September 22, 2007 Undoubtedly, you have read about the recent cratering of the dollar. Paul Krugman, a columnist for The New York Times, is wondering if this is the “Wile E. Coyote moment” for the dollar. You know the cartoon character–he runs off a cliff, stops, looks down and realizes that there is nothing between him and the bottom of the canyon except thin air–and he plunges. The dollar has been slipping gradually for six years. Is this the time it really goes over the cliff? America’s profligate ways have been supported for years by foreign investment. Is now the time that the rest of the world is going to wake up and pull out? Nobody knows. As the old joke goes, you can line up all of the economists in the world, and they still wouldn’t reach a conclusion.
The dollar has been weakening since January, 2001, and I don’t think I need to remind anyone of what political event occurred that month. Cutting taxes is all well and good to a point. Cutting taxes and then running up a huge deficit is quite another proposition. I read in this morning’s online newspapers that “W” is now going to concentrate on reining in government spending. I’m glad that he finally had that epiphany. Unfortunately, he chose to use the old shibboleth again about “the tax and spend Democrats.” Well, at least the Democrats tried to pay the bills. Alan Greenspan, who has been all over the news recently, states in his new book that cutting taxes without cutting spending was a bad idea. Why didn’t he say something in 2001? Why did he wait until now?
i hope I’m wrong, but I don’t feel that the dollar has reached bottom quite yet. $1.45 to €1.00 is a distinct possibility, perhaps even $1.50 to €1.00. This contrasts to the 90 cents per euro that those of us who were in Verona paid when the euro was first introduced on January 1, 2002. Personally, all of my income is in dollars, but I pay my bills in euros. My €0.80 cappuccino used to cost me 72 cents. Since it now costs $1.12 (a fifty cent increase), my former daily ritual has changed to a once or twice a week splurge. To protect myself with BET, I have a clause near the end of The Book of BET which states that I will raise or lower the price of a tour up to 5% in case of currency fluctuations. This policy has been in effect since 1994. I raised prices once in 1996, lowered them once in 2000. and have had to raise them eleven times since 2001. The current currency train wreck was precipitated somewhat by the sub-prime mortgage market failures. The “magic market” mantra of the conservatives has clearly let us down. Regulatory supervision was obviously sorely lacking. I just hope we don’t end up in a worldwide recession because of it.
Now that I have had my (not so) little rant, let’s get to the business of travel.
Thinking of alternatives, traveling to non-euro based countries isn’t going to work as the dollar’s weakness extends to most of the world currencies. Even the Canadians have caught up with us! You, of course, have the choice of not traveling outside of the USA, but many of you on this list choose not to consider that option. And if your knees (either original issue or replacements) still work, the heart is still pumping away with regularity, and the synapses are still connected, I hope you will choose to continue to travel with me. I will continue to offer trips that will cost you much less than if you were to book them on your own. And of course, as any of you who have been on a BET trip know, you will have a great time!
There are ways that one can travel without coming home destitute. On every trip I see newbies spending money like there is no tomorrow. I shake my head at having busted my butt to save them a bundle and they blow the entire savings during the first three days of the tour. Shop wisely if at all. Tip appropriately. Know the exchange rate so you can make sensible decisions. Lighten up at lunch since I am going to probably stuff you silly at dinner–these are just some of the ways you can come back with great memories and still have some money in the bank (back)