolitan to see Verdi's "Un Ballo in Maschera".
Have pleasant and interesting discussions.

Alright , I know the pound's taken a hit, but come one! Even at the current rate you all STILL have to be getting great value for your money! It's not that I'm unsympathetic, just that I'm an American. When we began our house purchase, one euro cost us about 95¢. Today we pay nearly $1.60 for each euro.....talk about a loss of buying power! Okay, never mind....it's just too painful to talk about.....:sad::sad::sad::sad:

[quote=Gala Placidia;87124]Pigro, I think that your wife is Spanish and I guess that you may speak the language. I found this article in today's paper and I have not been able to contrast the information. I am sure that others can manage a rough translation but it says a lot about how much people have to work in different countries to get the same food item, in this case bread.[/quote]
the article is rather inconsistent in that it describes the "Big mac index" as the time taken to earn enough to buy a big mac in different countries - thats not in fact the case; the BMI is used to illustrate the "true" worth of a currency and has nothing to do with the affordability of the burger to a local worker.

I don't deny that salaries are in general much higher in London than Madrid, but I don't personally think anything like 3x more white collar work would be required to pay for a kilo of bread in Madrid than London - were that true, it would in any case say much more about pay & taxation than about currency strength.

I also don't at all subscribe to the article's notion that basic foodstuffs are cheaper in London than in madrid - personal experience says no way!

[quote=Gala Placidia;87124]Going to New York to visit my eldest daughter and to have a ball, including an evening at the Metropolitan to see Verdi's "Un Ballo in Maschera"..[/quote]
lucky you. I went there for the first time last year and loved it. Swimming outdoors in the (heated) rooftop pool of the gansevoort hotel at the end of December with the manhattan skyline as a backdrop was quite surreal ... and it was 68 degrees in Central park one day (when 2 feet of snow would have been more normal) ... bizzarre.

ts in Euro verus Euro: the costs of fresh veg in Barcelona (market off las Ramblas) are half the cost of fresh veg in Umbria (Perugia ortofrutitcola mercato). So - a euro is not 'a euro' in buyng power throughout Europe.

I know this sounds pedantic to people who are based in US dollars or Sterling, but no way is a Euro a constant in buying power. It is quite fascinating how the rates on a eurobond denonimated in Deutschmark vary from those released by the Italian central bank...it is quite beyond my understanding of what the 'Euro' meant that this disparity could arise...but then, I did waste part of my life studying economics...

I wasn't even aware that euro bonds WERE still denominated in the old national currencies?

but it doesn't surprise me tht a bond from the german bank is intrinsically worth more than one from the italian one - bond values are all about risk, no?

Ooops. No, of course they aren't denominated in Deutschmark! Sorry.....

[quote=Charles Phillips;87144]ts in Euro verus Euro: the costs of fresh veg in Barcelona (market off las Ramblas) are half the cost of fresh veg in Umbria (Perugia ortofrutitcola mercato). So - a euro is not 'a euro' in buyng power throughout Europe.

You won't have any trouble finding variations in pricing in the US also. Local shops charge things based on what the local market will pay.

What the Euro lets people do is look across the border. If something is cheaper across the line on the map you drive over and buy it there. Or you surf on the web. I mail order stuff from Germany because the price is much lower. Shipping from Berlin is even cheaper then many local shops. If I had to convert marks to lira I'd have to figure in all that.

Central banks don't set bond prices. The wierd thing going on now with European bond prices are more about liquidity then anything else. People decided they needed to pile into "safe" and ignore anything else. You see an even clearer example of this by looking at US muni bond rates. These bonds are tax free to many americans. They are issued by the various US governments and are really no riskier then the other bonds that pay tax. Normally they cost more then the taxable bonds [makes sense doesn't it?] but with the rush to "safe" they were selling for less then the taxable bonds.

Of course there is not, it all depends how much tax is being charged on items as well. If you look at the States, even there, you have different prices, sometimes due to different tax rates, sometimes because it is a supply and demand market. For example we used to go often to Costco (a wholesalere)and we noticed that prices vary in the different states, on top of that you have the different tax rates, in some states you do not pay any tax and in some states you pay up to 8,25 % when you check out.

However the good thing is, that when I travel across the border in the Euro countries, that I do not have the hassle of changing money and we travel on a regular basis to Germany/Belgium/Luxemburg and France.

There are 'real' cost differences, as well as tax.

Most people who have driven the autostrada from Barcelona to Genoa will have seen the hordes of refrigerated lorries from Portugal and Spain bringing vegetables all the way around the coast into Italy. This traffic doesn't come free.

And as imported vegetables are often the cheapest ones in Italian markets (given that Italian consumers have a justifiable propensity to buy local produce wherever possible), it suggests that production costs in Italy are often higher than in Iberia.

Apart from the Euro (but it’s all related of course), the housing market is about to go in free fall here in the UK according to so called experts…. Quotes of 40% in the next 3 years. What impact will that have in Italy… House prices there already inflated by people from the UK buying there (on UK equity perhaps)…. Is it perhaps just as well for us to wait to buy in Italy?

The sterling has now reached new lows against the Euro. I don't see any light at the end of the tunnel with interest rate cuts, house prices dropping and the 'R' word being mentioned. If anything, it will get worse.

The key thing for the exchange rate is not the improvement of the UK but the state in Euro land.

The strong Euro weakens export (eventually) and tourism. The housing market has gone crazy in Europe too (it was pretty much a global problem).

Such issues normally travel from America to Europe via the UK. European press is hardly stating an optimistic picture.....it looks like the news we saw in the UK press before it arrived in eanest.

I would also like to point out that in my area properties have become much more negotiable. The agencies are now having to make an effort to sell stuff for the first time in a number years.

[url=http://www.independent.co.uk/news/business/news/the-currency-crunch-british-tourists-pay-price-for-euros-strength-806996.html?CMP=KNC-google_news&HBX_OU=50&HBX_PK=euro]The currency crunch: British tourists pay price for euro's strength - Business News, Business - The Independent[/url]

[quote]I would also like to point out that in my area properties have become much more negotiable. The agencies are now having to make an effort to sell stuff for the first time in a number years.
[/quote]

Good. And i don't mean that sacasticly either.

I am assuming that this has happened because of the euro's stength? If so you are talking of a market that has been hyped and over valued because of over seas perchasers taking advantage of the low cost of purchase in Italy,when compared to places like the UK..

Now with the Euro being, ok maybe a little too strong for its own long term good, the overseas market buyer cannot get the same bargain buy they were led to believe.
This is good for Italy and the Italian people,as a quick look at the UK market will show you what can and does happen when the locals cannot buy in their own area because of outside influence.

If only we had joined the euro ,but then i remember being told it would fail.now it looks like being the currentcy of the future,and we missed the boat yet again!

good article, nothing's ever black & white (though I've seldom seen so much use of the conditional tense by someone tryng to make a prediction!)

I think the euro will find a long term foothold within 15% of its present value relative to the $ but I do agree that there will be trouble ahead for those member states whose own economic performance is badly out of alignment. Italy, take a bow!

[url=http://www.economist.com/research/articlesBySubject/displaystory.cfm?subjectid=3856661&story_id=10809039]Charlemagne | Don't play politics with the euro | Economist.com[/url]

[quote=tennaval;87516]
I would say the next 18 months will be the acid test as to the abilty of a centralised bank like the ECB to respond to such differing needs from all its members. Personally I think the picture will change quickly as exporters scream and individual national interests are threatened.
[/quote]

If you're in Italy,Spain,Ireland,Greece and soon enough France you have to ask yourself what the ECB is giving you.

It's not keeping inflation in check like it's mandated to.
Growth is lacking.
Even government debt is trading up with the credit mess.
Then there are those complaining they aren't doing enough about the money market rates.

[url=http://www.bloomberg.com/apps/news?pid=20601087&sid=ajHX05hFhTJI&refer=home]Bloomberg.com: Worldwide[/url]

So what is the ECB good for?

OTOH The ECB has a history. One the article pointed out.

The ECB kept rates high in 2000,2001 and drove Germany,Italy etc into a recession that crashed the Euro. Why should anybody expect the ECB to not drive the Euro into the ditch?

[url=http://www.ecb.int/stats/exchange/eurofxref/html/eurofxref-graph-usd.en.html]ECB: Euro exchange rates USD 11 April 2008[/url]

[url=http://www.ecb.eu/stats/monetary/rates/html/index.en.html]ECB: Key interest rates[/url]

[url=http://epp.eurostat.ec.europa.eu/portal/page?_pageid=1996,39140985&_dad=portal&_schema=PORTAL&screen=detailref&language=en&product=STRIND_ECOBAC&root=STRIND_ECOBAC/ecobac/eb012]Queen detail[/url]

[quote]So what is the ECB good for?
[/quote]

Assuming this is linked to the bloomberg.com article.
If thats the case, i see no piont in the question,unless you believe that somehow the world crisis is either the euros fault or the ECB fault?

Or you believe somehow the european central bank is the keeper of ALL nations and bankers who play silly buggars day in and day out.

Me i have more trust in the ECB and frankfurt than anywhere else in this world when it comes to self centred and greedy pratts that don't care one i oter for anything but a fast buck....... or should that be dollar......

It is very fascinating: a couple of Norwegians posted in a parallel thread, and I am meeting quite a number of Swedish people interested in buying in Italy. Although Norway and Sweden are clearly part of Europe, and behave and trade in a very integrated way, neither country uses the Euro - so that rather puts the kybosh on the argument which considers that if the UK had joined the euro all would be sweetness and light.

Now, although I have often commented on that sector of the Italian property market attractive to foreign buyers being susceptible to a slowdown (UK US), I'm begining to rethink that position because of the number of Scandinavians (including Finns who do use the Euro) paying rather high prices for nice houses. It seems that the lure of a better climate surpasses everything - or is it the cheap vino!

[quote=giovanni;87526]Assuming this is linked to the bloomberg.com article.
If thats the case, i see no piont in the question,unless you believe that somehow the world crisis is either the euros fault or the ECB fault?
.[/quote]

No I'm asking what good is the ECB?

Inflation is above their target. So they are failing to keep that in check. Their only job by law. The only thing they claim to be interested in.

Growth in many parts of the Euro zone is negative or getting there. So those countries have to question the ECB from the growth angle.

Interest rates aren't being maintained at a stable level. So countries like Italy that were led to believe joining the Euro and giving up a central bank would lead to stable interest aren't getting that either.

So considering everything the countries gave up in terms of monetary flexibility what are they getting from the ECB?

Oh Frankfurt? More German banks are having sub prime problems then the UK. Northern Rock versus how many German Banks?

[quote] More German banks are having sub prime problems then the UK. Northern Rock versus how many German Banks?
[/quote]

Really? is that why the UK government has asked UK banks to come clean?

Just a quick look at teletext will show you that even the UK government knows all is not well in our banking zone.......

Where would the Lira be now? If the Italian Lira was still the currency what would have occurred?

With the economic, governmental and Alitalia issues I would have suspected it would have lost a lot of value. However, the weak Lira would have helped exports and that would have been good for the Italian economy. So has the 'stable' Euro helped or harmed Italy? The balancing act of economics