Wednesday, March 26, 2008

Sweden and the Plummeting American Dollar

The American dollar fell again today. It is now under six Swedish crowns for the first time in as long as I can remember. In fact I remember the good old days when a US dollar could buy a solid 11 Swedish kronor. The American discount. It was a beautiful thing. Now Europeans are enjoying the European discount. And I am confused.

I am confused because I am making European money. I am earning SEKs here in Sweden. Not many. But still. And according to the passport I have been traveling on I am European. But I feel very American. So much so that I am constantly checking the exchange rate. And doing conversions in my head. Despite not earning, nor spending, American money.

The dropping value of the dollar has lead to a decrease in European travel for Americans. In fact, Paris, the city which seems to give some sort of indicator as to how travel happy Americans are, has seen a significant drop in American tourists. About 6% last year, and over 10% this year. Which is solid.

Depending on your point of view, the dropping dollar is good. Europeans are heading to the US in droves. JaCal wrote a post about this that kind of blew my mind. A few pretty normal purchases, jeans, an iPod, and a digital camera will basically make up for the cost of the plane ticket. Which demonstrates two very important things. The dollar has really fallen. And Swedish stuff is ridiculously expensive.

The interesting thing is how this will impact the American economy. Tourism can bring in a lot of money. And a bunch of Europeans flocking to New York to buy iPods, digital cameras, and Levi’s can have a very positive impact. Granted not enough to stop the continued turbulence, but still. Money coming in from other countries is always nice. Of course the falling dollar also suggests some economic problems in the US and generally unstable currencies can be a sign of inflation.

Of course, a stable US dollar is much better for Americans but let’s look at the positive here. And by positive I mean purely selfish. I’m not earning or spending dollars anymore, and when I go home or buy things online in the US, I am getting the European discount.

That being said, psychologically, the falling dollar is killing me.

13 comments:

  1. Lucky you! It's the elections, too. As soon as that's over, things will improve. Speaking of elections...no, wait...I better not. :o)

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  2. Works for me. Being recently moved here, I still have lots of bills to pay in the US (loans, woo) and I'm earning in SEK. I'm quite pleased -- sucks overall that the US economy is going down the shitter, of course, but I'm lucking out.

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  3. the dollar is killing me and it's definitely changing my tourist habits. A European trip was in the works for Spring Break but we decided against it because we didnt want our pants pulled down over the the exchange rates! Speaking of pants...Jacal is right about the difference in ipods and most electronics but the price difference on jeans might be a bit misleading. Yes, in the US you can get a pair of levis jeans for $39 but the Levis jean you buy in Sweden are the premium style that would run close to the same price if you were to buy them in the US. T
    Hairy, how about I ship you 30 ipods to Stockholm and we can start a little business. We could charge an extra $150 for each Ipod and still the swedes would get a bargain :)

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  4. let the dollar plummet! the krona gets stronger cause it!

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  5. @isle dance - no no no elections are fair game. Im all for some interesting discussions.

    @chuyskywalker - nothing wrong with checking out the positive spin on this. bummer that the economy isn't feeling all that hot, but nothing wrong with a little selfish attitude every now and again.

    @travis - yeah that's a shame about the travel. it seems you are definitely not along in that regard.

    and the difference in jeans is pretty stark in JaCals example but even if you're looking at a regular pair of jeans (which is surprisingly hard to find in Stockholm) there is a solid difference.

    and the ipods is a glorious idea. I've actualy joked with my family about just shipping things over. it's kind of sad but even after shipping costs you're staring at a pretty solid profit margin.

    @anonymous - this is a common misconception. currencies are not valued against each other. they have their own value and are often compared to each other because of exchange rates but the dollar dropping does not mean the crown is getting any stronger. it might mean it is getting stronger in relation to the dollar but it could be losing stength against the yen for example. strength of currency in comparison to other currencies is relative.

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  6. I was just watching CNN as I was reading, and they were talking about the Times Square stores that now all have signs that read "We take Euro". What the damn happened to our country, Hairy?

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  7. You got bitchslapped by Europe! That's what happened!

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  8. You can forget about tourism in America. They are so strict at the airports and customs these days that for example I don't bother. And I don't want to give them my DNA, prints and stuff. I have nothing to hide but still. There are places I could visit in America, but it's just too hard to do it. Jobbigt, I should say :)

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  9. @ the sign factory - I saw an article about that too... not cool.

    @tito - Europe is getting cocky.

    @smek this - tourism is booming in America right now actually. people are loving it because of the price. everyone has a price. if it keeps dropping even you might want to head over smek. and Americans love Finns. Especially because Conan O'Brien looks like the President of Finland.

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  10. Hairy the plummeting dollar may be helping you, but it is kicking the crap out of my trip to Brazil this fall--you guys want to come?

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  11. you've just got to earn some non-US dollars. no problem right. And I've never been to Brazil. Or South America for that matter...

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  12. well sign your butts up--I've got a space reserved just for you....all you need is dollars or Kronar (may save you some dough)

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  13. seriously... but the dollar is on the upswing. or at least it is over 6 SEK again.

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