June 21, 2003
From the desk of Jane Galt:Buy American!
There is quite a fraught discussion in some circles about whether we Americans should vote with our wallets on the recent French diplomatic efforts to prevent us from invading Iraq. Should we boycott French products? Should we plan to travel elsewhere?
Why yes, of course we should.
Not necessarily because we hate France. Even French-loving, war-hating, Bush-bashing Europhiles will, if they're smart, be looking for more ways to buy American this summer. Why? Because, my little chickadees, the exchange rate is dreadful. If you will read the post immediately below this one, you will understand that the American dollar is in the middle of that long awaited decline of which my co-blogger speaks.
That means that everything you buy from France, or in France, is much, much more expensive. About 35% more expensive than it was last summer. And though we may long to support our British allies, the pound has similarly appreciated against the dollar. Trust me. The last time I was in London, it took $1.65 to buy £1. Now it takes within a hair's breadth of $2.00. Jane is on an involuntary diet caused by the contraction in her stomach whenever she contemplates paying $12 for a stale sandwich.
Why is this happening? Because, my little chickadees, fewer people want to hold dollars. Specifically, fewer people want to buy things from us, which reduces the demand for dollars, and causes the price of the dollar in terms of other currencies to fall in much the same way that mad-cow disease causes a drop in the price of beef. Thus, the currency declines, which eventually compensates for this problem by making us want to buy fewer things from abroad, bringing our trade and capital accounts once more into alignment.
Meanwhile, you're the bloke with sticker shock who's helping the process along by whining and/or swearing every time you're asked to fork out more of your hard earned money for each imported item. Being a rational economic actor isn't all fun and games, you know.
So you don't have to be particularly patriotic to join me in my new Buy American campaign. Just thrifty.
Posted by Jane Galt at June 21, 2003 11:22 AM | TrackBack | Technorati inbound linksMegan: Nice to have you back. I take your point on buying American and the exchange rate; you're certainly correct in your conclusion but with respect to the pound, you either exaggerate or are getting burned. 100 pounds from an ATM in England on June 11 cost me a $168.11 charge to my Visa card. That's not as good as it was a year ago but not two to one either. We're doing much better (or I should say much less worse) against the pound than the euro. Of course, if you were changing currency or cashing travellers' checks, you may have been hit with a 2 to 1 exchange ratio. Which is why you should never pay cash in Europe and get the small amount of cash you may need from an ATM. But, I don't care what happens to the exchange rate, I'm not going back to France for a long time and I'm someone who has spent over six months in the last six years travelling in France.Maybe it's just the fact that I live in Orange County, California and am a conservative guy, but I've met or know at least a half dozen people who have cancelled trips to France this year (as did my wife and I) because MM. Chirac and Villepin have decided to lead their not-unwilling people in an anti-American foreign policy.
Not anti-american Mike. Anti-Bush. And diservedly so IMO.
A widespread Spite-the-French movement is pure Bush-apologist wishful thinking. Not that you won't be able to find that sentiment within he echo chamber, it just isn't that widespread in the 'real America'.
On the other hand, as Megan points out, the cost of a European vacation in US$ has been climbing lately, and that's enough to convince a lot of people to go elsewhere, espeically in this ecomomy.
Not anti-american Mike. Anti-Bush. And diservedly so IMO.
No Bones,if you ever been to France like my family and my friends have, you'd know it isn't just "anti-Bush". While on a trip to Spain, they spent a day to go to France, only to not be able to find a resturant to serve them, because they simply were Americans(as they were told by the operators of the places themselves). And this was before Bush was ever elected. And they were a diverse group of Peurto ricans, dominicans, etc etc, no rich white repubs among them.
A widespread Spite-the-French movement is pure Bush-apologist wishful thinking. Not that you won't be able to find that sentiment within he echo chamber, it just isn't that widespread in the 'real America'.
Yeah, that sixty to ninety percent approval rating Bush has been enjoying over the years means nothing, America *despises* Bush, even if they don't know it yet and that massive Trade Surplus turned Trade Deficitwith France is only beauce of a few thousand people. Right.
$2.00 to the Pound? Sheesh, it isn't quite that bad! Looking at my copy of Saturday's Times, the actual rate listed was $1.6636, so you'd probably pay $1.72 or so at a bureaux de change.
The truth is that GBP movements are highly correlated with those of the Dollar, more so than the Euro, and there has been a depreciation of the Pound against the Euro over the last few months, much to the delight of British manufacturers.
"America *despises* Bush, even if they don't know it yet"
Ah, but they're suffering from false consciousness, don't you see?
Ah, but what if this shift in exchange rates is permanent?
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