[HN Gopher] The euro has tumbled near parity to the US dollar
___________________________________________________________________
The euro has tumbled near parity to the US dollar
Author : systemvoltage
Score : 268 points
Date : 2022-07-11 17:34 UTC (5 hours ago)
(HTM) web link (www.bloomberg.com)
(TXT) w3m dump (www.bloomberg.com)
| sfusato wrote:
| This is gonna be a hard winter in Europe, that's for sure. I fear
| a "free for all" type of scenario where everyone will be scraping
| to get some gas.
| downrightmike wrote:
| Or just Ryanair'ing down to Spain
| walrus01 wrote:
| When things are really frozen, maybe Ted Cruz can give some
| tips on last mile airfares to sunny destinations
| paganel wrote:
| Unfortunately not all of us can afford 3-month Airbnb stays
| in places like Southern Spain over winter.
| andix wrote:
| WHO says your heating bill will be less?
| Hamuko wrote:
| You still need to heat your home, are you there or not.
| kelnos wrote:
| Not as much, though. Leave home and set the thermostat to
| 50F or so.
| jefftk wrote:
| If no one will be there you can drain the pipes and leave
| it unheated over the winter. People typically do this
| with summer homes.
|
| (I think this thread is silly though: there's no way
| enough people will move to warm climates for the winter
| to make a dent in cold-country fuel consumption.)
| secondcoming wrote:
| At least in the UK, the part of the bill that is really
| increasing is the Standing Charge (a charge just for
| being connected to the gas network). So even if you turn
| off your heating your bills are still going to increase.
| roguas wrote:
| No, if you live in multiapartment complex. At least in my
| country there are laws that forbid you as others have to
| provide extra heating.
| jefftk wrote:
| _> laws that forbid you as others have to provide extra
| heating_
|
| Link?
|
| As far as I know, there's nothing like this in the US,
| and it's something that I've known broke people to do.
| [deleted]
| Void_ wrote:
| I was really surprised about the gas prices in Canaries
| during my trip in February... What's going on there?
| z3t4 wrote:
| Or heat the house by mining crypt currency. Crypto currency
| might be the only free and stable currency once China want
| USA to pay back the loans.
| vbezhenar wrote:
| What about CNY? China is world leader, surely its currency
| should be pretty stable. I, personally, started to invest
| my tiny savings into CNY.
| kasey_junk wrote:
| The problem with CNY are several fold: defacto peg,
| difference in price between onshore and offshore cny,
| strict currency controls make treasury operations
| challenging for real users of the currency, governmental
| policy of treating foreign holders different than
| domestic, etc.
|
| At the end of the day most currency holders want a
| liberalized currency and CNY is far from that.
| refurb wrote:
| I remember some Reddit post asking about CNY and the
| replies were all "Wait, all the rich Chinese are
| desperate to get their money out and you want to bring
| your money in?"
| Glavnokoman wrote:
| How do you do that? Directly into currency or in china-
| traded stocks? Which broker do you use for that?
| dkjaudyeqooe wrote:
| Ryanair hedged their kerosene at an effective price of $60 a
| barrel, so no problem.
|
| They also seem to be the only airline that isn't cancelling
| thousands of flights right now. As much as I dislike them,
| they seem to be well run.
| im3w1l wrote:
| I think their big thing was understanding the difference
| between stated preferences vs revealed ones. They took away
| beloved perks of flying, and managed to show that people
| weren't willing to pay what it cost to provide them.
|
| I still remember their proposal for ultra-cheap standing-
| only tickets (couldn't get that one past regulators). Kinda
| wonder if it was seriously meant or not.
| dkjaudyeqooe wrote:
| Not sure about "cost to provide them" but unbundling is
| their game. Here are some prices (in euros):
|
| Under the seat bag: 0 Reserved seat: 10 10kg checked bag
| (carry on size): 16 20kg checked bag (full size): 26 A
| bag being overweight by 1kg: 70
|
| So they get pricey quickly if you're taking any decent
| amount of luggage. God help you if you don't have
| accurate scales at home.
| refurb wrote:
| That's the game with discount airlines. Not only baggage,
| but $ to print your boarding slip, $ to pay luggage fees
| at airport, etc.
|
| If you read the costs closely and can avoid them, they
| work great. I flew from SFO to Stockholm with Norwegian
| Airlines for $400 return on a 787. About the same as SFO
| to JFK.
|
| But it was no frills. No even free water served (you
| could ask for it) or any meals. If you prepare it's
| great. If you don't it's pricey.
| tomjakubowski wrote:
| Any non-flat rate pricing for baggage is godsent. I've
| long been annoyed that US airlines will charge the same
| amount to check a small bag, with a few pieces of
| lightweight passenger cabin contraband, as to check a
| giant 50 pound duffel bag.
| kasey_junk wrote:
| So long as the airlines rigidly enforce carryon size
| restrictions. It was bad enough when baggage was free,
| now you've got people slamming steamer trunks in the
| overhead cabinets just to avoid the fees.
| Symbiote wrote:
| Unless the flight is sufficiently empty, Ryanair staff
| often walk around the gate and get anyone with a large or
| heavy-looking bag to put it on a scale.
|
| (They have the scales available before check-in, so it's
| reasonably fair.)
| Symbiote wrote:
| Standing-only was a marketing stunt. No one could
| possibly expect it to be allowed by the regulators.
|
| Ryanair repeating this story gets them free advertising
| reassuring people that they try and minimise costs.
| simonh wrote:
| Ryanair have a long history of very savvy, far sighted
| planning. Back in 2001 when many airlines cancelled orders
| for Boeing planes after 9/11, Ryanair signed a long term
| contract for 155 brand new 737-800s at a huge discount.
| They've taken out some smart long term options on jet fuel
| before a well.
| yoran wrote:
| Same. They seem to be one of the few airlines that are well
| run. Maybe cause the founder is still CEO, I don't know.
|
| I also respect their honesty. They tell you "we get you
| from A to B the cheapest way", no more. Traditional
| airlines' ads are all about traveling in luxury, which is
| extremely dishonest considering 99% of their travelers
| experience a not-far-from-Ryanair level of comfort.
| rocketbop wrote:
| Michael O'Leary has been CEO since the early 90s but did
| not found the company.
| aaomidi wrote:
| They know how to handle margins of profit and also a way
| higher scale than most airlines.
| odiroot wrote:
| "Let them eat cake"
| downrightmike wrote:
| cake was not like we have today, it was dough used to line
| the oven to keep the actual baked good from burning, like
| how some recopies say to have a pan of water in the oven.
| In terms of the sentiment, The EU dug the hole on this one,
| and de-nuking their grid was just plain stupid.
| vbezhenar wrote:
| Just install stove and cut some trees around? You can build
| working stove from few dozens of bricks really quickly.
| baybal2 wrote:
| hcmacro wrote:
| Rising nationalism worldwide is a bane to European prosperity and
| I don't see that trend reversing. In the latest bout of EUR
| depreciation, one can interpret Russia's invasion as a
| nationalist imperative. The prior bout of EUR volatility
| accompanied Brexit, of course. And over the last decade, the US
| has been a better investment destination than Europe (probably
| the case going forward too).
|
| In contrast, many commentators thought London (and Paris to a
| much lesser extent) would take financial market share away from
| New York during the aughts, the heyday of globalization.
| Celebrities like Gisele famously demanded to be paid in EUR,
| while Jay-Z showed off his Euro notes in the video for "Blue
| Magic."
| [deleted]
| wyager wrote:
| > Rising nationalism worldwide is a bane to European prosperity
| and I don't see that trend reversing.
|
| Yeah, the biggest economic problem is definitely nationalism
| and not, say, excessive covid lockdowns or gas sanctions.
| andruby wrote:
| In the grand scheme of global economics, yes, nationalism has
| a very big impact, and it typically lasts longer than
| pandemic lockdowns or gas sanctions.
| MrMan wrote:
| Nationalism will destroy all of it, nice try though
| deflecting
| bobthepanda wrote:
| It doesn't really help that the last crisis exposed that
| Eurozone governance is a headache compared to the relative
| cohesion of a one-country currency, due to the individual
| countries butting heads about policy.
| was_a_dev wrote:
| Is that no different to regional leaders butting heads in
| government?
| bitshiftfaced wrote:
| The difference is that even when non-Euro countries have
| different regional leaders butting heads, you still have
| both fiscal _and_ monetary policy controlled by those
| elected /appointed from the same country.
| bobthepanda wrote:
| To look at the government styles of other major reserve
| currencies (USD, CNY, JPY), state/provincial/regional
| governors have little to no impact on monetary or financial
| policy. Florida doesn't have the ability to veto the FDIC
| saving a New York bank for political points, the same way
| Germany was very will-they-won't-they over several major
| bailouts.
| tenpies wrote:
| > Rising nationalism worldwide is a bane to European prosperity
| and I don't see that trend reversing.
|
| Also importantly, the EU's economic raison d'etre ended last
| quarter.
|
| It was simple: Germany props the EU with transfer payments and
| EU members commit to buying German goods. Now Germany has a
| trade deficit. A major exporter-manufacturer has a trade
| deficit. That's like China having a trade deficit. This is
| absolutely cataclysmic and an economic fuse of unknown length
| just got lit on the EU.
|
| And the worst probably isn't even behind us as Brussels
| continues to self-destruct for the sake of stopping a comic-
| book villain version of Putin who is apparently an existential
| threat to the West, but also not powerful enough to even take
| over Ukraine.
|
| I'm not one for predictions, but unless Brussels comes back to
| reality and stops dealing with platitudes and the ideas of
| insulated Davos elites, it's quite likely the EU ceases to
| exist as we know it within the decade.
| landemva wrote:
| > the ideas of _Klaus Schwab_, it's quite likely the EU
| ceases to exist as we know it within the decade.
|
| EU people gave control to Schwab. Your timeline looks to be
| correct for EU crack-up caused in part by unpayable pension
| obligations. In the meantime, my tourist dollars spend
| further in Europe this summer.
| markvdb wrote:
| > [...] Brussels continues to self-destruct for the sake of
| stopping a comic-book villain version of Putin who is
| apparently an existential threat to the West, but also not
| powerful enough to even take over Ukraine.
|
| You might be underestimating how close Vladimir Putin is to a
| comic book villain. I'd recommend you to take a look at
| https://meduza.io/en/feature/2022/06/16/the-criminals-in-
| the... . (Meduza is a reputable Russian journalistic medium,
| operating in exile from Riga, Latvia. )
|
| > I'm not one for predictions, but unless Brussels comes back
| to reality and stops dealing with platitudes and the ideas of
| insulated Davos elites,
|
| I've noticed from up close how much of the EU structure,
| especially the EU parliament, is actually very approachable
| by the ordinary member state citizens it is supposed to
| serve.
|
| > it's quite likely the EU ceases to exist as we know it
| within the decade.
|
| The risk certainly seems a lot higher that for the US or
| Russia. "Quite likely" is a bit of an exaggeration at this
| point though. I do hope a decent EU will last quite a bit
| longer. I feel like all recent crises have actually
| strengthened the EU.
| dragonwriter wrote:
| > a comic-book villain version of Putin who is apparently an
| existential threat to the West, but also not powerful enough
| to even take over Ukraine.
|
| Russia is more than powerful enough to take over Ukraine on
| its own. But Western aid to Ukraine -- because of the
| perceived Russian threat -- has been enormous. US direct
| military aid since the major invasion this year being more
| than Ukraine's most recent annual defense spending.
| yieldcrv wrote:
| Euro is my new favorite USD stablecoin
| throwawaymanbot wrote:
| buzzwords wrote:
| This because Euro is falling in value (probably faster than USD
| is falling in value)
| rsykes2 wrote:
| EU interest rates are below 0%. US are above 3%. Also EU
| economies are a little slower than the US at the moment.
| Primarily, though, its always rates.
| steviedotboston wrote:
| 1 liek = 1 prayer
| V__ wrote:
| Since the US has a trade deficit with the EU [1], will this
| negatively impact the US or positively impact the EU in any
| tangible way?
|
| [1] https://www.census.gov/foreign-trade/balance/c0003.html
| JPLeRouzic wrote:
| I may be wrong but international trade is often labelled in US
| Dollars [0], so for US entities buying at EU, it would change
| little, while for EU entities buying in US, it would be
| costlier as they would have (or their bank) to buy more Dollars
| to pay for the imported stuff.
|
| For US entities selling to EU, nothing changes, but for EU
| entities selling to US, they would receive less Euros for a
| given amount in Dollar. As their cost structure is in Euro,
| they will have a lower net income.
|
| [0]
| https://en.wikipedia.org/wiki/International_use_of_the_U.S._...
| dkjaudyeqooe wrote:
| In this situation the US is importing deflation (Euro) and the
| EU is importing inflation (USD), assuming you pay in the
| currency of the country you're buying from.
|
| And given the deficit there is more of former happening than
| the later.
| gigatexal wrote:
| insane. When we moved to Germany 4+ years ago it was .85 USD to 1
| EUR.
| beebmam wrote:
| I think you mean the opposite
| SkyMarshal wrote:
| You're right, it was 1 USD to 1.17647058824 EUR.
| aquadoggy wrote:
| That's odd, because I recall exchanging 3.141592653 USD for
| 36959913570736074 10^-16 EUR.
| georgeburdell wrote:
| I think they meant that the Euro was worth more than 1 USD,
| as it has for decades
| [deleted]
| TekMol wrote:
| iasay wrote:
| You're right. Europe sold out a chunk of its high profile
| technology industry and never bothered to invest afterwards.
| Philips was the worst. They bought up every single electronic
| component supplier then sold it all to China. And let's not
| look at the whole Nokia and Microsoft shit show.
|
| The electronic design industry shrank so quickly that it
| actually pushed people out into other sectors.
|
| We're just pouring fuel on the race to the bottom. Lots of old
| men got to die rich.
|
| Edit: don't know why parent post was flagged. It was spot on.
| kmonsen wrote:
| Deepmind is a British company (now owned by Google), and are
| for sure at the forefront of AI from anything I can understand.
|
| Covid vaccines were almost all done by European companies.
|
| Europe is different for sure, and incumbents often use
| regulations to fight innovation but that happens in the US as
| well. Internet access for example is a lot better in Europe
| compared to US.
| TulliusCicero wrote:
| > Internet access for example is a lot better in Europe
| compared to US.
|
| Citation needed. Data I can find indicates that the US does
| pretty well for speed: https://en.wikipedia.org/wiki/List_of_
| countries_by_Internet_...
|
| That said, I have no doubt that the cost of internet in the
| US is substantially higher than in Europe.
| bobthepanda wrote:
| It really depends on the country in the EU. Germany is
| terrible with Internet speed.
| TulliusCicero wrote:
| Agreed. I lived in Germany until last year and it wasn't
| great. Especially since companies there often do only
| 2-year contracts, or only have higher speeds for the
| 2-year contracts.
| TekMol wrote:
| Britain is not in the EU.
|
| If we include Britain, there would be 2 websits in the top
| 100. A Hungarian porn website and bbc.com
| TheDong wrote:
| > There is only one European website in the top 100
| websites
|
| spotify.com is swedish, and booking.com is the netherlands.
| Both of those are part of the EU, are in the top 100, and
| are not porn websites.
|
| There are more I'm sure, but I know those off-hand.
| TekMol wrote:
| Can you link to a list that has these two in the top 100
| websites worldwide?
|
| Both are not on Wikipedias list of most visited websites:
|
| https://en.wikipedia.org/wiki/List_of_most_visited_websit
| es
| TheDong wrote:
| I used the alexa top 1m, since when someone says "top
| website", that's what I assume is being referred to:
| http://s3.amazonaws.com/alexa-static/top-1m.csv.zip
|
| Maybe that's stale and there's other preferred sources
| now.....
|
| But you linked a "top 50" list, which seems obviously
| useless to make the claim you're making.
| rdl wrote:
| Hungarian? I assume you mean Czech (xvideos)? And xnxx (not
| sure if they're related). There's also a Cyprus based site
| (xhamster) although I suspect they have substantial
| operations in not-Cyprus.
| TheOtherHobbes wrote:
| Not according to this list:
|
| https://www.visualcapitalist.com/ranking-the-
| top-100-website...
| rdl wrote:
| I just browsed that list and it was hilarious that most
| of the EU sites were google/amazon country sites. But
| that list is from 2019.
| kmonsen wrote:
| You said Europe (I think, can't read your comment anymore),
| and the UK is very much part of that.
| MrsPeaches wrote:
| Europe != EU
|
| Britain is in Europe but not the EU.
| blibble wrote:
| fortunately Britain doesn't use the euro
| andymockli wrote:
| Related: https://www.x-rates.com/calculator/?from=EUR&to=GB
| P&amount=1
| blibble wrote:
| not really related when that's almost 20%, is it?
|
| turns out retaining the ability to set your own interest
| rates is important
| asdadsdad wrote:
| yeah, they use the pound, which is also almost 1 = 1 with
| the Euro =)
| blibble wrote:
| so by almost you mean almost 20% off?
|
| euro-nationalists kept saying after brexit the euro would
| hit parity
|
| (but they expected it to be against the pound, not the
| dollar)
| asdadsdad wrote:
| lol, ok, fair. I guess people would expect the pound to
| lose power due to Brexit in the long term
| asdadsdad wrote:
| inflation is at 9% tho
| formerly_proven wrote:
| Europe has a lot of braindrain as well. If you are truly
| talented, why would you stay (many don't)? Either you're not
| that good, or something else is tethering you here (many valid
| reasons).
| fleddr wrote:
| Citation needed, specifically regarding your use of the term
| "a lot".
|
| Sure enough, if you take the small percentage of extreme tech
| talent or very entrepreneurial employees, many in that group
| might consider taking their business to the US.
|
| But how much is that really? 1%? 5%? Can't be much more. So,
| 95-99% don't...hardly a brain drain.
|
| The other thing Americans can't seem to comprehend is that
| not everybody is a dollar-chaser. For the typical European,
| if they have a decent quality of life and some reasonable
| disposable income, they are satisfied.
|
| Bread and games as they say.
| worker_person wrote:
| For Federal Income Taxes
|
| * Top 1% pay 48% of all income taxes * Top 5% pay 59% of
| all income taxes * Top 50% pay 96% of all income taxes *
| Bottom 50% pay 3% of all income taxes
|
| https://www.ntu.org/foundation/tax-page/who-pays-income-
| taxe...
| fleddr wrote:
| Can you clarify what those numbers try to show?
|
| The point I made is that I don't expect a "lot of
| braindrain" from Europe and that this concerns a tiny
| percentage willing to move to the US. What is the
| relation with the tax revenue you shared?
| TheOtherHobbes wrote:
| You get decent healthcare that won't bankrupt you _even if
| you 're comfortable._ And you're a few orders of magnitude
| less likely to get shot by some rando.
|
| Also longer vacations and a more relaxed working environment.
|
| I know of far more people heading to the EU from the US than
| the other direction.
| frumper wrote:
| People have good care in the US too, just not everyone. If
| you're highly desired to be considered part of the brain
| drain of Europe then you'd likely be able to get good
| healthcare.
| kube-system wrote:
| Brain drain and crippling healthcare debt affect two
| entirely different demographics. If you have a top tech job
| in the US you good have insurance.
| jjav wrote:
| > If you have a top tech job in the US you good have
| insurance.
|
| Relative to health care in the EU, not that good. Top-
| tier platinum PPO from top silicon valley employers is
| still going to cost a lot out of pocket (way above the
| so-called max out of pocket) if you have health expenses
| and that's on top of the $25K-$30K we're paying for the
| coverage itself.
| lotsofpulp wrote:
| Why would it cost more than the "so called max out of
| pocket"?
|
| A top tier platinum plan will, per the legal definition
| of platinum, pay for 90% of expected health expenses.
|
| Max out of pocket should be less than $5k for a family of
| 4 on a platinum plan, and the employer will be paying
| 70%+ of the premiums, if not more.
|
| Assuming you are seeing in network providers, which for a
| top tier platinum PPO should be almost all doctors, and a
| BCBS plan would be nationwide, then your premiums would
| be say $500 per month for a family of four, and out of
| pocket max will be $5k per year at most.
|
| Total expenses of $11k per year for the most expensive
| locale in the US. And that is assuming you max out health
| spending every year, which probably will not happen. And
| that is off the family has only one working adult.
|
| And you get an HSA to invest $7.3k per year and withdraw
| it tax free at any point in the future. You can have a
| few hundreds of thousands saved up for healthcare
| expenses by the time you retire, all tax free.
| zerocrates wrote:
| You can't have a top-tier plan and an HSA, can you? I was
| pretty sure HSAs were only available to those on high-
| deductible plans.
|
| People on traditional plans can have FSAs but those
| typically don't let you really accrue from year to year.
| frumper wrote:
| My employer provides a high deductible plan and deposits
| most of our deductible into an HSA. Once deductible is
| met it is a top tier plan.
| lotsofpulp wrote:
| I have seen gold metal level plans high deductible health
| plans that qualify for HSA. I do not know about platinum,
| but the difference in gold and platinum is gold covers
| 80% of expected expenses and platinum covers 90%.
|
| My gold level high deductible health plan has a ~$3k
| deductible I think (for family coverage).
|
| I imagine even a platinum plan can be high deductible if
| the deductible is set to equal the out of pocket maximum.
|
| Either way, the numbers will not be too different for
| gold and platinum plans.
| orange_joe wrote:
| What are you talking about? I've worked in two top tier
| companies and the most I've ever paid for the coverage is
| $120/month (1 firm I paid nothing). How are you paying
| $2,000/month at a "top SV employer". I've never had to
| pay more than the maximums (how does that even happen),
| and my out of pocket costs have always been under
| $50/visit for a specialist visit. I really don't
| understand how you get these numbers.
| Moldoteck wrote:
| just out of curiosity. What happens(to citizen/employee)
| if due to some health issues they are not able to perform
| their job as a tech worker for 6-12 months?
| kube-system wrote:
| At a top tech job? You take advantage of your company's
| leave policy, draw from disability insurance, and/or your
| bank account is already big enough.
|
| For other Americans, yeah, this is how many get into
| medical debt.
| ekkeke wrote:
| I don't think many people I know would abandon family,
| friends, language, and culture to move to a different country
| unless the incentive was very high. Moving to the USA is also
| quite hard and the rhetoric around it isn't great so even a
| double or triple salary (which I've heard is the norm in some
| industries eg. software) isn't particularly tempting.
|
| I doubt Germany, France, Austria etc. would see much
| significant drain. Poorer countries (eg Poland) have been
| already hit quite hard and might be impacted a lot more by
| this though.
| avgcorrection wrote:
| So why would stay when there are many valid reasons to stay?
| I'm confused.
| jltsiren wrote:
| Why would you leave anymore, as remote working has become
| common? Quality of life has always been a major reason for
| staying in Europe, while low professional salaries have
| driven many away. Today the latter is much less important
| than it used to be.
| junipertea wrote:
| 1. It's not as common as everyone claims. 2. Big money
| comes with US companies, and then you can be at whim of US
| timezone, or worse, a big company that is not remote-first
| or asynchronous.
| baal80spam wrote:
| > Why would you leave anymore, as remote working has become
| common?
|
| Maybe because, IME, 90% of US offers are: Remote (US
| based)?
| iasay wrote:
| If you're paid in dollars, rising prices, rising energy
| costs.
| davnn wrote:
| That relies on the assumption that money is the sole reason
| to decide where to live. Even from a monetary perspective,
| top talent can easily earn >100kEUR/year in Europe too, which
| enables a very good lifestyle given that you have to spend
| way less on social services. That's not to mention the rise
| of remote work if you prefer to work a US-based company.
| spiderice wrote:
| > less on social services
|
| Less? By what metric? The tax burden is lower in the US
| than in Europe by a good amount. Does paying a lot more in
| taxes not count toward paying for social services?
| LeanderK wrote:
| because Europe has a incredible quality of life? Where would
| you move? There are some attractive cities outside but they
| are not many imho. I don't want to drive a car, want to live
| urban and with a lot of alternative culture around me. I am
| done with suburbia. It's the other way around, why should I
| move? There's quite a few reasons to stay in Europe. It's not
| all about money (assuming inflation stays manageable, but
| it's a war here, who knows).
|
| I also doubt the amount of braindrain, i see a lot of brain-
| gain where I live (in the south of germany and I don't
| include europeans).
| Moldoteck wrote:
| Canada is a much better option for many, because pay is
| closer to us but people also get nice healthcare. The best
| option would be Switzerland. On the other hand in Eu there
| are places where qol is much better compared to what you can
| get in us(be that Netherlands, Denmark, some parts of
| germany/france/spain) and this qol is improving each ear even
| in poorer eu countries. Tech workers can get a more than
| decent pay at faang style companies or by working remotely
| for us
| acchow wrote:
| > but people also get nice healthcare
|
| By all accounts of everyone I know in Canada and also those
| in Canadian Healthcare, the system is on the verge of
| collapsing
| mrkramer wrote:
| SAP stands good with EUR27.842 billion revenue plus there are
| plenty of good European gaming companies. But yea US is the one
| innovating.
| selimthegrim wrote:
| Infineon and ASML are chopped liver too apparently?
| BryanBeshore wrote:
| Reminds me a bit of the Dollar Milkshake Theory
| systemvoltage wrote:
| I think this happened today at somepoint:
| https://twitter.com/alexsalvinews/status/1546518198148808708
|
| But, I decided to link to the bloomberg article since it gives a
| better context.
|
| To my non-expert intuition, it seems a double-edge. Currency
| devaluation brings the cost of European manufactured G&S cheaper
| and brings a boost to the economy, and hurts US exports. On the
| other hand, Bloomberg cites devaluation of Euro would bring more
| investments in the US as it is now a parity.
| stncls wrote:
| Re: title ("lowest since 1999"):
|
| It's actually since December 2002.
|
| 1999 is the _first_ time the EUR reached parity with (then
| dipped below) the USD.
|
| https://www.google.com/search?q=1+eur+in+usd
| systemvoltage wrote:
| Nice catch, corrected the title.
| omnibrain wrote:
| I'm pretty sure it was in January 2000. A few days before the
| 20th. Because the 20th was my grandfathers birthday and I
| visited him that day, but bought a Wallstreet Journal (Or
| Financial Times International Edition) with the headline that
| the euro plunged below parity for the first time at an
| airport either in Orlando or at the layover in Washington.
|
| I may still have this issue in my memorandum box. But no, I
| won't go looking for it. ;)
| littlestymaar wrote:
| What you're describing is the "long term" possible outcome, but
| in the meantime, plummeting Euro is a major reason for high
| inflation in the EU. This is the most concerning "second edge".
| paganel wrote:
| Devaluation of the euro also increases the real price we have
| to pay for oil and gas.
| dwater wrote:
| As a non-economist, that's one of the basic things about trade
| that was surprisingly hard to wrap my head around. Your
| currency is high, that's good because you now have much greater
| buying power outside your country! Everyone else's stuff is
| cheap! Also, it's bad, because it means your stuff is more
| expensive, so nobody outside wants to buy it, so your exports
| decline.
|
| Basically it's just: high currency is good if you're importing,
| bad if you're exporting.
| frumper wrote:
| That's true and it does become harder to purchase US goods,
| but the US isn't exactly the country you try to import from
| for cheap goods. Much of the appeal in US goods is either in
| brand or perceived quality.
| TheOtherHobbes wrote:
| Keep in mind forex prices are all gambling anyway.
|
| These prices are the opinion of a relatively small number of
| people, some of whom - like certain well known banks - have a
| long record of bad faith price fixing.
|
| For example:
|
| https://en.wikipedia.org/wiki/Libor_scandal
| wyager wrote:
| Total nonsense. Forex markets are extremely liquid; narrow
| and deep. Right now, I could exchange 3M USD for euros (or
| vice versa) and not even move the price by $0.0001.
| blibble wrote:
| > These prices are the opinion of a relatively small number
| of people
|
| complete rubbish, FX is the most liquid and actively traded
| instruments there are
| neilpanchal wrote:
| Yes.
|
| > In terms of trading volume, it is by far the largest
| market in the world, followed by the credit market.
|
| Furthermore:
|
| > Trades between foreign exchange dealers can be very
| large, involving hundreds of millions of dollars. Because
| of the sovereignty issue when involving two currencies,
| Forex has little (if any) supervisory entity regulating
| its actions.
|
| https://en.wikipedia.org/wiki/Foreign_exchange_market
| systemvoltage wrote:
| OTOH, intuitively, as EU G&S get's cheaper, the market demand
| for EU G&S spikes, driving the prices up to a different
| equilibrium than before. It exasperates shortages in EU with
| secondary/tertiary supply chain effects slogging down the
| economy.
|
| One anecdotal example is Czech based JetBrains. They
| announced a few days ago that they're increasing subscription
| prices. I presume, they have a huge sales numbers in the US.
|
| I really don't understand macro-econ on this scale, Bloomberg
| article is good, but would be fascinating to read deep
| analysis of pros and cons.
| christkv wrote:
| I would think it would mean more investment in the euro zone as
| you get a big discount on any investments paid in dollars
| compared to a year ago.
| littlestymaar wrote:
| The article is actually talking about public debt, which is
| different from "investment" in the FDI sense, but is still
| "investment" from the investor's PoV.
|
| I have a colleague who likes to say that "every concept
| expressed with less than three words is adding confusion
| instead of reducing it", and I like this saying more and more
| every day.
| cronix wrote:
| Meanwhile, the Ruble is up from where it was just before the
| invasion. There is a sudden drop off during the month following
| the invasion in late Feb when sanctions were applied, but risen
| since then. It's currently sitting at a 5 year high.
|
| https://www.xe.com/currencycharts/?from=RUB&to=EUR&view=5Y
| trhway wrote:
| >Ruble is up from where it was just before the invasion.
|
| The prices in Russia reflect about 1.5-2x ruble fall against
| dollar since the invasion. The official ruble/dollar ratio is
| maintained by draconian measures/restrictions against exporters
| and population (plus significant depression of economy which
| was consuming a lot of imports, like the car market falling 6
| times because most of the foreign car makers/traders are gone,
| similar situation in IT for example, ie. Russian economy
| collapsed to becoming only natural gas and oil pump). Very
| similar to the situation back in USSR when dollar was only 0.63
| of ruble, yet it wasn't possible to buy any dollars at that
| price.
|
| Wrt. original post - it was obvious even back in February that
| the faster Ukraine wins the less hit Europe will take. Europe
| has been dragging its feet on military help for Ukraine and as
| a result dragging itself deeper an deeper into an economical
| crisis. Leaders of France, Germany, Italy still seem to hope
| that Russia will take a piece of Ukraine, and after that the
| things will be back to the good old times. This naive thinking
| has already obviously failed, yet they are still clinging to
| it.
| cheriot wrote:
| Is there a way to look at volume of EUR/RUB exchange?
| SergeAx wrote:
| This is artificial. Import is very low due to sanctions, export
| is quite high due to energy price hike, so there's a lot of
| foreign currency sitting idle inside the country, and exporters
| should pay their expenses and taxes, so they have to sell at
| whatever price market is ready to buy.
|
| I actually banked on that a bit, enough to offset losses on
| other parts of my portfolio.
| qaq wrote:
| Russia is in tough spot with this situation inflation is high
| if they drop the rubble it will get crazy high if they don't
| drop it they can't make the budget work.
| rndmind wrote:
| Are you arguing that the ruble is more stable place to store
| your money than the Euro?
| hef19898 wrote:
| Obviously the most stable plave is some non-fiat crypto-
| stable-coin thingy or other. /s
| arinlen wrote:
| > _Meanwhile, the Ruble is up from where it was just before the
| invasion._
|
| A massive economic sanctions package, which eliminates their
| ability to import goods and services while having their sole
| export stockpile foreign currencies, does help level the
| balance of trade.
|
| But that does not mean the economy is not tanking though.
| fny wrote:
| The price isn't what you think it means.
|
| I say this only because I have a sizable amount of rubles from
| an earlier trade, and * _I have no way to exchange them for USD
| despite the exchange rate.*_
|
| The price you see is a reflection of the price accepted by
| those able and willing to trade rubles which is currently * _a
| limited subset of the world*_. Sure, they have a massive trade
| surplus due to the commodity shortage, but a lot of the move is
| engineered through capital controls.
|
| (1) Western Ruble electronic trading is dead. It's near
| impossible to move rubles with any size.
| [https://www.risk.net/our-take/7946561/russian-ruble-
| trading-...]
|
| (2) Moscow is forcing companies to buy rubles.
|
| (3) Moscow limited the amount of dollars that Russians could
| withdraw from foreign-currency bank accounts and barred banks
| from selling foreign currencies to customers.
| [https://www.wsj.com/articles/russias-economy-is-
| tankingbut-t...]
|
| (4) Moscow has fixed the price of gold.
| [https://www.kitco.com/news/2022-03-28/Russia-sets-fixed-
| gold...]
|
| So really, the "appreciation" you see is compensating you for
| the headache you'll have to go through to do anything
| meaningful with rubles.
|
| Meanwhile, Russian inflation is at 15% and GDP is collapsing.
| Russian imports have collapsed because * _no one really wants
| rubles*_.
| throwaway290 wrote:
| Whom can you sell rubble for euro at that price? No ordinary
| person that I know of could do it in Russia or outside last
| time I checked.
|
| Outside of Russia, nobody will take your ruble. In Russia,
| somebody may, but that's not going to be a bank and the actual
| cost will be much steeper than advertised rate.
|
| (US dollar skyrocketed to almost 100 ruble in March until
| Russian government decreed its officially worth 60 except now
| you basically can't legally buy western currency. HODL mode I
| guess?)
| AnotherGoodName wrote:
| Looks like their foreign exchange reserves are dropping though.
|
| https://tradingeconomics.com/russia/foreign-exchange-reserve...
|
| So not sustainable. They are selling foreign currencies to keep
| the ruble alive.
| simonh wrote:
| It's not sustainable in the long term, but that term is
| actually quite long. This isn't going to be a short or medium
| term crisis. It's going to take years, and a lot of
| consistent political will. I hope we're up to it.
| arinlen wrote:
| > _It 's not sustainable in the long term, but that term is
| actually quite long._
|
| I'm not so sure about that. There were a bunch of news
| outlets warning that Gazprom is on the brink of a massive
| default. Gazprom, of all companies.
|
| If the company that subsidizes Russia's ruling regime can't
| make their payments in spite of sitting on a huge pile of
| oil and gas, that does not bode well for Russia's economy.
| YarickR2 wrote:
| That bunch of news outlets was/is feeding their clients
| bullshit
| thelittleone wrote:
| Can share some sources for this? Genuinely curious.
| [deleted]
| dmatech wrote:
| A default that is only due to sanctions preventing
| repayment of debts isn't really a meaningful default.
| chrisco255 wrote:
| Is the Euro or the Yen sustainable at this point? BOJ has a
| standing policy to buy unlimited JGBs. How sustainable is
| that?
| pyrale wrote:
| JGBs being owned mostly domestically, that particular
| country's currency is probably not at risk unless big
| japanese institutions decide to close shop and retire
| abroad.
|
| As for the Euro, it's currently at a 20-year low, if that's
| an answer to you. Since the balance of payment is positive,
| there's probably no reason to be pessimistic in the long
| term.
| chrisco255 wrote:
| > As for the Euro, it's currently at a 20-year low
|
| The Yen is at a 24 year low vs USD. The Yen is down 15.9%
| YTD. That is just an incredibly fast erosion and we're
| only halfway through the year.
| pyrale wrote:
| > we're only halfway through the year.
|
| Is there a yearly pendulum that I'm not aware of? Because
| if not, we've also only 21% through the century, and
| we've barely scratched the millenium.
| O__________O wrote:
| Russia still has 2301.64 Tonnes of gold:
|
| https://tradingeconomics.com/russia/gold-reserves
|
| Or roughly $128.9 billion USD in gold reserves:
|
| https://www.wolframalpha.com/input?i=2301.64+Tonnes+of+gold+.
| ..
| Armisael16 wrote:
| What's Russia going to do with that gold? Put it on a train
| a quarter of the way around the world to Beijing?
|
| It is far from trivial to move that kind of stock.
| hef19898 wrote:
| But how many bitcoin and stable coins do they have?
| O__________O wrote:
| Russians, not Russia, according to this article from
| early Feb-2022 have $214 billion in crypto assets based
| on IP address analysis:
|
| https://m.timesofindia.com/business/cryptocurrency/blockc
| hai...
| ak_111 wrote:
| Why isn't that already reflected in the price? Surely FX
| traders (who are mostly very large institutional investors)
| have already factored this into their models since it seems a
| very important factor?
| [deleted]
| uoaei wrote:
| It is an important factor, just not yet.
| austhrow743 wrote:
| Why the assumption that it's not reflected in the price?
| guerrilla wrote:
| That's what they meant. Read the second sentence of the
| comment.
| RandomLensman wrote:
| RUB is a tiny market in FX and probably not many touching
| it due to current risk surface. Very large institutional
| investors are usually not big FX speculators anyway outside
| of exposure from their assets. FX tends to be a bit more
| fast money.
| hauget wrote:
| How does this compare to foreign exchange reserves of other
| countries like the US & China?
| gumby wrote:
| Don't think of the US as having foreign exchange reserves.
| Other countries have foreign exchange reserves, basically
| all in US dollar-denominated instruments.
| abirch wrote:
| The ruble is artificially up
| https://www.npr.org/2022/07/07/1110354162/the-artificial-str...
| dannyw wrote:
| Hardly. As mentioned in the podcast, the emergency measures
| are more or less gone, and the Ruble is still staying strong.
| And raising interest rates to increase the strength of your
| currency is exactly what central banks can and should do.
|
| There is so much propaganda and "Russia-bad" going around in
| the media, whether you think it's deserved or not is
| irrelevant to the quality of journalism taking an extreme
| nosedive.
|
| Elvira Nabiullina (Russia central bank chair) is IMHO one of
| the smartest central bankers in the world right now. Much
| better than "transitory" Powell.
| dkjaudyeqooe wrote:
| Apparently you've fallen for Russian propaganda.
|
| Russia has capital controls. Exporters are forced to buy
| roubles with 80% of their foreign currency, among other
| restraints to the free trading of roubles.
|
| If you traded roubles on the black market, you'd get the
| actual price, and it's much lower there.
| chrisco255 wrote:
| Is there a fiat today without capital controls?
| xittz wrote:
| postsantum wrote:
| >If you traded roubles on the black market, you'd get the
| actual price, and it's much lower there.
|
| This is simply not true. "Black market", in the form of
| p2p crypto, had the rate close to the official one since
| the beginning of the war. Check your sources, they might
| be biased and feed you bullshit
| outside1234 wrote:
| There is a lot of "Russia is bad" evidence in shelled out
| cities and dead Ukrainians. They certainly earned this one!
| gumby wrote:
| > Elvira Nabiullina (Russia central bank chair) is IMHO one
| of the smartest central bankers in the world right now.
| Much better than "transitory" Powell.
|
| She tried to quit at the end of February but was not
| permitted to.
| cuteboy19 wrote:
| There is a Soviet joke hidden in this somewhere I feel we
| just have to find it.
| trhway wrote:
| as siblings noted about Soviet joke - in today's Russia
| you don't quit your job, your job quits you.
|
| Actually it isn't that much of a joke today - according
| to the new wartime law Russian government can compel any
| business to produce the amount of product/service the
| government wants with the business having no right to
| refuse, and the government can force people to work
| overtime, weekends, holidays with the government defining
| what payment, if any, to happen to the business and the
| people.
| gumby wrote:
| Looks like the USA's Defense Production Act supposedly
| has similar effect:
| https://www.fema.gov/disaster/defense-production-act
| MrMan wrote:
| EB-Barrington wrote:
| Russia is bombing, raping, and murdering civilians.
| "Russia-bad" is the understatement of the year.
| abirch wrote:
| Personally I'd take a weak currency any day. It helped
| exports.
|
| Going back to Russia's economy, the future investment is
| dying. Its airplanes are not getting new parts. Siemens
| isn't repairing any equipment. The full effects of the
| sanctions won't hit for another few years.
| azinman2 wrote:
| > Personally I'd take a weak currency any day. It helped
| exports.
|
| This only works if you have a developed enough domestic
| economy to supply everything you need. Assuming you're
| exporting more than food, you'll need resources to
| produce anything, and if that's expensive then your
| theoretically cheap export pricing can't be so low.
|
| Russia's domestic suppliers aren't well rounded, but they
| do have energy independence which is a major factor going
| for them.
| partiallypro wrote:
| I don't think any monetary expert would agree with you that
| Russia or its CB is handling their economy well. It's in
| much worse shape than the EU or US. Russia is raising rates
| because they have to, not because it's the good policy
| choice.
| jboydyhacker wrote:
| Imports into Russia have dropped by over half. meaning they
| can't use their currency to buy anything. And they import
| pretty much everything except food and natural resources.
| Any currency which could not longer be traded
| internationally would rise as well but it's of little good
| if you can't trade it for anything.
|
| so before you dismiss all that "propaganda" make sure you
| don't spread it yourself.
| mc32 wrote:
| Outside of North America and the EU other regions such as
| Asia, SouthAm, Africa and ME still trade with Russia.
|
| Yes, it means no luxury goods from the EU and no tech
| from NorthAm. But the embargo isn't as broad as one might
| imagine.
|
| There are some important tool and equipment from the EU
| and NA that if sanctions remain for years could result in
| a mega Cuba situation where lots of things are under
| maintained.
| chrisco255 wrote:
| Show some stats and sources. What does Russia import?
| Chinese goods? Is China willing to trade with Russia for
| food and energy? What do you think?
| beebmam wrote:
| Why is the USD getting stronger? Shouldnt the inflation in the US
| due to loose monetary policy make the USD weaker internationally?
| bubbleRefuge wrote:
| How about USD in private sector circulation becoming scarcer
| due to higher prices paid for same output and lower USD federal
| deficit spending being a deflationary force.
| Mikeb85 wrote:
| The EU also had loose monetary policy resulting in inflation.
| USD is getting stronger because of the American oil industry.
| Demand for exports is always a major factor (probably the
| biggest factor actually) in exchange rates.
| partiallypro wrote:
| The US Dollar is up against almost every major currency,
| uncluding the British Pound. It's up against the Franc (though
| way off of ath's), the Yen, the Krone, etc. It's a safety
| trade, the European economy is much more fragile than the US's.
| China and Russia are testing the waters on how far they can
| push things, so the dollar gets bought up. If Russia cuts off
| Nord Stream it will be quite disastrous for most every country
| in the region sans Norway because it's essentially a
| petrostate.
|
| People seem to think that if Ukraine collapses and Russia just
| takes it that the EU/US will just be able to back off, but
| that's not in the cards.
| decremental wrote:
| It's not. The Euro is getting weaker at a rate faster than the
| US dollar.
| frozencell wrote:
| Due to US-EU lobbies?
| mabbo wrote:
| The Euro is getting weaker, faster. There's a war with Russia.
| And apparently some monetary policy changes are moving too
| slowly.
| RC_ITR wrote:
| Which is a very strong indicator that current inflation is
| much more driven by real economy factors than by monetary
| policy (or at least the situation is more complex than the
| "money printer go Brrr" crowd wants you to believe).
| nabla9 wrote:
| You are right. Something like 60-70% of inflation is energy
| everywhere.
|
| You can look components of inflation in both regions and
| see exactly how much is hydrocarbons.
| reedjosh wrote:
| It's really just that "money printer go Brrr" globally.
|
| All of the world's central banks are printing like mad.
| Both the EU and Japan both have negative interest rates
| atm.
| MikePlacid wrote:
| Russia, while at war, is doing not that bad,
| surprisingly: https://www.xe.com/currencyconverter/conver
| t/?Amount=1&From=...
| RC_ITR wrote:
| But then why is the most printed currency the one getting
| strongest fastest?
| howmayiannoyyou wrote:
| Why:
|
| - Germany facing record deficit spending to offset energy
| shortages due to Ukraine war.
|
| - Massive US-denominated debt in Europe, requiring USD to
| service and/or payoff at a time when the US has raised interest
| rates and decreases liquidity. This is a huge reversion of a
| bubble that has enlarged for over a decade.
|
| - Greatly decreased USD revenue from exports to US due to
| inflation, adjusting EURO downward in a somewhat autonomous
| rebalancing (meaning not necessarily central bank led).
|
| - Inflation over imports of food, energy & other goods settled
| in dollars.
|
| - Fissures in the EU over German and Hungarian reluctance to
| participate meaningfully in defense of Ukraine as a proxy for
| defense of countries like Poland and Lithuania.
|
| - Risk premiums across the board.
| atwood22 wrote:
| Basically, people are expecting the Fed to have a stronger
| response to inflation compared to the ECB. The Fed is expected
| to have a stronger response to inflation than most of the
| world, which is why the U.S. dollar is so strong against other
| currencies as well.
| echelon wrote:
| The US has energy, food, and most of the business inputs it
| needs.
|
| The Eurozone is facing war and an energy insufficiently.
| MR4D wrote:
| The US is raising interest rates faster than others, all other
| things being equal - which they aren't but for simplicity, it's
| close enough).
|
| That is effectively what is driving up the price of the dollar
| - more people are moving their money over to take advantage of
| rates that they expect will pay more than other currencies.
|
| Think of it like this - Would you move your money to a bank
| paying 2% interest versus a bank paying 0% interest? Not
| everyone would, but many would.
| dhruval wrote:
| Europe has record inflation as well.
|
| The ECB is lagging behind US federal reserve in tightening
| monetary policy. (They are just about to implement their first
| rate hike in 11 years)
| x3sphere wrote:
| Inflation is just as high in the EU is it not? It's probably
| the flight to safety effect.
|
| Monetary policy is shifting, Fed has said they will keep
| tightening until inflation is back to 2%. For whatever reason a
| lot of people keep betting on a pivot. I don't see this
| happening, even if the end result is a recession (may already
| be in one). Inflation continuing to rise is ultimately worse
| than another recession if the Fed pivots.
| reedjosh wrote:
| > For whatever reason a lot of people keep betting on a
| pivot.
|
| At some point the US has to print to outrun its debts. There
| will be a pivot.
| baq wrote:
| Or it can keep strengthening the dollar... strong greenback
| suppresses yields.
| lamp987 wrote:
| EU decided to commit economical suicide with sanctions. They
| just bet that Russia will die first.
| ShivShankaran wrote:
| Iran and Venezuela are not dead yet. Russians have a higher
| degree of tolerating poverty than Europeans.
|
| EU and Russia are playing .... the Russian Roulette
| nikanj wrote:
| The US has the option of sitting this one out. The EU have to
| deal with Russia
| dkjaudyeqooe wrote:
| Inflation is everywhere, so less of a factor. Instead:
|
| US has a higher interest rates.
|
| US has a stronger economy (relatively).
|
| US Dollar is where people go in times of trouble.
|
| US central bank is turning off QE ("money printing")
|
| US central bank is planning on reversing QE ("money
| destruction")
| medo-bear wrote:
| US tells EU to jump EU asks how high
| ShivShankaran wrote:
| EB-Barrington wrote:
| Russia invaded Ukraine.
|
| Before that, there was no war.
|
| This is an exceedingly simple concept, and a fact.
|
| Russia instigated the war.
| medo-bear wrote:
| instigated or not it is clearly being played to us
| advantage: strangle russia + make eu pay for much more
| expensive us gas. whats perhaps suspicious is all the pre
| war efforts the us made to stop nord stream 2
| EB-Barrington wrote:
| Current events tell us the US was right.
|
| Russia instigated the war, there is no "or not".
| hef19898 wrote:
| Simply not true. Ask George W. how much EU support he got
| for the war on terror. Also, the US, while syarting a lot
| of wars in last decades, didn't start or instigate the
| one in Ukraine. That was Outin trying to pull a NATO /
| George W. war on terror thing that didn't work out as
| planned.
| Someone1234 wrote:
| It is a race down, and the EU is "winning." The EU was/is too
| heavily dependent on Russian oil and natural gas whereas the US
| has better isolation due to its domestic fuel production.
|
| Both regions need to improve renewables for national security
| reasons, and work on winterizing and migration to
| residential/commercial heat-pump technology to both reduce
| usage but also move to electrical-based heating/cooling which
| can be sourced from multiple vectors (renewables, gas, nuclear,
| et al.).
|
| People frame renewables around global climate change, which
| while true, isn't the elephant in the room. The elephant is
| national security and stability, and renewables are a key
| element.
| boomskats wrote:
| Because as Victoria Nuland said back in 2014 when this was
| all kicking off, "F** the EU" [0]
|
| [0]: https://www.youtube.com/watch?v=L2XNN0Yt6D8
| ShivShankaran wrote:
| mushufasa wrote:
| > EU was/is too heavily dependent on Russian oil and natural
| gas whereas the US has better isolation due to its domestic
| fuel production.
|
| Oil follows the "law of one price" globally; https://public.w
| su.edu/~hallagan/EconS327/weeks/week9/LOOP.p... global prices
| converge since it's an identical commodity that can be
| transported with low friction.
|
| When the EU restricts russian oil, India and China buy more,
| and then EU buys more oil from elsewhere -- it's a global
| market that readjusts relatively quickly.
|
| There is some short term friction around switching costs and
| infrastructure, moreso for volatile-to-transport gas than for
| oil, but this shouldn't be a meaningful factor to currency.
| There are tons of other impacts of war, such as general
| destruction of capital and people's productivity, as well as
| plenty of other explanatory factors that would have a bigger
| effect here.
| dathinab wrote:
| but it's about gas, always has been
|
| Oil heating in Germany isn't supper common, it depends a
| bit on the region as it was trendy during some time in the
| past but most oil heating which had been build in the past
| has been replaced by gas at some point in the last 20
| years.
| howmayiannoyyou wrote:
| US denominated debt in Europe is the real elephant to the lay
| person. Much debt was created in Europe and elsewhere outside
| the US that was priced and must be settled in USD - at far
| lower interest rates than are emerging from the FED at
| present.
| pydry wrote:
| Long term we need more renewables. Short term we need a
| negotiated end to this war.
|
| There is going to be economic carnage if we keep turning the
| heat up.
| throw_nbvc1234 wrote:
| The West/NATO are reluctant to force Ukraine to make a
| settlement. They've been very clear that it's up to the
| Ukrainians. That could change closer to winter and it seems
| Zelensky is aware of that.
|
| https://www.washingtonpost.com/politics/2022/06/28/zelensky
| -...
| [deleted]
| beebmam wrote:
| Why should anyone settle with a robber? We should be
| destroying the lives of criminals like this, not settling
| HWR_14 wrote:
| The better example is that Russia was robbing a bank and
| now has hostages (I think I've seen many movies about
| it). Why negotiate even though they're wrong? Because
| they can shoot a hostage (nuke something).
|
| Their nukes don't mean that you let them do whatever they
| want. But it means that you have to take limited actions
| that keep the warfare conventional. And sometimes that
| means settling with them.
|
| Heck, finding _something_ that Putin can claim is a
| victory is probably important if you want the war to end.
| It doesn 't matter if it's real, and it may not matter if
| _he_ thinks it 's something he won. It certainly matters
| that he can tell the Russian people that the cost they
| bore to "denazify" Ukraine worked. Otherwise, he failed
| and that way lies bad consequences for dictators.
| iakov wrote:
| Oh I don't know, EU leadership and officials were more
| than happy to settle with with a dictator who annexed
| foreign land, crushed dissent and assassinated political
| rivals both domestically and on foreign soil. They were
| happy to sell him weapons. Hell they invited the bastard
| to dance on their weddings.
|
| It really is a good question why has the world leaders
| have settled with a person like that in charge of a
| nuclear power. I wonder if cheap energy had something to
| do with that.
| kergonath wrote:
| A settlement will only be a license for Russia to do the
| same thing again in a couple of years' time. It's not
| even the third time they do this in the last 20 years.
| This has no easy solution, but pressuring Ukraine to give
| up its land would be particularly bad.
| zo1 wrote:
| I don't get this, so they take over another country near
| their border. What is the objective downside for the rest
| of the world and the people affected? We already don't
| care enough to "help" the Russian people, so why care
| about adding more of them into the fold? If we _really_
| cared and if we thought their suffering was worth the
| price to pay, we would be invading Russia and Ukraine
| right now to "liberate" the people. Instead we're
| weighing up the cost of people's lives and playing word
| games, perpetually.
| nivenkos wrote:
| Do the same how? Putin's demands were clear at the start
| of the war - cede Crimea to Russia, and let Donetsk and
| Luhansk become independent:
| https://www.reuters.com/world/kremlin-says-russian-
| military-...
|
| The majority of those territories were already occupied
| for the last 8 years, it would have been better to
| negotiate that at the start.
| dodgerdan wrote:
| Clearly you've not being paying attention when they went
| to execute every politician and takeover Kiev?
| dragonwriter wrote:
| > Do the same how? Putin's demands were clear at the
| start of the war [...]
|
| > The majority of those territories were already occupied
| for the last 8 years
|
| How do you have an invasion, occupation by one country of
| large sections of the territory of another, with shelling
| and other fighting between the parties, without a war?
|
| You don't; you are confused as to what the beginning of
| the war is.
| baq wrote:
| Russia is past the point of no return. There can be no
| negotiations as long as Ukraine is still standing. Putin
| went all in and will get culled when the odds of failure
| are deemed too great by the court. His successor must be
| worse than him, as all the better ones have been eliminated
| already.
|
| It's a certified shit show and the only thing preventing
| conventional war in all of Eastern Europe right now is
| NATO. Economic war (and cyber and psyops) is what's left,
| so that's what they're fighting with. Looks like they ran
| out of stuff to steal from their own citizens, so had to
| start looking outwards.
| pydry wrote:
| >It's a certified shit show and the only thing preventing
| conventional war in all of Eastern Europe right now is
| NATO.
|
| The two things that caused this war are:
|
| 1) NATO the "defensive" alliance tearing libya to shreds
| like a rabid dog, basically for sport. This signaled the
| start of Putin's paranoia.
|
| 2) NATO putting Ukraine on the path to membership and
| refusing to back off.
|
| Joining a gang is dangerous. Ukraine paid dearly for
| trying to join ours.
| S201 wrote:
| Yeah, it's all NATO's fault and has nothing to do with
| Putin's irrational aggression.
| HWR_14 wrote:
| 1) NATO took it's action in Libya due to UN Security
| Council resolution 1973. First several NATO members (and
| non-members like UAE and Qatar) were attacked to
| implement the UNSC resolution. A couple weeks later, NATO
| took over as a coordinating body of the military forces.
| Some members (like Germany) declined to participate at
| all.
|
| 2) NATO never put Ukraine on the path to membership,
| although as a result of this invasion they're changing
| their mind.
| SkyMarshal wrote:
| US interest rates are rising so US treasuries are getting
| cheaper to buy, thus providing a higher payoff if held to
| expiration. ECB hasn't started raising EUR rates yet. That
| combined with the economic security of US relative to Europe is
| probably attracting safe haven-seeking capital.
| CamperBob2 wrote:
| You don't have to outrun the bear, you just have to outrun the
| guy next to you.
| cheerioty wrote:
| Name checks out.
| WalterBright wrote:
| > Shouldnt the inflation in the US due to loose monetary policy
| make the USD weaker internationally?
|
| The EU is inflating their currency more.
| narrator wrote:
| USD can be used to buy Oil and LNG. That's most of it. Euro
| buys oil in USD and then the USD goes into treasuries. It's
| called Petrodollar Recycling[1].
|
| [1] https://en.wikipedia.org/wiki/Petrodollar_recycling
| adam_arthur wrote:
| Currencies can lose value in an absolute sense while gaining
| value in a relative sense. USD per unit of goods is a different
| metric from USD per EUR
|
| Both USD and EUR are losing value relative to real goods, just
| at different rates
| InTheArena wrote:
| I;m getting more and more convinced that the EU/US are far more
| tied together at this point then anyone thinks. I wonder if we
| are going to see the EU/US parity act like a peg to the dollar
| (or conversely, the dollar pegged to the euro) for a while.
| nikolay wrote:
| This is what happens when Europe submits to America! All present
| EU politicians are puppets and do not serve their people.
| partiallypro wrote:
| This is Putin's line. Anyhow, it's not true. The US has been
| warning Europe (especially Germany) for years that it has
| become overly reliant on Russian gas and overly dependent on US
| military aide. Germany even laughed at the US President's face
| for implying it. Granted it was Trump, but anyone with any
| semblance of common sense saw this coming, and even someone who
| is often wrong isn't -always- wrong.
| lvl102 wrote:
| Really? Perhaps EU should spend some money to defend its own
| backyard instead of relying on the US for the past 100 years.
| Just a thought.
| koonsolo wrote:
| As a European, I unfortunately have to agree with you.
| [deleted]
| _Parfait_ wrote:
| nivenkos wrote:
| Yeah, economic suicide to make sure US puppets keep getting
| their gas transit fees.
| lvl102 wrote:
| I wanted to start ordering some goods from EU to take advantage
| of the favorable FX. Turns out a lot of vendors have stopped
| shipping to the US (especially for goods that are also available
| in the US). Some of these goods are nearly double the price in
| the US.
| negamax wrote:
| Do you have examples?
| eimrine wrote:
| Weak Euro == less of value being payed to Russia for gas?
| SmallBets wrote:
| They have to pay in rubles, which are also strong vs euro
| EVa5I7bHFq9mnYK wrote:
| The contracts are in euro/dollars, what "paying in rubles"
| actually means is that Russian exporting company must sell
| euros for rubles immediately upon receipt, so that the euros
| can't be frozen via sanctions.
| Moldoteck wrote:
| But they pay in euro to gasprombank and Russia is doing
| conversion on their behalf. It's a flex to say that EU is
| paying in rubles for propaganda, when they are not...
| chrisco255 wrote:
| But isn't the end effect the same? End result is euros are
| being dumped for rubles by EU nations themselves.
|
| Once the euros are converted to rubles, it's unlikely they
| get converted back into euros somewhere else in the supply
| chain. As opposed to USD, which facilitates 87% of world
| trade.
|
| That means net selling pressure on the Euro.
| usr1106 wrote:
| I think that's not completely obvious how it works at the
| moment. Russia has unilaterally required payments in Rubles
| despite long-term contracts saying something else. Some
| smaller countries have refused and got cut of any deliveries.
| EU has generally declared not to pay in Rubles, but I don't
| know what e.g. Germany does at the moment. There is no
| realistic exchange rate for the Ruble because Western
| companies don't want to touch it and Russian companies have
| been forced to buy Rubles for most of the foreign currency
| they get.
| erichocean wrote:
| > _Russia has unilaterally required payments in Rubles
| despite long-term contracts saying something else._
|
| Yeah, that's how sanctions work: unilaterally.
| usr1106 wrote:
| Sanctions would be stop selling gas. Just saying look we
| have this contract, we want to continue with it, but we
| change the terms without asking sounds something else.
|
| To make priorities clear: Attack war is a crime and
| Putin, his government, and army leaders belong to Den
| Haag and then into prison.
|
| But every westerner continuing to drive their car, fly to
| holidays and other wasteful lifestyle activites makes
| energy prizes go up and pays for Russia's war. Europeans
| a bit more directly than Americans, but in the end we
| have a global market so nobody goes free of
| reponsibility. Nothing they will end up in court for
| (would be a miracle if even Putin did, Bush and Blair
| didn't for doing not too differently), but certainly
| morally wrong.
|
| Haven't checked recently but a month ago or so it was
| said Russia earns more money for oil and gas than in
| February, despite the volume having decreased quite a
| bit.
| sesm wrote:
| > Russian companies have been forced to buy Rubles for most
| of the foreign currency they get.
|
| This restriction has been removed couple of weeks ago. At
| first it was 80%, then 40%, now it's gone.
| usr1106 wrote:
| Ok, I don't follow the details so closely, I assume you
| are correct.
|
| Which Russian companies still have significant income in
| foreign currency? I thought trade has mostly stopped.
| Except for energy, but that is dealt with in a different
| way anyway as discussed above, because still excluded
| from sanctions from the West and the Ruble requirement
| from Russia.
|
| Then there is of course China and India which seem to
| intensify trade. No idea what currency they pay in and
| whether the increase has already been significant during
| 4 months.
| s1artibartfast wrote:
| There is a lot of ongoing development on this front,
| although it has largely fallen out of the US media.1[1]
|
| It looks like Russia is also only accepting rubles for
| wheat [2].
|
| This is the obvious and natural result from the sanctions.
| OF course they will not accept a currency they can not
| spend anywhere.
|
| [1] https://www.russia-briefing.com/news/russia-insisting-
| paymen...
|
| >The EU's executive body told the EU governments in a
| closed meeting that the authorities were not preventing
| companies from opening accounts with Gazprombank and would
| allow them to buy gas in line with EU sanctions.
|
| >The EU will get a taste of what this means as Russia is
| turning off the still-operating Nordstream 1 pipeline for
| 'routine scheduled maintenance' from next Monday, July 11th
| to July 21st.
|
| [2] https://dailytimes.com.pk/962297/russia-imposes-ruble-
| restri...
| littlestymaar wrote:
| Having to pay in rubble is the reason why rubble is strong vs
| Euro (because you need to buy rubble, in order to pay for
| gas)
| EVa5I7bHFq9mnYK wrote:
| The ruble is strong because imports have been cut in half
| due to sanctions, while exports continue unabated.
| Actually, Europe sends more money to Russia now than before
| the war.
| downrightmike wrote:
| It's strong because they are burning foreign currency and
| stopping people from pulling out. Same thing that Sri Lanka
| did.
| littlestymaar wrote:
| They did that indeed, especially in the early days to
| avoid a complete collapse, but since then it's not the
| primary mechanism at stake.
|
| This is a great reminder that keeping your money afloat
| is not that hard as long as you can export. (For the
| record, what destroyed Venezuela comes from the fact that
| they needed to _import_ light oil in order to process
| their heavy one. Once the sanctions cut the input flow,
| the output flow dried up pretty quickly and it was game
| over)
|
| I don't think it will matter long, given the catastrophic
| failure of the Russian military (which is currently
| demilitarizing Russia pretty quickly, how ironic), but
| from the economics PoV it's still interesting to witness.
| lesuorac wrote:
| What definition of strong are you using? Ruble (only one l)
| has historically been around 85:1 and now its ~60:1.
| (Rubles:Euros, i.e. 85 Rubles for 1 Euro)
|
| https://www.xe.com/currencycharts/?from=EUR&to=RUB
| [deleted]
| littlestymaar wrote:
| > Ruble (only one l)
|
| Indeed, thanks. Not a native speaker here, and I got
| everything mixed up with the early-war pun "the Ruble is
| going to rubble"
|
| > What definition of strong are you using? Ruble [...]
| has historically been around 85:1 and now its ~60:1.
| (Rubles:Euros, i.e. 85 Rubles for 1 Euro)
|
| Yes, that means Ruble's purchasing power increased by 40%
| (one Ruble could buy you ~1.2 euro cent, and now it buys
| you ~1.7).
| s1artibartfast wrote:
| That means it is about 40% stronger than it historically
| has been.
|
| IF you had your money in Rubles last year, can buy 40%
| more of a product than if you had your money in Euros.
| hervature wrote:
| That is the definition of strong. You need fewer rubles
| now for 1 euro. Just like you need fewer USD for 1 euro
| now.
| lostmsu wrote:
| No. The contracts are either in euro or in dollars.
| s1artibartfast wrote:
| And Russia unliterally disregards those contracts and has
| turned off the gas.
|
| Unfortunately, Europe does not control the flow despite
| whatever legal arguments they can muster.
| sfusato wrote:
| We're importing gas, so no. Basically, a weak currency helps
| exports, hurts imports.
| nivenkos wrote:
| happyopossum wrote:
| Yeah, it would be great if Putin withdrew from the war so
| countries could consider something like that, but...
| kergonath wrote:
| I am not sure we are living on the same continent. Europe has
| not entered the war; the war has entered Europe, on a Russian
| tank. "Europe" (whoever this is) cannot withdraw from the war.
| The war will be thee until either Ukraine or Russia bleeds dry.
| And if it is Ukraine, then it will be only a start of political
| and economical instability.
| IdiocyInAction wrote:
| Germany and the rest of the western EU nations could decide
| to stop arming Ukraine and stop doing sanctions against
| Russia.
| dodgerdan wrote:
| France, Italy and Germany's economic comfort is absolutely
| meaningless in the face of what Russia is doing. You haven't
| figured out the fact that peace with Russia is a country being
| invaded, looted, with thousands murdered, war crimes and
| abuses? But wait there's more, a few years later the Russians
| do it again.
| IdiocyInAction wrote:
| A country no EU nations had any defense obligations to.
| RcouF1uZ4gsC wrote:
| I actually have long term questions about the viability of the EU
| as a major global player.
|
| It doesn't have the natural resources that the US/Russia/China
| have. It is interesting that the time was the nations that would
| be the EU were most dominant, they used colonization to get the
| resources from all over the world (see for example British
| Empire).
|
| In addition, there is still lack of political unity, with a much
| less powerful centralized government compared to say China or
| even the US.
| ericmay wrote:
| Well, it does have resources. Wine from France, for example.
| Natural gas and oil (Norway for example). But the EU, so long
| as it avoids political fragmentation will be ok because they
| can manufacture products and they have skilled workers and
| knowledge. It's not _just_ about resources.
| T-A wrote:
| Nitpick: Norway is not a EU member.
| Der_Einzige wrote:
| ... Yet
| blibble wrote:
| it never will be with the common fisheries policy
| balderdash wrote:
| Not sure what resources your referring to with regards to
| china, they seem to be net importers of food,energy, metals,
| etc...
| stickfigure wrote:
| Natural resources are overrated, human capital is _vastly_ more
| valuable. The EU has a large, highly educated population with
| stable civic institutions. Sans another major war, Europe will
| be fine.
| StanislavPetrov wrote:
| >Natural resources are overrated, human capital is vastly
| more valuable.
|
| They are overrated until you don't have any. It's hard to
| manufacture anything without natural resources. It's hard to
| heat your home or fuel your car. As far as the "stable civic
| institutions" the farmers in the Netherlands would like to
| have a word with you.
| ThalesX wrote:
| All poor countries in the EU are brain drained... more and
| more educating the population is benefiting rich western
| states, more than the ones that produced the human.
|
| I've had many arguments with people where I can't get it
| across that it costs _a lot_ to get a human being all grown
| up, socialized, educated and ready to work in high value
| industries. Then we get them swept away to the west (and for
| good reasons, more money, higher quality of life etc.) and
| end up with nothing for all our societal investment. If we
| 're lucky, some of them come back with some know-how and
| create a viable business, but most don't bother.
|
| 3 / 4 of the people I went to school with (primary,
| secondary, high school and college) are now gone for good.
| Almost as many upcoming graduates (soon to be 18+) are
| planning to either study here and go, or just go.
|
| This pains me as someone that decided to stay behind and try
| to change something. But I do understand their motivations.
|
| Resources are nothing without people.
| barrenko wrote:
| People from SEE go to Hamburg, people from Hamburg go to
| NY.
| Atatator wrote:
| Where do people from NY go to?
| standardUser wrote:
| The entire Western-led global economic order is designed to pry
| open new markets, especially ones that provide important
| resources. That's why it's sometimes called neo-imperialism.
| China has become a major power with the aid of that economic
| system and is now inexorably tied to it. The fact that it has a
| lot of natural resources is incidental. It followed a very
| similar development strategy to Japan, Taiwan, South Korea and
| Singapore - all economically thriving countries that lack
| natural resources. Russia on the other hand has become severely
| diminished by it's inability to integrate into that economic
| system. It's biggest exports are natural resources, much like
| any given developing country.
|
| I think any sober assessment of which regions will achieve or
| maintain economic preeminence in the coming decades would have
| to include Europe and almost certainly exclude Russia.
| aaomidi wrote:
| Keep in mind colonization is alive and well within Europe.
|
| Just an example: https://www.cadtm.org/Africa-How-France-
| Continues-to-Dominat...
|
| France is still operating a colonial governance system, we just
| kinda ignore it.
| muro wrote:
| Not surprising, given the crazy inflation in EU in some
| countries. I know US also has inflation, but do far it looked (to
| me) much worse in the EU.
| dkjaudyeqooe wrote:
| It's still got 35 pips to go!
|
| I'm one for marking the occasion, but let's actually wait until
| it's there.
| ggregoire wrote:
| I just checked a few mainstream European news sites and none of
| them are talking about it. (might be cause it's midnight?)
| dkjaudyeqooe wrote:
| Because it hasn't happened yet. It might not happen.
|
| When it actually happens you'll see 0.99 something.
|
| The OP jumped the gun.
| sys_64738 wrote:
| Is this good or bad? Can anybody who understands money exchange
| trading tell us what this means?
| gmiller123456 wrote:
| Depends if you have Euros or Dollars. The Euro used to be worth
| much more than a dollar. Of course, the value of a dollar is
| also falling, so it just means the Euro is falling faster.
| afpx wrote:
| The dollar is falling compared to what? Commodity prices?
| pcmonk wrote:
| I think the answer is something like:
|
| - the dollar is falling compared to US living expenses (US
| inflation)
|
| - the euro is falling compared to the dollar (exchange
| rate)
|
| - therefore, the euro is falling faster compared to US
| living expenses
|
| - but the euro is not necessarily falling faster compared
| to EU living expenses (EU inflation)
|
| Indeed, EU inflation and US inflation seem to be about the
| same, which means that the exchange rate change is not
| because one or the other is experiencing more inflation.
| gmiller123456 wrote:
| There are lots of ways to value the dollar, the Consumer
| Price Index is probably the most useful.
| kietay wrote:
| They mean purchasing power, e.g. inflation.
| jessermeyer wrote:
| Falling relative to _what_?
| nemo44x wrote:
| Considering oil is priced in USD it will cost more euros to buy
| it. The USD is also the global reserve currency and it's more
| expensive for a European to participate than ever before in the
| Euro era.
|
| On the other hand it's a great time for Americans to travel to
| Europe. Americans have for decades been relatively wealthy
| compared to Europeans but today are considerably so.
|
| If you're a Euro planning a trip to Disney, it's very expensive
| right now.
| pastor_bob wrote:
| It's good if you're an American interested in traveling to
| Europe/buying European goods.
|
| Bad if you're an American selling products to Europeans.
| perbu wrote:
| Both. Imported stuff will be more expensive in Europe. Bad for
| consumers.
|
| Exports from EU will be more competitive, which in the medium
| term will strengthen the Euro again.
| gitfan86 wrote:
| The exchange rate doesn't matter. What matter is the change in
| the exchange rate.
|
| Commodities like food and gas go to the highest bidder usually.
| If country A is paying $10/pound for bacon and country B is
| also paying $10/pound for bacon the bacon suppliers will sell
| bacon to both countries, but if all of a sudden country A is
| only paying $2/pound for bacon because their currency went down
| 80%, the bacon suppliers will only sell their bacon to country
| B at $10/pound.
| [deleted]
| dsq wrote:
| The silver lining is that a weaker currency means EU exports are
| more competitive.
| chrisco255 wrote:
| But can the EU even scrape together the raw material inputs to
| produce enough to make up for the trade deficit? Will they be
| competitive with Chinese exports? Can they implement this
| strategy given their labor market constraints?
| hef19898 wrote:
| The answer to all of that is, hold on, yes.
| partiallypro wrote:
| Very difficult to make new exports that are cheap when your
| energy costs are soaring. Energy in Germany is up over 400%.
| dellIsBetter wrote:
| And is a good news for US inflation
| de6u99er wrote:
| This is bad for Europe because our salaries (before tax) have
| already been lower than US salaries. Additionally we pay much
| more taxes than you guys on salaries (up to 50%) and on VAT
| (~20%).
|
| Means at the moment until salaries get inflation adjusted that we
| pay a premium price for everything.
| Ma8ee wrote:
| Many Europeans don't know how much taxes Americans actually
| pay. It's not that little, but often paid differently with high
| property taxes and sales taxes instead of VAT. And most of us
| (Europeans) don't have to pay EUR1000 or so in health insurance
| for ourself and our family. We might make a bit less money, but
| most of us have at least 5 weeks of paid vacation (I've got
| almost 7).
| [deleted]
| thehappypm wrote:
| Yep, health care costs for a family can run $10k/year for
| Americans (out of pocket maximum) and so basically any kind
| of major illness or baby delivery will cost that much.
| jakear wrote:
| How often do you expect most families encounter major
| illnesses and/or babies?
|
| I've literally never used my health insurance. I expect the
| vast majority of people are in the same boat.
| spiderice wrote:
| That varies widely by your insurance. And given that tech
| companies use insurance as a way to attract more employees,
| software employees often pay way less than that. I'm about
| to have a child and I will pay $0 for it. My wife's company
| pays everything. Even if we were using my companies
| insurance instead of hers, we wouldn't pay anywhere near
| $10k.
| nemo44x wrote:
| It's way more than "a bit less". As someone that has had
| global teams in multiple countries, the country in Europe
| that approaches USA salaries is Switzerland. The rest in my
| experience are paid significantly less that their
| counterparts in the USA. Especially their counterparts in
| high cost of living areas.
|
| For example, people I was paying $190k in the USA were making
| around $110 in Europe and this was well before parity - $1.25
| per euro, etc.
|
| It's probably around 50% of an Americans salary today or
| there about.
| rootsudo wrote:
| While you wish to make it sound "not so bad" the fact is that
| you do pay more in taxes, and drastically much less money
| then for USA. 7 weeks of Vacation sounds nice, but depending
| on your org/work in USA, it can rival that, most FAANG, tech
| companies and such offer minimum 4 weeks of vacation, 20
| days, which is 28 days including weekends "total."
|
| Then many states do not have income taxes, Washington,
| Nevada, Florida and Texas for example.
|
| Sales tax is also not that high, topping around 10% for the
| most expensive of cities, but as low as 5%.
|
| Then on income tax, we have very favorable tax brackets that
| allow us to reduce our tax liabilities. Someone making 250K
| w/ an LLC can easily drop their bracket to as low as 13%.
|
| As an American, we have pros. You being an European, you have
| pros - but if you're experienced in the game and have time -
| there is a reason why USA can have very favorable tax, income
|
| Now if you talk about your public transit, rails and trains -
| yes I'll concede and say that is much much ahead of USA. :)
| rvnx wrote:
| Be gentle on the pros of Europe. There aren't that many.
|
| The Western Europe trains are expensive and ridden with
| criminality (see Paris Syndrome).
|
| Eastern Europe is great but the trains are very slow and
| don't cover many different paths. In addition we have are
| very unstable neighbours who threaten to explode the few
| railways we have.
|
| Japan has a great train system however! Sadly it's not in
| Europe.
| Gare wrote:
| Yeah, I only pay 500EUR mandatory health insurance per month
| out of 40000EUR per year gross salary. I'd rather earn
| $100000 and pay $1000 per month.
| akmarinov wrote:
| And have gas be super cheap
| marvin wrote:
| Norwegian gas prices are currently ~$11.5 per gallon.
| Anyone in continental Europe got a more impressive
| number?
| nwiswell wrote:
| Honestly, it really is true that upper middle class and
| wealthy Americans pay less tax than their European
| counterparts.
|
| VAT is broadly much higher than sales tax, property taxes are
| not exactly unknown in Europe, and if you are an employed
| professional, your health insurance burden is typically
| pretty close to zero.
|
| If you live in a no-income-tax state like Washington or
| Texas, and you are single making $200,000 a year, your
| effective (not marginal) tax rate, including FICA, is around
| 26%. I doubt that anywhere in Europe comes close.
|
| The flip side is that poor people in America absolutely get
| shafted.
| tiernano wrote:
| By my math, I'm come out with around 62.5% of my base
| income per year. But that includes a payment to pension. I
| pay for health myself (around EUR100 per month) but if
| something happens to me, I'm covered on some things. [edit:
| based in Ireland]
| cpursley wrote:
| Bulgaria has a 10% flat tax. Hungary 15% flat tax. There
| are others.
| nemo44x wrote:
| And a software engineer makes $50k there.
| cpursley wrote:
| Only if they work for a local company. If you work for a
| richer EU country or the US, you can do very well
| financially.
| nwiswell wrote:
| Do they have payroll taxes? I struggle to see how you
| could run a pension system at those tax rates.
|
| The 26% figure above does include the FICA payroll tax.
| ff317 wrote:
| Except that our social safety nets are practically non-
| existent. I bet if you made a middle-class comparison where
| you took a bunch of the typical EU social benefits, and
| equated the private costs middle class Americans pay to
| take care of them privately (healthcare, especially for a
| family, care of elder relatives, how much they'll need to
| save up to put their kids in college and retire even
| meagerly on their private income, etc)... I bet the
| Americans come out on the losing end of it on average.
| mgraczyk wrote:
| News to me, I spent less than 50% of my income last year on
| everything. Not just taxes, everything. And I'm in roughly
| the highest tax bracket in the US and have roughly the
| highest state and local taxes.
|
| I would guess my effective tax rate including sales and local
| and healthcare and everything else is ~40%
| PenguinCoder wrote:
| You single and don't have a personal vehicle? I'm Married,
| and have kids, in a lower COL area. I paid ~9% federal
| income tax, ~7% state income tax, ~1% of that in property
| tax, without attributing for healthcare insurance every
| paycheck, and uncounted more in sales tax, gas tax, etc
| etc. I have spent ~90% of my take home income trying to
| barely survive in the last year.
|
| Being able to save 50% of your income is a level of
| privilege many don't have regardless of effective tax
| rates.
| mgraczyk wrote:
| totally agree, but it sounds like you're paying way less
| in taxes than you would be paying in Europe.
| aidenn0 wrote:
| The breakdown is:
|
| - Working professionals making low 6 figures (espicially in
| states with income taxes) pay much closer to EU taxes than
| most people think.
|
| - Non professional jobs (service industry and blue-collar)
| are taxed very lightly, but have worse benefits, less job
| protection, and an extremely limited social safety net.
|
| - Government jobs have better benefits than other non-
| professional jobs, but often the pay is not great (I suspect
| no better than EU, but honestly have no clue what e.g. a
| postal worker in the EU makes).
|
| - The very wealthy are taxed very lightly compared to the EU.
| cactus2093 wrote:
| Agree with most of this. Although to be fair the social
| safety net is not as weak in the US as most people think,
| either. The majority of the Federal government's budget
| goes to Medicare and Social Security, the main gap is just
| that for working-aged people there is no universal
| healthcare in the US.
|
| Not sure what you mean by the last point, though, it kind
| of conflicts with your first point. And in e.g. France the
| capital gains rate is 19% I believe vs 20% in the US.
| Various countries in Europe have experimented with a wealth
| tax, but they've now all gotten rid of it. In what ways are
| the very wealthy taxed heavier in the EU?
| benatkin wrote:
| I disagree.
|
| > the main gap is just that for working-aged people there
| is no universal healthcare in the US
|
| What about those who have health insurance but have huge
| medical bills?
| dzonga wrote:
| and most european software engineers (uk/germany etc) their
| take home pay is similar to what a dev in the midwest would
| make i.e the rest of the usa. not SV salaries that people
| like to post about as if they're the norm
| rvnx wrote:
| You pay health insurance in Europe, it's just that it's
| baked-in in the salary and you have no choice than to pay for
| the public system (as there is very little competition).
|
| For example, in Estonia the minimum you have to pay per month
| just to health insurance is 201.20 EUR and this barely covers
| anything except extreme injuries, so on top you add a private
| insurance :|
| 19h wrote:
| > you have no choice than to pay for the public system
|
| You can very much opt out from the "public system" in
| Germany. I'm privately insured.
| OtomotO wrote:
| You can't in Austria - you can additionally get a private
| insurance, but it's by no means mandatory.
|
| Although I pay most of my urgent stuff in cash, and get
| it back later (not everything), because otherwise I have
| to wait 3 months + for a simple scan :/
| rvnx wrote:
| Interesting, thank you for sharing. I didn't know. (I
| assumed it was like France, where it's also mandatory at
| 7.30%+1.30% (in some regions))
| b4je7d7wb wrote:
| In finland you are also required to pay for public health
| care. But employers are also required to provide private
| healthcare for workers. Vey nice to pay for both public and
| private healthcare on top of insane income taxes.
|
| Estonia seems like a tax haven in comparison.
| tlss wrote:
| Discussion about US taxation often omit:
|
| - the state & local taxes (can be as high as 12-15%)
|
| - social security (6.2%, tapers off after 150k)
|
| - medicare (2% generally)
|
| - net investment income tax (3.8%)
|
| - different tax treatments of short and long term capital
| gains
|
| Sure, if you just look at the federal rate, the US tax rate
| does seem a lot lower...
|
| VAT are generally higher in Europe though. Even in the "high
| sales tax" areas in the US, you'd typically get ~10% compared
| with 22% in Europe.
| cactus2093 wrote:
| The tech salaries you see discussed in the US are in jobs
| that also cover healthcare, so we don't pay out of pocket
| each month for health insurance. And these jobs include
| "unlimited vacation", however most people don't take more
| than about 4 weeks a year.
| OtomotO wrote:
| central Europe here: You have to take the vacation! You can
| take a few weeks in the new year, but not everything and
| you have to consume them.
|
| Why "have to"? Because it's by law forbidden to bully
| employees into taking money instead of going on vacation.
| To never have to deal with this, most employers are very
| strict wrt vacation days :)
| grepLeigh wrote:
| When I worked for US companies that paid employee health
| insurance premiums, my family's premiums appeared on my W2
| as taxable income. Only my own premium was "covered" in a
| way that did not increase my tax burden.
| asciimov wrote:
| I'd happily pay more US taxes if it was used to fund
| healthcare, infrastructure, and had better human (worker)
| rights.
| DrBazza wrote:
| Careful what you wish for. We (in the UK) fund the NHS
| significantly to the point that it's now a political football
| - freezing funding to it and wanting it to be better run is
| political suicide, but wanting to cancel a piece of national
| infrastructure (HS2, our second high speed railway) that
| would demonstrable add to the country's GDP, and cost a tiny
| amount in comparison, is fine.
| peanuty1 wrote:
| Spoiler alert: we (US) already collect enough taxes to
| adequately fund all of those things.
| asciimov wrote:
| Lord I know... I think about that sometimes, then I wonder
| if we get the same great deal on our military spending that
| we do on our healthcare.
| nivenkos wrote:
| Yeah, like as a senior engineer I get $85k, that leads to a
| take home of about $4500 per month. Mortgage and debt payments
| are ~$2500 to start with.
|
| And now that buys less and less.
|
| We can't afford to be playing world police or pretend to be the
| world's refuge.
| cactus2093 wrote:
| A lot of people working in tech in California pay above 40%
| effective income tax rate with a top marginal tax rate of like
| 48%. So Europe income tax rates are not as much higher as you
| might think.
|
| The tax brackets in the US tend to be much progressive though,
| so for people earning lower salaries their taxes in the US are
| much lower.
| samjmck wrote:
| To put this into perspective a little, Belgian income tax is
| 40% after 23000 euros (which is now 23k dollar) and 50% after
| 43000 euros. So the issue here is the middle and even lower
| class being hit with incredibly high taxes.
| stefco_ wrote:
| If you want to talk about premiums, the US housing market is
| out of control right now; just having a roof over your head in
| any metropolitan area means paying through the nose. It's rough
| all over :(
| hiram112 wrote:
| This really isn't how it works. You might pay a premium price
| for specialty goods and foods imported from the US, but, based
| on a quick Google search, there doesn't appear to be many
| consumer items - our top 5 exports are aircraft, machinery,
| pharma, mineral oils, and medical instruments.
|
| In developed countries, the majority of the costs for goods and
| services (and taxes) come from labor, which means they're not
| affected by currency fluctuations too much.
|
| Not a good time to vacation to the US, nor is it a good deal
| for Americans working in the EU and paid in Euros who need to
| pay past bills back in the US
| option wrote:
| you can get to 50% (up to 39% federal and 12% state) in CA
| _before_ sales and real estate tax if you are in high enough
| tax braket.
| vineyardmike wrote:
| Most Americans think that taxes are high elsewhere and low in
| America, and I guess Europeans think that? Maybe it's true but
| I think American taxes are higher than people seem to believe
| though.
|
| A tech worker in Silicon Valley will easily hit >40% income tax
| (30+ federal, 10 Cali). Sales tax is up to 10%. Many places
| have affordable property tax due to American laws on home
| ownership. California may be a state with laws closer to Europe
| than many other American states (eg texas). Massachusetts/New
| England generally have "better" laws too (eg MA has stronger
| healthcare protections than most states).
|
| Not sure what ordinary Europeans actual pay, but an internet
| search says German taxes go up to 40s, which seems pretty
| inline with Cali.
|
| Obviously a tech worker in SV will be top few % for American
| salaries, but you need to be a well paid urban worker in
| America to be able to get healthcare and an income that affords
| college for children and good public transit and other things
| Europeans get from their governments.
| acchow wrote:
| > an internet search says German taxes go up to 40s, which
| seems pretty inline with Cali.
|
| Using https://www.arbeitnow.com/tools/salary-
| calculator/germany and https://smartasset.com/taxes/income-
| taxes#9jiRJIN31w
|
| In Berlin, 200k nets you 113k after taxes
|
| In California, 200k nets 132k after taxes
|
| That is 43.5% vs 33%
|
| But there are differences in sales taxes/VAT, property taxes
| (and deductions for such), mortgage interest deduction, etc.
|
| A $1M mortgage loan at 3% could reduce your taxable income by
| 30k, saving you almost 10k in taxes per year in the US.
| fartcannon wrote:
| Over here we call this premium the Canada Tax. Prepare for it
| never to go away no matter what the Euro does.
| [deleted]
| pastor_bob wrote:
| Canadians do just fine with a weak dollar, low pay, and high
| taxes
| aabhay wrote:
| Yup. Canadians don't go bankrupt because of medical bills
| (the #1 leading cause of bankruptcies in the US)
| rmatt2000 wrote:
| > #1 leading cause of bankruptcies in the US
|
| This isn't true. A certain well-known politician made this
| claim, but it turns out she counted everyone who had
| medical debt when they declared personal bankruptcy as a
| "bankruptcy caused by medical debt." If someone gambled
| away their home and incidentally had an unpaid doctor's
| bill, it's a stretch to call that a medical bankruptcy.
|
| https://www.theatlantic.com/business/archive/2009/06/why-
| eli...
| peanuty1 wrote:
| Wow, Elizabeth Warren loses more of my respect every day.
| threads2 wrote:
| "medical-debt-related" bankruptcy then. To your point,
| wonder if it's higher than any other ___-related
| bankruptcies (anyone have data on that?)
| threads2 wrote:
| Yeah but then wE DoN'T hAvE a ChOiCe iN dOcToRs.
| jleyank wrote:
| Weak but not that weak as it's roughly tracking the US dollar
| at 0.78 +/-. Benefits of its raw material/petrodollar nature.
| And others have pointed out a more aggressive move against
| inflation than say europe.
| peanuty1 wrote:
| Yet 80% of Waterloo computer science grads move to the US
| after graduating to enjoy a higher quality of life.
| rvnx wrote:
| Once the salaries get inflation adjusted (20%+ of inflation in
| my country), then the production costs are going to increase,
| which is going to increase the risk for the prices to spiral up
| again.
| partiallypro wrote:
| Germany, and by extension Europe, abandoning nuclear power and
| making itself more dependent on a country historically at odds
| with the rest of Europe will go down as one of the biggest
| political/economic blunders of the century. Germany is such a
| powerful economy in Europe that it being so dependent on Russian
| gas will effect every country and they will all collectively
| suffer.
|
| It's also pathetic that both the US and EU both now have to go
| beg other bad actors for oil/gas.
| nivenkos wrote:
| Whilst I support nuclear power, it's not the main issue, but
| the lack of progress in electrification of industry and homes.
|
| A lot of processes and heating still use natural gas directly,
| and that is what is causing the threat of industrial shutdowns.
|
| Many countries have already switched to coal for electricity
| generation -
| https://www.reuters.com/business/energy/netherlands-activate...
| option wrote:
| interesting fact - Ukraine in the middle of war now sells
| electricity for profit to Europe because they haven't
| completely abandoned nuclear. This is even despite the fact of
| them losing their largest nuclear plant (in Zaporizhja) to
| russia.
|
| Germany's decision to abandon nuclear is one of the most stupid
| ones ever.
| callamdelaney wrote:
| dang wrote:
| Can you please not post in the flamewar style to HN? It's not
| what this site is for, and it destroys what it is for.
|
| https://news.ycombinator.com/newsguidelines.html
| kergonath wrote:
| Sterling is really not doing much better than the Euro against
| the dollar, and you will feel the effects of inflation just as
| much as city boys... It's wishful thinking to believe that the
| UK will stop being affected by what happens in Europe by
| throwing a tantrum and going sulking to its metaphorical
| bedroom.
| Halan wrote:
| What's Brexit anything to do with this, UK had its own
| currency. Thinking that Brexit has decoupled U.K. from EU's
| market destiny is just wishful thinking.
|
| Before the Brexit referendum 1PS had been reaching peaks at
| 1.44EUR
| _ph_ wrote:
| This is not a historic low, but a definitive low. There are
| several reasons for this.
|
| - in time of a crisis, the world seems to ralley around the
| dollar, as it is backed by the strongest economy and the
| strongest military.
|
| - this crisis has hit Europe hard, as it is not only close to the
| war, but of course, too dependant on Russian oil and especially
| gas.
|
| - there was a lot of inflation internationally, the US federal
| bank was the first to raise interest to combat inflation. The EU
| lags behind and is limited in action due to the fear of
| destabilizing some of its member countries with too high of a
| debt.
|
| Consequently, there is a lot of good reason for the Euro to be
| weak at these times. However, if the energy crisis can be solved
| and the war contained, a weak Euro also is also pushing exports
| from the EU. So there is a lot of reason for this trend to be
| stopped, if not reversed, until the other extreme is reached
| again.
| olivermarks wrote:
| The US dollar and and offshore petrodollar are the world
| reserve currency. The euro is just another second tier currency
| backed by the european central bank which is extremely fragile.
| https://mobile.twitter.com/MkBlyth/status/152993421389776487...
| RC_ITR wrote:
| A lot of people who wonder why the US is so seemingly
| subservient to SA (vs other Middle East countries) don't know
| about this:
|
| * In 1974, Washington and Riyadh struck a deal by which Saudi
| Arabia could buy US treasury bills before they were
| auctioned. In return, Saudi Arabia would sell its oil in
| dollars--not only enlarging the currency's liquidity but also
| using those dollars to buy US debt and products.*
|
| [0] https://www.google.com/amp/s/qz.com/2143450/saudi-arabia-
| wan...
| ceeplusplus wrote:
| Europe doesn't just have an energy crisis though, if Russia
| decides to cut off the gas they straight up have insufficient
| energy to make it through the winter. The decline in the Euro
| is pricing in the risk of catastrophic shutdowns of industry
| across Europe.
|
| All of it a result of moronic politics around nuclear and a
| failure to build out fossil fuel capacity while the green
| energy transition was still in progress.
| mjfl wrote:
| will this have political blowback for the 'Green' parties?
| dchnshA wrote:
| DSingularity wrote:
| How can it not? Unless things can reverse fast (ie imported
| energy capacity that has left returns overnight) European
| home heating costs will skyrocket this winter. The average
| household will look for someone to blame.
| hef19898 wrote:
| Electric energy =|= thermal energy. Nuclear energy solves
| the electricity part (which doesn't pose any issue at
| all), while doing nothing to aolve the thermal energy
| question. No idea why people, on HN of all places on the
| internet, fail to realize that simple fact...
| mr_toad wrote:
| Your making the argument that nuclear is not a heating
| option because gas is cheaper.
|
| If we're going for the cheapest option, then why not fuck
| the planet completely and all burn coal?
| arrrg wrote:
| They weren't in charge of energy policy. In Germany for
| the last 16 years. They had completely different policy
| ideas to what was actually implemented.
|
| Blaming the greens is internationally some kind of dumb
| idea that likes to reduce politics to stereotypes. The
| real effects will be much more subtle and indirect.
|
| Could still end up with the greens losing votes.
| Currently it doesn't look that way at all. (German
| perspective here.)
| adammarples wrote:
| There's a lot of anti green rhetoric around on news boards
| throwaway5959 wrote:
| As green as astroturf.
| turbinerneiter wrote:
| Why would it? They weren't in charge for any of it. If we
| had built the renewables they wanted, we would have less of
| a problem now.
| rndgermandude wrote:
| The German Green (Grune) party is up in recent polls[0].
| They are not just part of the German government coalition,
| with the posts of Secretary of Economy and Energy (Habeck)
| and Foreign Secretary (aka Secretary of State, Baerbock)
| (and some other posts), they are very powerful within the
| government coalition. Both Habeck and Baerbock are leading
| Chancellor Scholz of the SPD in polls since months.
|
| It has to be said tho that the Green party is doing
| "realpolitik" now. While they aim at one hand to
| drastically accelerate renewables, right now they also
| invest heavily in getting a more secure energy situation in
| the near future still using a lot of fossil fuels,
| including rapidly building up LNG terminals and securing
| deals with parties they previously frowned upon, e.g. a gas
| deal with Qatar, the government of which the Green party
| previously heavily criticized for the human rights
| situation in the country. And e.g. they accepted - with
| some bickering - the temporary gas (as in petrol) price
| subventions the other coalition parties wanted, in exchange
| for temporary public transport price subventions (a 9-Euro
| regional ticket, that is valid for a month at a time, 21M
| sold by July 1, population 83M).
|
| They are still rejecting nuclear power generation, neither
| wanting to build new plants, nor keeping old plants running
| (the operators of said old plants already called the idea
| of keeping those plants running "infeasible" to outright
| "stupid").
|
| It remains to be seen what the blowback will be if
| inflation doesn't at least slow down, or if autumn and
| winter come and people start getting cold. Tho right now,
| the politicians and leading experts and "experts" say, it
| doesn't look like there there will be a shortage on a scale
| that gets life-threatening to some people.
|
| [0] 20-24% share in recent polls, vs the 14.8% they
| actually got in the last election in Sep 2021. They are
| actually slightly ahead of the SPD (social democrats) in
| the polls now. The SPD is the majority partner in the
| coalition.
|
| https://www.wahlrecht.de/umfragen/
| mr_toad wrote:
| > They are still rejecting nuclear power generation
|
| It boggles the mind that a so called Green Party is
| investing in fossil fuels.
| Flatcircle wrote:
| Not building/using nuclear is almost criminal negligence.
| People will die from that mistake.
| throwaway290 wrote:
| People are dying from that mistake. FTFY
| arrrg wrote:
| Can't heat with nuclear. Not in a way that's relevant for
| this, anyway.
|
| Heat is the main challenge and heating alone is problematic
| all by itself.
|
| Gas dependence was a huge mistake, nuclear is not the short
| term solution we are looking for and getting away from gas
| dependence in the past couldn't have relied on nuclear.
|
| Think heating when you hear gas, not electricity.
| kergonath wrote:
| > Can't heat with nuclear. Not in a way that's relevant
| for this, anyway.
|
| That is not a law of Physics. Electric heating is
| perfectly fine. It's true that we cannot do it quick
| enough to matter in this case, but that is not a good
| reason to just shrug and not learn anything from this. We
| will need a long-term strategy, because even if we manage
| to come up with a temporary solution, it's clear that
| these things will happen again in the future. It's just
| too good as a way of applying pressure on European
| countries. Long term, it will _have to_ be electric if we
| want to improve our energy supply and have a remote
| chance of not staying too far from our climate goals.
|
| We should have seen this coming for quite a while. It was
| in fact predicted, but mostly ignored by politicians who
| seemed to thing that oil crises from the 1970s were fun
| and that energy independence was irrelevant.
| logicalmonster wrote:
| > Can't heat with nuclear. Not in a way that's relevant
| for this, anyway.
|
| Are you able to expound on why this is the case? Are you
| specifically talking about furnaces that use some kind of
| oil being very common in Europe?
|
| Also, in an emergency situation, can't nuclear be used
| for heating, albeit through powering things like space
| heaters rather than the normal furnaces?
| hef19898 wrote:
| Domestic heating is done, mostly, by gas. Hard to replace
| _all_ of Germany 's (or Europes) domestic heating
| infrastructure with electric heating in couple of years.
| Not to speak about monts.
|
| So no, nuclear power cannot be used for heating and
| Europe definitely doesn't have an electricity problem.
| marvin wrote:
| This whole comment tree seems to be full of people who
| deliberately misunderstand physics and economics.
|
| Europe is still going to have access to gas if Russia
| cuts its whole supply come winter -- in fact, 60% of the
| European gas supply will still be present. Probably a bit
| more, since lots of crisis efforts have been made to
| provide gas from other sources. Only part of the heating
| needs have to be replaced.
|
| Let's say Germany still had the, what, 8000 gigawatts of
| nuclear power online that it has shut down during the
| last decade? Wild-ass guess, but it's a lot. That's base
| load, of course. Electric power.
|
| Resistive heating is dirt cheap to deploy in terms of
| capital costs. You can buy a 2000W heater for $20,
| perfect for domestic use. So the operating costs
| dominate. Using a heat pump is 3-4 times better in terms
| of operating costs; that's not as easy to deploy but many
| places will already have A/C installed and that's usually
| the same thing.
|
| So then it becomes a question of economics; many
| industrial processes cannot be replaced with electricity.
| But as we've seen, heating of living spaces can easily be
| done with electricity.
|
| So in the kind of crisis we're discussing here, those
| thousands of gigawatts of nuclear electricity would be
| pretty damn useful for emergency heating of German homes
| and businesses, during months where the gas would be more
| profitably used for the industrial processes that require
| it.
|
| It sure as hell wouldn't have been cheap, but it would be
| cheaper than shutting down half the economy, which is
| what we're preparing for right now.
|
| It's a moot point, of course, because those ~17 nuclear
| plants are already shut down. But it would very much have
| made the issue dramatically less painful.
| logicalmonster wrote:
| In an emergency situation (a matter of life and death for
| the vulnerable) can't space heaters be powered by
| electricity then?
| hef19898 wrote:
| Short answer no. Unless someone comes up woth a scalable
| domestic heating version, using electricity, of AWS.
|
| And stop spreading FUD about people freezing to death in
| there houses in winter, please.
| camgunz wrote:
| Don't you literally just buy a wall heater and plug it
| in? What am I missing here?
| hef19898 wrote:
| You don't seeem to uave an idea how domestic heating
| works in most oarts of Europe, do you? And that simple
| plug in heater will consume so much electricity that your
| gas heating would still be cheaper. Also, that wall
| heater doesn't heat your water supply...
|
| Edit: Assuming a plug in wall-heater does all of that,
| just how many of them would you need by November this
| year to change something?
| camgunz wrote:
| Sorry, let's start over.
|
| 1. Cool, nuclear power, cheap electricity, great.
|
| 2. Hmm, looks like sometimes they explode in a pretty
| rude, nukey way. Maybe we should stick with coal, oil,
| and gas.
|
| 3. Yikes, climate change. But if we pull all our
| coal/oil/gas plants down we won't have enough energy and
| prices will skyrocket. Not enough wind/solar/hydro yet.
|
| 4. So... maybe nuclear is a good idea again? Cheap
| electricity?
|
| We're here. So your argument is we can't use nuclear
| because electricity is too expensive in Europe, when the
| whole idea is to increase the supply of electricity and
| thus bring down the price?
|
| > Also, that wall heater doesn't heat your water supply
|
| There are electric water heaters.
|
| > how many of them would you need by November this year
| to change something
|
| Maybe someone in this thread is arguing that we can both
| build a bunch of nuclear plants and distribute electrical
| heaters to people in ~4 months, but I'm not. This is all
| a long term thing isn't it? Don't we have to do this
| anyway for green energy?
| hef19898 wrote:
| No idea why the concept of energy, in the scope of a
| national ecobomy, is so hard to understand. Of course you
| can heat with electricity, in the case of heat pumps even
| sustainable. Thing is, there are _millions_ of house
| holds, commercial and industrial users that have decades
| of infrastructure in place heating with gas. No way to
| replace that in mid, let alone short term.
|
| Also, nobody will freeze to death in his house over this.
| D13Fd wrote:
| Maybe if you want to heat a subset of rooms for the cost
| of heating the whole house.
|
| Electric heaters are extremely expensive to run relative
| to gas or heat pumps.
|
| Heat pumps are great and extremely efficient, but not
| they are as hard to install as air conditioners (because
| they are air conditioners that work in reverse).
| Scoundreller wrote:
| I never understoood why nobody makes a windowshaker
| heater, but I guess you could just install an existing
| unit in reverse and protect it from rain.
|
| Same with portable air conditioners.
| caeril wrote:
| In "emergency situations", there is this crazy modern
| technology called "blankets" and "jackets" and "coats".
|
| Home heating is primarily a luxury for comfort, not
| survival. Given sufficient insulation, we generate enough
| heat from food to muddle through.
|
| Is it fun to shiver under blankets during an energy
| crisis? No, not at all. But are people going to die? Not
| likely, assuming access to space alien technology like
| blankets and coats.
| Kuinox wrote:
| France have lot, lot of electric heating, 41% the
| population is heated with electricity. Plus a simple
| electric heater is very cheap to produce.
| ephimetheus wrote:
| Which is part of the reason why France during winter
| typically imports electricity from Germany, because their
| nuclear plants can't keep up.
| hokkos wrote:
| rather because a recent change in the energy code allow
| to count neighbor firm capacities into the adequacy
| requirement and the usage of monte carlo methods for
| adequacy requirement.
| xorcist wrote:
| This is an important point that quickly gets lost in a
| simplified debate.
|
| Different types of power have different characteristics.
| Nuclear power plants runs at constant load and changes in
| power are slow. They take on the order of days to start
| and stop, and can not on their own follow load changes on
| a country wide network.
|
| This isn't good or bad, it just is. They can manage the
| same base load day every day until they need servicing.
| But that also means you need other power sources to take
| the top load. That's usually natural gas turbines, even
| if it could be other things. Hydro is optimal, but most
| countries have a limited capacity for that. Which is,
| somewhat ironically, a similar situation as wind and
| solar have, but for completely different reasons.
|
| Keep that in mind when people talk about replacing
| natural gas with nuclear. They do different things.
| mlyle wrote:
| > Nuclear power plants runs at constant load
|
| This _mostly_ isn 't physics, but rather a reflection of
| nuclear power's high capital costs. Nuclear plants have
| demonstrated that they can ramp up and down pretty
| quickly compared to e.g. most combined cycle natural gas
| plants.
|
| https://www.oecd-
| nea.org/upload/docs/application/pdf/2021-12...
|
| "For example, according to the current version of the
| European Utilities Requirements (EUR) the NPP must at
| least be capable of daily load cycling operation between
| 50% and 100 % of its rated power Pr , with a rate of
| change of electric output of 3-5% of Pr per minute. " -
| it goes on to discuss how most modern light water plants
| significantly outperform this requirement.
|
| "Most of the modern designs implement even higher
| manoeuvrability capabilities, with the possibility of
| planned and unplanned load-following in a wide power
| range and with ramps of 5% Pr per minute. Some designs
| are capable of extremely fast power modulations in the
| frequency regulation mode with ramps of several percent
| of the rated power per second, but in a narrow band
| around the rated power level. "
|
| > Keep that in mind when people talk about replacing
| natural gas with nuclear. They do different things.
|
| Having some nuclear base load certainly helps, though, if
| natural gas is disrupted. Instead of having both the
| dispatchable power and variable power impacted from
| reduced natural gas supply, you instead only have a
| portion impacted.
|
| One strategy is to build a bunch of renewable for during
| the day. Add some nuclear base load. And then with the
| surplus power you get sometimes, do power-to-gas with
| electrolyzer cells. Finally, use natural gas peaker
| plants and burn natural gas where justified in industry.
| This is a nice diverse mix with storage.
| outside1234 wrote:
| Yes - but you can be assured they won't be Germans - so no
| policy change needed!
| berkes wrote:
| If you started building a nuclear plant ten years ago, it
| will be finished when the crisis is way over.
|
| Nuclear certainly is crucial in the mix. And used as such:
| Europe has a lot of nuclear power.
|
| But nuclear is slow. Terribly so. Even an operational plant
| needs days to react to increasing or decreasing demands.
| And building such plants from scratch, or extending
| existing ones, takes decades. Never months.
| baskethead wrote:
| It's only slow because of ridiculous and unnescessary
| regulations around it. They can easily speed things up
| while still keeping it safe, but their (and our/US's)
| laws are kicking themselves in the butt.
| fmajid wrote:
| The Germans are shutting down perfectly serviceable and
| world-leading (in terms of safety) nuclear reactors
| purely out of doctrinaire ideology of the Green Party.
| dchnshA wrote:
| This is bullsh _t and i made an account just to tell you
| why:
|
| - Large parts of the Uranium are coming from Russia
|
| - Nuclear power is not competitive and nuclear power is
| very expensive (especially if you conside the costs the
| government will be left holding the bag on, becuase
| nuclear power plant companies will spin off their power
| plants to new companies to go bankrupt once the profiting
| is done and the cleaning up the nuclear remains starts),
| no matter how much the pro-nuclear people want to lie
| about it
|
| - Nuclear power is statistically not dangerous compared
| to fossil fuels, but not compared to renewables.
|
| - The world's uranium supply is running out. Already
| since the late 1980s, uranium mines have been unable to
| meet the world's annual demand. The nuclear industry has
| so far filled the fuel gap with material from military
| and civilian stockpiles.
|
| - Nuclear waste is a problem no country except Finnland
| is anywhere near solving. Germany has been trying to find
| a permanent nuclear waste storage location since 1999 and
| have not come closer to finding one since then, because
| every time the current favorites are revealed the "not in
| my backyard" screeching starts and local politicials
| force a restart of the search.
|
| - Many of the world's nuclear power plants are old,
| because hardly any new ones have been built in ages,
| because ...
|
| - The construction of nuclear power plants is
| unbelievably expensive and takes decades, and much of the
| know-how on how to build nuclear power plants has been
| lost in europe over the past decades because so few are
| being built, which drives up the costs even further.
|
| - We still have 7 years of CO2 budget in Germany, so why
| do some politicians talk about building new ones,
| although they would only be finished in 20 years at the
| earliest (and we in DE can't even get the berlin airport
| built in anything close to the deadline, how long does a
| nuclear power plant take then ?)
|
| - Budgets for nuclear power plants take budget away from
| renewables
|
| - We have to change from a centralised to a decentralised
| grid, nuclear power is a step in the wrong direction
|
| - Nuclear power plants make us dependent on dictators
|
| - Climate change has an impact on reactor operations.
| With global warming, extreme weather events are on the
| rise. Unlike renewables, however, nuclear power plants
| are not adaptable. Rather, their danger increases in our
| changing climatic conditions.
|
| - Our neighbour france has heavily invested in nuclear
| power and is is a complete sh_tshow. There are constant
| headline to the extend of "Low temperatures caused
| another french nuclear power plant to go off the grid,
| worsening the skyrocketing energy prices in france" (The
| same with "too high temperatures" any many other
| reasons). Even before the war they had an energy
| shortage.
|
| The 3 remaining nuclear power plants in germany are: -
| Emsland (1335 MW) - Isar/Ohu 2 (1410 MW) - Neckarwestheim
| 2 (1310 MW)
|
| All three are pressurised water reactors and thus not as
| bad as boiling water reactors, but total rubbish compared
| to liquid salt reactors.
|
| Moreover, all three have been in operation for over 30
| years and all three are due for a "periodic safety
| review" (every 10 years), which was allowed to be ignored
| during their last 3 years of operation due to a "grace
| period under the Atomic Energy Act". If they were allowed
| to continue running, the operation time extension of the
| of all three would start with at least one month
| downtime, because these inspections would have to be
| started again. These inspections would most likely also
| reveal necessary repairs, wich would further delay the
| timeframe.
|
| By the way, all three power plants have not been
| employing new staff for some time because they knew the
| would soon be shut down soon anyway.
|
| In short: these nuclear power plants have been preparing
| for their shutdown since 2011 and have let everything
| slide over the last few years because everything will
| soon be demolished anyway. There are not the necessary
| fuel rods, not the necessary personnel, not the necessary
| will of the operating companies and no safety checks that
| would be necessary for continued operation.
|
| Also: Merkel decided in 2011 (one day after the nuclear
| power plant disaster in Fukushima) to not allow nuclear
| power after the 31.12.2022. Merkel, famously in the green
| party . (for anybody with no clue about german politics:
| Merkel is in the conservative party)
|
| The conservative opposition needs things to disagree on
| with the government, the current government had no
| scandals so far and the conservatives are still salty for
| being voted out of government, so they just make sh*t up
| and currently that is the myth of our magical saviour
| nuclear power.
| markus_zhang wrote:
| I think money, perk and power go a longer way than
| ideology. There were probably backroom stuffs we didn't
| know about. It takes a LOT of cash to feul any movement
| that huge.
| MrMan wrote:
| Right the evil greens trying to secure a future for our
| children.
| katbyte wrote:
| Buy pushing to close nuclear reactors and burn more
| fossil fuels?
| hef19898 wrote:
| It is getting annoying, but nuclear does nothing against
| a gas shortage / higher gas prices. Electrical energy =|=
| thermal enegy...
| pliny wrote:
| when you pass an electrical current through a resistor
| you get heat.
|
| you can read about this concept here:
| https://en.wikipedia.org/wiki/Heating_element
| hef19898 wrote:
| Don't you say. Is there also a wikipedia article on how
| to replace all industrial, commercial and domestic
| heating infrastructure with those? Europe wide?
| pliny wrote:
| Electric radiators are quite cheap (they retail for less
| than $100), and homes in the cold parts of europe are
| typically well insulated, and if you bought a radiator
| for every person in the eu (0.5B * $100) it would cost
| .3% of europe's gdp ($18 trillion), or 5% of the eu's
| budget for 1 year. This helps reduce the reliance on gas
| for domestic heating.
| hef19898 wrote:
| Those heaters heat one room, not a house or appartment
| complex. They consume a ton of electricity, are higly
| inefficient and don't heat your water supply. And while
| they maybe cheap (are those cheap ones rated for
| contonous usage or are they some cheap Wish knockoffs?)
| they are not available in sufficient numbers...
| Seriously, how comes that people fail to realize how
| complex things around them are, like infrastructure?
| These things are not like a consumer grade app or some
| ride share business...
| jfim wrote:
| Most of the houses I've seen in Canada are heated using
| baseboard heaters, they're not exactly uncommon.
| Efficiency seems fine, and most of Europe doesn't get as
| cold as Canada during winter.
| Scoundreller wrote:
| Where in Canada? Almost everything on the nat gas grid
| has furnace heating. In the sticks you'll have wood
| biomass, propane or kerosene heat.
|
| Anyone using electric baseboards is getting highly
| subsidized electricity because any other energy source is
| cheaper.
|
| Only place I saw baseboard heating was in school
| portables.
| jfim wrote:
| Quebec. Then again that might be because of the low
| electricity prices there.
| Scoundreller wrote:
| > Those heaters heat one room, not a house or appartment
| complex.
|
| It's something I've always wondered:
|
| At night, it might be more cost effective to heat a
| bedroom electrically than an entire household with gas.
| But that's a forced air heating issue: you can't block
| 75% of a furnace's airflow and expect it to keep working.
| Europe usually has boilers and radiators so dialing down
| heating to just a room is possible.
|
| Or better yet, heat the person with a mattress pad
| instead of the building air at night.
| semigroupoid wrote:
| The shutdown was essentially started when Angela Merkel,
| who is a member of the conservative CDU, was chancellor.
| tawm wrote:
| That's not true. The exit started in 2002, under a
| red/green government.
| hef19898 wrote:
| True. And it was immediately reversed when Merkel's
| conservative government took over. And then again
| reversed by the same conservative led government after
| Fukushima.
| nielsole wrote:
| The nuclear reactors would have been due for a thorough
| 10-year check-up in 2019 which was omitted because of the
| approaching shutdown. So claiming this was "purely out of
| doctrinaire ideology" seems unreasonable.
| xorcist wrote:
| Probably not from Germany, are you? The greens were not
| part of this decision when it was actually made.
|
| Yes, there was some anti-nuclear sentiment after
| Fukushima which made for an opportunity. But it was long
| in the running. Both the SPD and CSU/CDU had interests
| here. Lots have been written on this in established
| media, should you wish to delve deeper.
| droffel wrote:
| I've been hearing the same line about nuclear plants
| taking decades to be built for decades, as if its a valid
| dismissal. As the saying goes, the best time to plant a
| tree was a decade ago, the second best time is now. We
| should be scaling up our nuclear capacity.
| pydry wrote:
| Solar farms take six months. Wind farms 2-3 years. Pumped
| storage takes ~5 years and theres no shortage of
| locations: https://www.sciencealert.com/scientists-
| spot-530-000-potenti...
|
| A non nuclear mix is also cheaper and isnt uninsurable
| without a catastrophe liability waiver.
|
| The best time to build a nuclear plant _is_ 40 years ago.
| hokkos wrote:
| I have read several of those studies with an automated
| workflow to find suitable pumped hydro/wind/solar and
| they consistently miss local awareness. They often use
| deeply inaccurate land cover classification when the
| simple usage of open street map could have helped, and
| for hydro they underestimate the recent local opposition
| to destroy a village to build a dam.
| cuteboy19 wrote:
| Pumped storage is cool but way more situational than you
| think
| FooBarWidget wrote:
| Ten years ago was also when everybody was scared of
| nuclear, even more than today.
| chitowneats wrote:
| Famously, France does and Germany does not. This wasn't
| just some accident. Germany and their Green Party chose
| this.
| hef19898 wrote:
| As others already pointed out, the nuclear exit strategy
| was decided upon under Merkel's conservative government.
|
| Some added information so: The Green party pushed for an
| exit of nuclear power as part of a social-docrat
| government. This exit eas actually pretty well worked out
| and planned. When Merkel took, one of the forst things
| was to throw that rather good plan out. Only to revert
| that decision, hastly at that, after Fukushima. That
| second nuclear exit, the one Germany is currrently going
| through, was hastly done, ill planned and rushed.
|
| And lastly, nuclear power does exactly nothing to
| compensate for reduced gas deliveries. Germany, as in
| deed a good portion of Europe, is heating with gas. And
| not nuclear power or electrical.
| usr1106 wrote:
| And if you build more people will die in the next big
| accident. There is no doubt that there will be a next
| accident. For Chernobyl you can say criminal neglect was
| part of the system in the USSR. 3 Mile Island happenend in
| the world leader in technology. Japan used to have the
| reputation of having high security standards. Until
| Fukushima happened and they did not have the situation
| under control. There will always something fail, regardless
| how well it's designed. Not necessarily this year or not
| even in 5. But most of us still intend to live for decades,
| I'd assume.
|
| If a Jumbo crashes you expect around 400 death. If 2 crash
| into each other it's twice as many (search for Tenerife if
| you are too young to remember). If you build 2 skyscrapers
| for 16,000 employees you risk 16,000 deaths if the worst
| happens ("Less" than 3000 died, so the cold facts aren't
| that bad after all.) If you build build a nuclear power
| station with millions of people around, you risk many more
| deaths. Not everyone of them immediately, but cancers
| caused by radiation will continue for decades. Building
| such things is engineer hubris and some day something worse
| than what we have seen so far will happen.
| caeril wrote:
| How many people died or were injured (even medically,
| long after the fact) from Three Mile Island?
|
| Dramatic, sure, but nuclear power kills far, far, far
| fewer people than buckets of water or BIC lighters.
| nivenkos wrote:
| We can use coal for electricity, the issue is natural gas
| itself for industry and domestic heating.
| skrause wrote:
| No. The gas is needed for heating homes and industial uses
| and that was already the case when Germany was using its
| peak nuclear power. Keeping the nuclear reactors would be
| almost no help with the current problem because Germany is
| using almost no gas for electricity.
| katbyte wrote:
| 10%+ of electrical generation is "almost none"?
| skrause wrote:
| Yes, because all of Germany's electricity is only around
| 21% of its energy needs. The heat sector is more than
| twice of that.
| hef19898 wrote:
| Yes.
| pydry wrote:
| I look at this graph and think many things but "oh god if
| theyd just kept the nuclear plants switched on everythin
| would be ok" isnt one of them:
|
| https://www.cleanenergywire.org/sites/default/files/styles/
| g...
|
| The amount of flak that purple sliver garners is way
| disproportionate to its importance - especially since it's
| not even dispatchable.
|
| Plus germany relies on natgas for a ton more than just
| electricity. Will we make fertilizer with nuclear power
| too?
| MisterPea wrote:
| I think more so the precedent it set. Not switching on
| ~and~ not growing nuclear. It wouldn't be too ridiculous
| for Germany to be producing 30GW from nuclear by now.
| That's a 22GW spread from what it is today which isn't
| negligible.
|
| But yeah, people are definitely being a little over
| dramatic on the severity.
| kyleblarson wrote:
| Reminds me of the German UN delegates smugly laughing at
| Trump when he said that dependence on Russian oil is a bad
| thing: https://www.youtube.com/watch?v=FfJv9QYrlwg
| theplumber wrote:
| Trump was basically a clown saying different things for
| different audiences.
|
| He said that we should be more friendly with Russia and
| that Russia has been trated unfairly. And then said we
| should buy more gas and oil from the U.S. What do you make
| of that? Why would you buy LNG from the U.S if Russia is
| such a great friend and its gas pipes are nearby?
|
| Then went at great lengths to say how Europe is the biggest
| foe for the United States and not Russia.
|
| Not to mention that fiasco at the Helsinky summit. If you
| talk a lot of nonsese people stop treating you seriously.
|
| If I remember right he fancied NK leader as well. Just a
| clown or showmen or whatever you want to call him but
| definitly a reliable adviser.
|
| Germany has been warned about its dependency on Russian gas
| by its EU neighbours and past U.S administrations long
| before that clown. It's just that Germany thought Russia is
| not completely stupid and made a risky and bad bet. Now it
| has to pay. It may be for the better because now it can
| invest in more renewables(i.e has a cleaner slate)
| davrosthedalek wrote:
| While the strategy to let Russia sit on the table of grown
| ups did not work out in the end, I think it delayed Putins
| actions for a few years. I think Ukraine has much better
| chances than 5 years ago. And without the pandemic, it
| might have worked longer.
| DoingIsLearning wrote:
| > if Russia decides to cut off the gas they straight up have
| insufficient energy to make it through the winter.
|
| I agree with your sentiment on massive incompetence regarding
| Energy policy but this is an exageration.
|
| 1. Russia won't cut off gas despite it's threats because gas
| is quite literally one of the few revenue sources for the
| Russian economy. Much like Qatar, Russia would implode
| without Gas money.
|
| 2. There are plenty of other gas providers Qatar, Norway,
| Algeria, even US/Canada LNG, who can sell to the EU.
|
| What they likely won't sell is at the cost of Russian gas
| which is the pressing point for Central and Eastern European
| countries.
|
| But the point is, you would shut down heavy industry and go
| into deficit before you were faced with a doomsday scenario
| of people freezing during winter.
| s1artibartfast wrote:
| >Russia won't cut off gas despite it's threats because gas
| is quite literally one of the few revenue sources for the
| Russian economy. Much like Qatar, Russia would implode
| without Gas money.
|
| Russia literally shut down Nordstrom today for at least 10
| days.
|
| Getting paid for gas in Euros or dollars they can't spend
| is worse than not selling it.
| quonn wrote:
| This is planned maintenance (so far) that was expected to
| happen and takes 10 days every year.
| mortenjorck wrote:
| _> Russia literally shut down Nordstrom today for at
| least 10 days._
|
| Just to be clear despite autocorrect, Russia did not shut
| down a major western clothing retailer, but the Nord
| Stream 1 pipeline.
|
| https://www.upi.com/Top_News/World-News/2022/07/11/nord-
| stre...
| ceeplusplus wrote:
| Shutting down heavy industry is already a doomsday
| scenario. That would imply millions of people out of work
| and billions if not trillions of dollars of lost GDP.
|
| > Russia would implode without Gas money
|
| Russia can sell to China and India. US/CAN has insufficient
| LNG transport capacity to completely replace pipelines from
| Russia. Germany has insufficient import terminal capacity.
|
| Yes, they wouldn't run out of gas, but the price would
| likely spike 5-10x and crater the EU economy which is
| equally as bad.
| rawfan wrote:
| That is not quite correct. First of all, Russia cannot
| simply sell to China and India. It takes years to build
| the necessary infrastructure to do that.
|
| Regarding import terminals: there are LNG terminals all
| over Europe that are far from their full capacity which
| all have connections to the German net. That alone would
| suffice in delivering enough LNG. Apart from that, we're
| on the fast track of having extra terminals ready by
| autumn.
|
| Also price spikes as massive as those you mentioned will
| be prevented by emergency government regulation of the
| market (already announced).
|
| As someone who works in the industry, I have a lot of
| confidence stating that we will be fine, thank you.
| hef19898 wrote:
| Last time this happened, during the financial crisis in
| 2008, Germany recovered remarkably fast. China is doing
| it due to lockdowns. Shutting some gas hungry indistries
| down over winter isn't ahlf as bad as it sounds.
| RandomLensman wrote:
| Not sure the FX market is pricing that catastrophic risk and
| not simply low rates and high inflation. Why would only the
| FX market price it and not equities or German government
| bonds or vol markets? Also, when markets generally go down,
| equity and FX positions are the first to be liquidated to
| shore up cash.
| ceeplusplus wrote:
| German companies have manufacturing presence all over the
| world, including substantial factories in the US. Those
| factories pay workers in dollars and sell products in
| dollars. They are somewhat isolated from the impacts of the
| EU failures.
|
| German govt bonds are still being purchased by the ECB
| under QE so it makes sense their yields are suppressed.
| RandomLensman wrote:
| Let me phrase it differently: I don't see the need to
| invoke catastrophic risk to explain current FX moves. I
| would expect a tail event inferred from vol markets to
| start with.
| Shadonototra wrote:
| Nothing to see, just the USD being inflated, to a point where
| nobody will want to do business with the US in USD anymore, it's
| not looking good
| [deleted]
| kcb wrote:
| You got that backwards. You're getting more euros for your
| dollar now.
| Shadonototra wrote:
| reverse psychology, the effect intended, is the outcome you
| didn't expect
| guerby wrote:
| https://archive.ph/blAqQ
| rossdavidh wrote:
| Maybe more interesting is that the Euro is also down vs. the
| British pound and even the Japanese yen. It's true the US dollar
| is appreciating against almost every other currency, but the euro
| is down even against the Swiss Franc, presumably also impacted by
| the war in eastern Europe and its threat to grain and energy
| imports.
| misja111 wrote:
| Yeah it's not just the USD being strong but also the Euro being
| weak. Main reasons:
|
| - the EU currently has a trade deficit. This is the first time
| ever. Reason is the energy crisis due to sanctions against
| Russia: energy prices have skyrocketed and EU is importing
| loads of energy
|
| - the ECB has been printing money like crazy in the last 14
| years. So far this money had been absorbed mostly by banks but
| slowly but surely it is starting to trickle into the real
| economy. Recently the ECB has finally increased interest rates
| and stopped buying Southern European bonds, however they had to
| start up their bond buying program again because Southern
| European government bond interest rates went up dangerously
| fast. This has undermined the belief that the ECB will be able
| to effectively battle inflation
| FiberBundle wrote:
| > the ECB has been printing money like crazy in the last 14
| years. So far this money had been absorbed mostly by banks
| but slowly but surely it is starting to trickle into the real
| economy.
|
| This is wrong, none of the money the ECB "prints" goes out
| into the real economy (see [1] e.g.).
|
| [1] https://themacrocompass.substack.com/p/tmc-6-all-they-
| told-y...
| mike_hearn wrote:
| It definitely does go into the real economy. They mostly
| use the new money to buy government bonds, and governments
| end up spending it (mostly) on people, who then spend it on
| things. The article you cited is just an explanation of the
| (long, complicated) technical process by which this
| happens. The claim money printing doesn't cause inflation
| is mainly backed by the claim that most Americans used the
| money "printed" and given to them by the USG to pay off
| debts, thus destroying money again. But it doesn't really
| destroy money if you're printing money and then using it to
| pay off debts. It just devalues the debt itself, because
| the total money supply has still increased, so the
| repayments are worth less than the lender expected.
| FiberBundle wrote:
| You can't use central bank reserves to buy government
| bonds! They're not legal tender.
| csomar wrote:
| > Recently the ECB has finally increased interest rates
|
| Did they? I thought they agreed (or iterated) that a rate
| increase is almost certain. But the increase itself is yet to
| happen (and it's not clear they are going to increase it by
| how much)
| misja111 wrote:
| Mm you're right, ECB agreed to increase rates but the
| actual increase will happen only on July 21st.
| jules wrote:
| The main issue is that the ECB will be unable to raise rates
| sufficiently to combat inflation because some EU member states
| will be in a lot of trouble.
| wiredfool wrote:
| The Euro is down a few percent on the pound, but GBP:EUR has
| been overall stable +- 5% since about 2016. In 2016, it was
| roughly 2:1 for GBP to Dollar, and 1.4:1 for the euro, but the
| pound lost a lot of value after that.
|
| Edit -- sorry, misread the graph scale there. At any rate, the
| euro has been more stable against the pound in the last few
| years than either of them have been against the dollar.
| dageshi wrote:
| The pound hasn't been 2:1 with the dollar since circa 2008.
| That was the high pre financial crisis. It mostly traded
| between 1.50-1.60 from then till 2016.
| ushakov wrote:
| important to note that GBP has had a 5-year high this year
| implr wrote:
| Until recently the Swiss National Bank was mostly concerned
| with pushing the franc _down_ , they had the lowest rates in
| Europe (and after the recent raise they're _still_ negative at
| -0.25%), after many years of this they 've accumulated over a
| trillion USD in foreign reserves. Trading in the other
| direction and keeping CHF up should be fairly easy for them.
| arcticbull wrote:
| Yeah, the EU also has a strong trade relationship with China -
| which was slammed by lockdowns. They've been smacked around
| from all sides.
| petre wrote:
| Hopefully this is going to be a wake up call but probably
| not. The US economy is much more robust, USD is the reserve
| currency and it also doesn't help that capital is fleeing to
| the US.
| simonh wrote:
| It's not like that's a particular problem for Europe
| though. The US imports more from China than from any other
| country, and about the same as it imports from the entire
| Euro zone.
| petre wrote:
| It's a problem specifically because of dependence on
| Russian gas, let alone Chinese imports.
| simonh wrote:
| Every country is dependent on everyone else at this
| point. We're all in it together. We do need to be smart
| about it though. We've been particularly dumb about
| Russia ever since 2014, that's crystal clear now.
|
| I think relying on (taking advantage of?) cheap Russian
| gas is only a mistake if you also think that giving
| Russia a pass over annexing Crimea was acceptable. In
| reality choosing to do both was a catastrophic error. You
| can make deals with your enemies (and both Russia and
| China as oppressive expansionist autocracies are choosing
| to be our enemies), as long as you make it clear where
| your boundaries are. We didn't do that clearly enough
| with Russia, and cannot afford to make the same mistake
| with China.
| leksak wrote:
| There are multiple reserve currencies, USD is not alone in
| being one.
| jmyeet wrote:
| This article mentions the interest rates issue but glosses over
| it.
|
| Imagine two currencies ABC and DEF. They are at parity (ie 1 ABC
| = 1 DEF). ABC's central bank has 10% interest rates. DEF's
| central bank has 1% interest rates. What happens? ABC strengthens
| against DEF just based on the interst rate differential.
|
| Why? Imagine if it didn't. You could borrow DEF 1B, convert to
| ABC, earn 10% interest and then pay it back later. If the
| exchange rate remains fixed, that would be a risk-free return of
| 9%. Because of that it doesn't happen. Think about it. This
| creates demand for ABC.
|
| Because of skyrocketing inflation, the Fed has raised interest
| rates. Europe has not [1] and really can't.
|
| Secondly, in uncertain times, there is nearly always a flight to
| the safety in financial markets, which usually means US Treasury
| bonds. This too creates demand for US dollars.
|
| So there are issues with th eEuro but really what you're seeing
| is a strong US dollar. This is a temporary situation.
|
| I'm not saying the energy issues in Europe aren't significant.
| They are. We can hope this creates pressure for a peaceful
| resolution to the war in Ukraine. This idea seems to make a lot
| of people angry like it means capitulating to Russia. Every
| conflict ends diplomatically (including WW2). Russia too is
| facing pressure to find a win and end the war as it's not
| sustainable long term so we're really in a game of chicken. Putin
| may be hoping a European winter (where the effects of an energy
| shortage will be more pronounced) will sway the odds in his
| favor.
|
| [1]: https://www.euribor-rates.eu/en/euribor-charts/
| WaxProlix wrote:
| Can you explain a little bit about what you mean by the "...and
| really can't" line? Is this just because they lack some of the
| mechanisms of a true central bank as a shared entity across the
| eurozone, or something less obvious?
| cko wrote:
| I think it's because some of the member states are already
| heavily indebted with weak economies, like Greece and Italy.
| A recession caused by monetary tightening may be annoying for
| Germany or the Netherlands, but very bad for most of the
| southern European countries.
| FabHK wrote:
| This.
|
| Italy already pays 1.9 percentage points higher rates than
| Germany, and has 140% debt to GDP. If the ECB sharply
| raises rates, then Italy's debt might become unsustainable.
| The Economist notes: "The country probably cannot tolerate
| yields on its bonds much above 4%. Around that point, the
| goals [of the ECB] of price stability and defending
| indebted countries would become irreconcilable. Should
| interest rates surge, the euro area would look dangerously
| frail. "
|
| https://www.economist.com/leaders/2022/06/23/how-fighting-
| in...
| Tsarbomb wrote:
| I was wondering about this too. I'm in Canada and we've been
| raising our rate even more aggressively than the USA. What is
| stopping Europe?
| pkaye wrote:
| Italy and Greece have a lot of debt so raised interest
| rates means their payments go up a lot more. Since they are
| part of the euro and can't print their own money they have
| no easy options.
| jmyeet wrote:
| > "...and really can't"
|
| So, a certain level of inflation is actually good. The
| general benchmark modern developed nations go for is 2-3%.
| High inflation can cause all sorts of problems even without
| getting into hyperinflation. Negative inflation ("defaltion")
| or even zero inflation causes problems too. Just look at
| Japan over the last 35 years to see this in action. Deflation
| promotes saving rather than spending such that there is less
| economic activity and this has a knock-on effect on creating
| unemployment.
|
| Side note: lack of consumer spending is a ticking time bomb
| for China thanks to having to fund your own retirement and
| the demographics caused by the One Child Policy.
|
| So 2-3% is really the sweet spot.
|
| It's also worth noting that countries that run deficits like
| inflation too as it decreases the real value of their debt.
|
| Central banks can contrl interest rates by setting the
| benchmark rate. For example, if the Federal Reserve offers 5%
| for US Treasury bonds (which are considered essentially "risk
| free") then why would a bank lend a business or you money at
| less than 5%? It's more risk for a lower return. This is
| _monetary policy_.
|
| So as you can imagine if someone can only borrow money at 20%
| vs 2% it will have an impact on economic activity. That's the
| point. In the US, high inflation is seen as being driven by
| demand outstripping supply so interest rates are a crude tool
| for reducing demand. That's why the Fed has been raising
| rates.
|
| The eurozone largely has the same inflation problem thanks to
| energy demand and housing but doesn't have the economic
| activity driving it. So if the ECB were to aggressively raise
| rates, the fear is this could cause a deep recession in the
| eurozone.
|
| So that's what I mean by "they really can't> The eurozone has
| the inflation but not the economic activity.
| nomorewords wrote:
| The common explanation is that it will fuck up the countries
| with a high debt to GDP ratio, like Greece
| petre wrote:
| > This is a temporary situation
|
| You're quite optimistic. I fear this is a 1930 moment. By the
| end of the decade we might have a Nazi Russia, WW3, North Korea
| attacking the South, China taking advantage of the situation
| and invading Taiwan. Japan remilitarising and maybe becoming a
| nuclear power.
| jmyeet wrote:
| > Nazi Russia
|
| I'm not sure if you're talking about Putin or after Putin.
| Putin is an autocrat in all but name already. It's unclear
| whta'll happen to Russia when Putin inevitably dies. It could
| plunge into chaos, which is a big risk of any cult of
| personality.
|
| But Ukraine has revealed that Russia's military is a paper
| tiger. Russia too is in decline (demographically).
|
| > WW3
|
| So if we actually have nuclear war between major powers, it's
| over. There's really no point worrying about this happening
| because it's unlikely you can impact this outcome so you'll
| be better off just assuming it won't happen.
|
| > North Korea attacking the South
|
| I don't fancy their chances. Sure NK has a large standing
| army but they can barely feed themselves. Kim Jong-Un isn't
| an ideologue. If anything, he's Saddam Hussein, which is to
| say he's motivated by his material reality rather than, say,
| any kind of fundamentalism. Kim likes his luxuries. Attacking
| the South would invite his own personal ruin. The only way I
| see this as realistic is if NK will otherwise collapse. Is a
| collapsing NK really that much of a threat? I mean they could
| cause a lot of people to die but could they succeed? I
| somehow doubt it.
|
| Remember too that NK only really exists because China wants
| it to exist. China, like any major power, likes having buffer
| states between it and other major powers. The US is no
| exception here either. The US almost started wW3 over Cuba
| after provoking the USSR (ie Jupiter MRBMs in Turkey).
|
| China doesn't war on th eKorean peninsula. China likes things
| the way they are. Just how long would NK survive without
| Chinese support?
|
| Side note: it has been a huge failure of US foreign policy
| not to consider that Putin too would want a buffer to NATO.
|
| > China taking advantage of the situation and invading Taiwan
|
| What'll eventually happen with Taiwan is a big open question.
| China knows what a shitstorm it would be to invade. Success
| isn't guaranteed either. A small body of water can be a huge
| barrier to even large militaries. Only 17 miles separates
| England and france at the closest point and Nazi Germany
| could never cross it and invade. Had there been a land
| bridge, the UK would've absolutely fallen in 1940-41. No one
| has successfully invaded England by sea since 1066.
|
| > Japan remilitarising and maybe becoming a nuclear power.
|
| Japan is a declining power due in large part to demographics.
| Japan is a bit like the UK in that it is highly dependent on
| imports. It also has a major power in the form of China as a
| direct neighbour. I really doubt Japan is the will or even
| the means to become a major military power.
|
| I'm honestly way more concerned about the rise of fascism in
| the United States than anything you mentioned.
| achenet wrote:
| > Putin may be hoping a European winter (where the effects of
| an energy shortage will be more pronounced) will sway the odds
| in his favor.
|
| Global warming. Checkmate, Putin.
| chrisco255 wrote:
| Winter is coming.
| RandomLensman wrote:
| Well, uncovered interest rate parity would have DEF strengthen
| not ABC.
|
| There are indeed other mechanisms, e.g., currencies with higher
| interest rates experiencing higher demand, but that also has
| limits/doesn't hold strictly etc.
| danuker wrote:
| Huh? Say you own DEF. Wouldn't you rather trade it for ABC to
| gain more interest?
| kgwgk wrote:
| The scenario was presented as follows:
|
| > ABC's central bank has 10% interest rates. DEF's central
| bank has 1% interest rates. [...] You could borrow DEF 1B,
| convert to ABC, earn 10% interest and then pay it back
| later. If the exchange rate remains fixed, that would be a
| risk-free return of 9%.
|
| If you have now 100 ABC = 100 DEF you have the choice of
| getting in 1 year 110 ABC or 101 DEF. If ABC depreciates
| against DEF and in one year 1 ABC = 0.918 DEF both choices
| become equivalent.
| RandomLensman wrote:
| Would you really go into "broken currencies" with high
| interest rates, for example?
|
| The carry trade in FX, i.e., borrow in low yielding
| currency invest in high yielding currency is a classic
| trade, but it is not risk free. FX can move against you.
|
| Basically, uncovered interest rate parity says that the
| interest rate differential creates an offsetting effect in
| the FX rate. Empirically, that is a bit shaky/doesn't
| always manifest, there are debates on time horizon, etc.,
| though. In short, FX not easy to predict.
| origin_path wrote:
| > Every conflict ends diplomatically (including WW2)
|
| WW2 ended with Berlin being captured by the allies and Japan
| being nuked. How was that a diplomatic end to the conflict?
| jmyeet wrote:
| How about the German Instrument of Surrender [1] and the
| Japanese acceptance of surrender terms [2]?
|
| [1]:
| https://en.wikipedia.org/wiki/German_Instrument_of_Surrender
|
| [2]: https://en.wikipedia.org/wiki/Surrender_of_Japan#Occupat
| ion_...
| hef19898 wrote:
| Weren't those unconditional? Hell, callong any of the two
| world wars being ended by dimplomacy is quite a strong
| argument...
| rr888 wrote:
| This isn't about the Euro. Yen is at a 20 year low as well, and
| pretty much all other currencies are soft too. Its dollar
| strength, interest rates in USD are much higher and going up (for
| now).
| throwawaymanbot wrote:
| taylodl wrote:
| Is it the Euro sinking or the US dollar rising? The U.S. dollar
| has been gaining a lot of value over the past couple of quarters
| - enough so to call into question whether inflation is being
| caused by currency policy, as the Federal Reserve believes, or
| being caused by actual supply constraints - as I and several
| other economists believe (but I'm not an economist). The fact the
| dollar is rising in value and yet prices have still continued to
| rise tells me the problem is supply.
|
| Supply shortages are something Western policy makers haven't had
| to contend with for quite some tine, certainly not in the
| lifetime of the policy makers!
| ralph84 wrote:
| > whether inflation is being caused by currency policy ... or
| being caused by actual supply constraints
|
| No reason it can't be both. Plus USD is still viewed as the
| safe haven fiat currency (deserved or not), so USD always
| displays relative strength vs. other fiat currencies when there
| is stress in the markets.
| lvl102 wrote:
| turbinerneiter wrote:
| How is this the Germans fault?
| baq wrote:
| Their energy policy for the last 20 years, government
| officials becoming Gazprom executives, their negligence to
| build LNG terminals...
| origin_path wrote:
| There are 28 large scale LNG import terminals in Europe.
| One or two more in Germany wouldn't change the scale of
| the problem much.
|
| The actual original point though, was that ECB cannot
| raise rates without causing Italy and others to default,
| or requiring 'austerity' that would probably cause civil
| unrest. That isn't the fault of the Germans. It is the
| fault of other European countries that have never got a
| grip on their government spending levels.
| makomk wrote:
| There's literally no way to get gas from those terminals
| to Germany on a large enough scale. They really went all-
| in on dependence on Russian natural gas and their
| politicians seem to have been richly rewarded for it.
| balderdash wrote:
| The dollar is strengthening, you can look at the dollar index
| [1] which compares the dollar to a basket of developed market
| currencies [2]
|
| [1]https://en.m.wikipedia.org/wiki/U.S._Dollar_Index
|
| [2] https://www.wsj.com/market-data/quotes/index/DXY/
| davrosthedalek wrote:
| Can someone ELI5 how the USD can go up vs EUR if US has
| higher inflation (about 1% or so) than the eurozone (or at
| least Germany). Wouldn't that mean that stuff gets cheaper in
| EU compared to US? Shouldn't there be arbitrage at some
| point?
| npongratz wrote:
| But that basket of currencies is composed of 57.6% EUR. I'm
| barely an amateur observer of these markets, but it seems to
| answer the question " _dollar sinking or euro strengthening?_
| ", it'd be better to look at a basket of currencies that
| excludes the euro in order to tease out the principal
| components of the move. And really, should probably also go
| the other way that looks at a basket of EUR/XYZ currencies
| and exclude EUR/USD.
|
| But again, this is not at all my area of expertise; I'm a
| rank amateur with barely any skin in the game. I'm very happy
| to learn other opinions and ways these things are determined.
| bartvk wrote:
| You can also value both currencies in gold, which offers
| another perspective.
| game-of-throws wrote:
| There's also the Euro Index (EXY) which is hitting all-time
| lows (at least as far as this chart goes back). Of course
| EXY includes the EUR:USD pair so it's kind of the reverse
| problem.
|
| https://www.tradingview.com/symbols/TVC-EXY/
| atwood22 wrote:
| What does it mean to be supply constrained? The simple
| definition means you don't have enough supply to meet demand,
| but that's too simplistic a definition. Supply constraints can
| happen for two reasons. The supply curve can shift (i.e. a
| decrease in supply), or the demand curve can shift (i.e. an
| increase in demand). The Fed's 0% interest rate, coupled with
| unprecedented government stimulus, lead to a huge increase in
| demand. So yes, technically, we are supply constrained, but we
| are supply constrained because of an increase in demand caused
| by government policy.
|
| Just an example, as part of the CARES act, congress allocated
| 800 billion for PPP loans that were supposed to go towards
| payroll. Now the Federal Reserve finds only 25% went to
| employees. So that was basically an unnecessary infusion of 600
| billion into the economy over a really short time window. And
| that money went to people who already had plenty of money. Is
| it a surprise why the housing stock is so low?
| ranger207 wrote:
| > ...caused by actual supply constraints
|
| Just curious, how would supply constraints lead to inflation?
| I'd expect lower supply would cause deflation
| wbsss4412 wrote:
| Prices are set by supply and demand.
|
| Inflation refers to the price of goods increasing.
|
| If supply reduces and/or demand increases, all else equal,
| prices increase. If supply increases and/or demand decreases,
| all else equal, prices decrease.
| acover wrote:
| Inflation refers to dollars buying less hamburgers.
|
| When there's a supply constraint - not enough hamburgers to
| go around - the price of hamburgers goes up and as such there
| is inflation.
| ranger207 wrote:
| Ah, I misunderstood the parent comment to be referring to
| _money_ supply. Whoops!
| dageshi wrote:
| Interest rates and interest rate expectations are pretty much
| the most powerful driving force in the currency markets. The US
| is at 1.5%, the Euro area is still -0.5% a 2% differential and
| it seems likely the FED will keep raising rates more
| aggressively than the EU will.
| newhotelowner wrote:
| I think supply shortage is the reason for the high prices. I
| can't get supplies for my business.
|
| My new treadmill at the business was supposed to be delivered
| last April. They have not provided a new date.
|
| It took LG 6-7 months to replace (ship) the broken TV under
| warranty.
|
| My franchise changed towel/linen manufacturing 3 times as old
| suppliers are not able to deliver. New prices have more than
| doubled.
|
| Lotion order I put in Nov was delivered in June.
|
| Some might say this is anecdotal but this is the case at every
| single hotel in America. A lot of small hotel owners are buying
| supplies from local Walmart stores too.
| revnode wrote:
| Europe simply printed more money than the US. Same for everyone
| else.
| s1artibartfast wrote:
| I find that hard to believe. Do you have a reference?
|
| My understanding that the US stimulus was generally
| unparalleled
| misja111 wrote:
| You're right, US has printed much more money. The EU is
| catching up though.
|
| In 2021, EU total amount of quantitative easing was 2.947
| trillion euro's. https://en.wikipedia.org/wiki/European_Cen
| tral_Bank#Low_infl...
|
| US: $4.5 trillion https://en.wikipedia.org/wiki/Quantitativ
| e_easing#:~:text=Th....
| mardifoufs wrote:
| That's just for 2021 though.
| s1artibartfast wrote:
| I think 2020 was even more
| mathiasgredal wrote:
| The cumulative numbers as of right now:
|
| EU: 3.4 trillion euro (https://www.ecb.europa.eu/mopo/pdf
| /APP_cumulative_net_purcha...)
|
| US: 8.9 trillion usd (https://www.statista.com/statistics
| /1121416/quantitative-eas...)
| mrep wrote:
| I'd say the eurozone is winning in what matters:
|
| 3 trillion euros / [?]14.5 trillion euro gdp of the
| eurozone [?] 20.6% of gdp
|
| 4.5 trillion USD / [?]23 trillion US gdp [?] 19.5% of gdp
| firstSpeaker wrote:
| What is the impact of this on ordinary citizens? Not the impact
| of inflation or impact or gas supplies, etc. The impact of this
| two currencies having parity.
| abeppu wrote:
| A variant of this is ... if you're in the US, what are you
| deliberately purchasing from the EU now (and how?). Are there
| consumer goods you care about where it now makes sense to order
| from the EU even with a greater shipping cost + time? If you're
| in the EU, what are US goods you would ordinarily buy but which
| are now out of reach?
| landemva wrote:
| Tourism - using hotels and transport.
| prennert wrote:
| Europeans investing in S&P500 don't get hammered as much as US
| citizens right now..
| andruby wrote:
| Apple devices (and other goods prices in usd - such as most oil
| goods) will be a bit more expensive.
| andreyk wrote:
| I am curious if this is correct: The EU has a population roughly
| of similar size to that of the US, and the EU had (when it
| included the UK) an economy roughly the size of the US in terms
| of GDP (https://www.thebalance.com/world-s-largest-
| economy-3306044). Is that right? (I just looked this up via
| Google)
|
| Also, Discussion of Europe's lack of mega companies / weakness is
| often a theme here, and there are many fair points to be made
| about its lack of entrepreneur culture and unfriendliness to
| business. But I'd like to point out that it's worth to think
| about more than just economies in comparing the EU to the rest of
| the world. So let me mention a couple of other things worth
| noting:
|
| Stuff like GDPR or the currently-in-the-works AI act (not to
| mention all the other rights and wellfare benefits common in much
| of the EU) don't help the EU's economy but do benefit its
| citizens in many ways (as far as I am aware).
|
| A bunch of countries in the EU (looks like about 12) has a
| happiness index score higher or the same as the US
| (https://www.theglobaleconomy.com/rankings/happiness/Europe/).
| Many of its countries also have higher life expectancy
| (https://www.worldometers.info/demographics/life-expectancy/).
| hef19898 wrote:
| Regarding those "mega-corps", Europe has quite a few of those
| as well. Food, aerospace, automotive, machinery, pharma,
| chemicals...
| partiallypro wrote:
| Most of them are German. Automotive is a huge global driver
| and Germany has 3 of the top 10 companies; it's just a fact.
| hef19898 wrote:
| Sanofi, Nestle, Airbus, Stellantis are not. And those are
| just the ones I come up woth from top of my head. Germany's
| strength are actually mid sozed comoanies ezcellong it what
| they do. And the big obes, is it really a surprise that the
| biggest EU economy actually has a fair share mega corps?
| partiallypro wrote:
| Airbus is a consortium created to compete with US
| companies. Nestle is Swiss and isn't in the EU, which is
| what we're discussing.
| hef19898 wrote:
| Ok, numbers then:
|
| - car makers, three of the top ten (world wide) are
| German, one is French-Italian with brands in Japan and
| the US
|
| - pharma: pretty even split between US and Swiss
| companies, two entries in the top ten from the UK, one
| from France, none from Germany
|
| - chemical: two German (no idea why statista wouod count
| Linde as an Irish company), one from Belgium and one from
| France in the top ten
|
| -aerospace&defence: one British, one French and Airbus
| (by alleans Frenxh but count it as European if you want)
| in the top ten
|
| I could research this firther, but Herman comoanies don't
| seem to he over represented when it comes to large
| international corporations
| systemvoltage wrote:
| > EU's economy but do benefit its citizens in many ways (as far
| as I am aware).
|
| I guess you can easily argue that a stronger economy also is
| pro-citizen and benefits the people. I have had discussions
| with close friends in EU and I get the opposite response.
| They're all in tech aiming to move to CH for better salaries
| and stronger capitalistic/enterpreneurship environment.
| Moldoteck wrote:
| Doesn't Switzerland has a law similar to gdpr? plus as many
| companies are operating in eea too, they must obey gdpr too
| Salaries of course are better (in some Cantons, not all of
| them)
| hef19898 wrote:
| Most people wanting to move to Switzerland due lower taxes
| and such tend to ignore the way hogher living costs there,
| in end what you save in taxes is spent on rent and
| groceries. Best thing is to _work_ in Switzerland but life
| across the border in France. Even better, replace
| Switzerland with Luxembourg and benefit from evil-EU
| enforced retirement benefits. Added bonus, FANG is offering
| jobs on Luxbourg, if you want to stay in "tech".
| tmalsburg2 wrote:
| What's the evidence for GDPR hurting the economy? And how large
| is the effect?
| acchow wrote:
| > A bunch of countries in the EU (looks like about 12) has a
| happiness index score higher or the same as the US
|
| If you're going to handpick states within the EU, shouldn't you
| also handpick states within the USA?
| MangoCoffee wrote:
| doing business from one EU member to another is very different
| from the US.
|
| US have common language and culture. EU is one zone with
| different barriers to crack.
| ag56 wrote:
| There are no mega-companies because it is not a single market
| in practice. Language alone splits your market.
|
| It would be like launching your SV startup only in California
| and not getting the other 49 states for 'free'. For each new
| state you launch in, there is regulatory burden and language
| burden, not to mention culture differences affecting UX. Small
| markets limit growth and reduce ability to raise capital ->
| ergo the US competitor will almost always win.
| chadash wrote:
| Well, it _rounds_ to the same number. But if you really care
| about an arbitrary line being crossed, then just know that as of
| 21:31 UTC, the Euro is still slightly higher than the dollar at
| 1.0039618 and it has not dipped at or below 1.00 yet.
| anony999 wrote:
| Is this bad? Many said the EUR strength was a curse for most of
| the EU states (i.e. Greece, Italy etc) except Germany.
| dsq wrote:
| A weaker currency is better for exports. So Italy can export
| cars, or olive oil, and the foreign currency it receives will
| buy more euros for paying employees, local suppliers, etc.
| mixedCase wrote:
| And it merits stating the obvious: In turn, employees and
| local suppliers suffer a worse quality of life as their
| salary loses buying power.
|
| Inflation redistributes wealth from people who earn and save
| in local currency (lower and middle class most impacted) to
| benefit those who deal more in foreign currency (upper middle
| class, rich people).
|
| Any inflation above the stability rate, produced by monetary
| policy, is government thievery plain and simple. I say this
| as an exporter who financially benefits from local currency
| inflation.
| bitshiftfaced wrote:
| If anything, Germany is thought to benefit (some said
| "unfairly") from the Euro, which is weak for its economy, but
| strong for other member countries. It allows Germany a
| competitive advantage when it comes to exports.
| donatj wrote:
| The Yen has bounced around Y=100 to $1 since the early 90's.
|
| I've had a completely unfounded theory about it for years that
| the tighter two economies are linked, the more likely this is to
| happen. People dealing in both being more willing just to round
| one way or the other bringing it into some sort of homeostasis
| due to simpler in-head math.
| jedberg wrote:
| The CAD/USD pair would be a counterexample to your theory. Our
| economies are pretty strongly linked, and usually CAD is about
| .75 USD, but it's gone as low as .60 and as high as 1.05
| (although interestingly it almost always heads back down if it
| hits 1.0).
| aidenn0 wrote:
| Until recently. it's been over Y=130 for a while now; at least
| some of my digial purchases are denominated in yen, so I've
| noticed the dollar strengthening.
| benatkin wrote:
| 1.00 but not 1.000
|
| It appears to not have crossed exactly 1 yet.
| amelius wrote:
| Will we see a surge when it does?
| AnimalMuppet wrote:
| No (probably). They're just numbers.
|
| (I'm not a currency trader, though...)
| blibble wrote:
| currency traders tend to be quite superstitious
|
| dropping below 1 will drop the "psychological barrier" then
| they all end up spooking each other into more selling
| rsykes2 wrote:
| EU interest rates are below 0%. US are around 3%.EU economies are
| quite slow at the moment compared to US.
| yrgulation wrote:
| Likely so that the euro zone can rush exports for cash buildups
| and then increase the value of the euro so it can buy oil and
| gas. Meaning it will bounce back up soonish. Else a lot of people
| will freeze.
| lukeqsee wrote:
| This is simply not how forex works.
|
| The flows of money through FX are astronomical amounts of
| capital, and even central banks struggle to maintain a hold on
| a subset of their own currency market, let alone artificially
| dumping and pumping a currency. The SNB (Swiss National Bank)
| is probably the most powerful in that regard (able to adjust
| the currency to their liking), but that is due to having an
| abnormally strong currency they've used to buy foreign reserves
| they can utilize to maintain the price targets they want.
| mise_en_place wrote:
| $DXY is 107, market is incorrectly predicting this is like 2008
| which was a deflationary recession. This is going to be an
| inflationary depression.
| chrisco255 wrote:
| It's at 108.2 right now.
| hcmacro wrote:
| $DXY has been rising since Jan 2021, not yesterday.
| DoingIsLearning wrote:
| How does one protect oneself in an inflationary depression?
| Hold no cash other than emergency fund?
| Zenst wrote:
| Quick look via google shows PS1.0 is $1.19 and EUR1.18 and
| confirms one dollar is one euro
|
| I guess currency traders are having a good day today or did at
| some stage.
| beojan wrote:
| A Euro isn't exactly one dollar, it just rounds to 1.00 to 2
| decimal places.
| superb-owl wrote:
| I've never understood why EUR/USD "parity" is a concept. It seems
| analogous to two stocks having the same share price - a totally
| arbitrary number that happens to be equal. Am I wrong?
| Armisael16 wrote:
| No, that's an accurate way to look at it. The important thing
| is the relative movement, not the precise value (the US economy
| would not be meaningfully different if we cut a zero of the end
| of every price).
|
| Psychological effects can come into play, of course.
| jonny_eh wrote:
| You're not wrong but as far as arbitrary comparisons go, them
| being at parity is a historical anomaly.
| throwaway1777 wrote:
| This has happened in the past, but the most recent time was
| 2000-2002
| Gare wrote:
| And Euro was introduced in 1999.
| lukeqsee wrote:
| Mostly correct. It differs from your analogy because you can't
| (usually) directly trade two stocks against each other, but
| it's purely arbitrary. Unfortunately, we humans are very
| psychologically affects by what appears to be arbitrary
| reasons. :)
| [deleted]
| jfengel wrote:
| The euro price was originally set deliberately to fall between
| the pound and the dollar. They could have set any price, but
| they picked that one with the intention that it would usually
| be a bit more than a dollar.
|
| There's nothing special about it being worth less than a
| dollar; it's an arbitrary mark not unlike a year ending in
| zero. But it only happens when the euro is significantly weaker
| than it was intended to be.
| onlyrealcuzzo wrote:
| > But it only happens when the euro is significantly weaker
| than it was intended to be.
|
| This isn't how central banks value their fiat currency.
|
| If for some reason the Fed puts 20% interest on the USD, the
| value of the USD would increase dramatically. The Euro is
| under no obligation to set its value with respect to the USD
| or the Pound.
|
| There is no "intended" value of the Euro with respect to
| other currencies.
|
| There's an "intended" value of the Euro with respect to
| keeping European governments solvent and keeping prices
| steadily increasing.
|
| If the Euro has to drop to $0.01 to achieve those goals, it
| will. If it has to climb to $100 to achieve those goals, it
| will.
| jfengel wrote:
| It was "intended" when the price was originally set. The
| goal was that the European economy would keep its ratio to
| the US roughly the same.
|
| Central banks do have some thumb on that scale, but as you
| say, it's entirely about keeping the economies healthy, not
| maintaining any specific ratio to other currencies. If it
| has fallen so far that the ratio is 1.0, that's not a
| problem for the currency itself, but it does happen because
| the economy is struggling more than the American economy
| is.
| kergonath wrote:
| > It was "intended" when the price was originally set.
| The goal was that the European economy would keep its
| ratio to the US roughly the same.
|
| This is just a baseless assertion you've made repeatedly.
| You should provide some source and be a tad less
| aggressive about it if you want to be convincing.
| rutierut wrote:
| Yes, I don't need to pay for my eBay purchases in Tesla stock.
| This conversion rate has a financial impact on a lot of people.
| But also you're right.
| solarmist wrote:
| It's also useful for travelers getting a sense of prices.
| aabhay wrote:
| What matters is the movement of prices over time. So if one
| stock was 20% higher in price than another yesterday, and today
| they're the same, then that's a big signal. We aren't
| interested in parity for the sake of parity itself.
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