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Re: Euro go-ahead

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  • Martin Votruba
    ... Perception. Data have shown consistently that inflation attributable to euro rounding was 0.2%-0.3% in all of the countries that adopted the euro in the
    Message 1 of 18 , May 2 7:00 PM
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      > whether it is fact or perception but it seemed when other
      > countries switched to the Euro, prices went through the roof.

      Perception. Data have shown consistently that inflation attributable
      to "euro rounding" was 0.2%-0.3% in all of the countries that adopted
      the euro in the past. Sven has described recently how the perceptions
      in Germany differ from that:

      http://groups.yahoo.com/group/Slovak-World/message/20614

      > I can't help but believe the perception at least
      > will be the same in Slovakia.

      I'm sure it will. Opinion polls have shown that people in the euro
      countries ascribed all the subsequent inflation (that would have
      occurred anyway) to the adoption of the euro, and exaggerated the
      total inflation to boot.

      Moreover, earlier opinion polls have shown the Slovaks have enormously
      exaggerated negative perceptions of inflation and of what they see as
      results of government policies, so the euro will most likely open the
      floodgates for adverse overstatement and whining next year.

      In a poll four years ago, for instance, the Slovaks estimated that the
      previous year's inflation was a staggering 18% while the actual
      inflation was 3.3% and average salaries grew by 6.3%.

      There have been other polls that have shown a similar inclination
      towards pessimistic overstatements concerning issues that can be
      perceived as results of government policies. One comparative poll in
      the Czech R., Poland, Slovakia, and Ukraine showed that the most
      negative about such issues and farthest off the mark were the Slovaks.


      Martin

      votruba "at" pitt "dot" edu
    • Ron Matviyak
      That perception of loss of purchasing power with the Euro is might strong, Martin. I have friends in Germany in a wide variety of professions, from
      Message 2 of 18 , May 2 11:03 PM
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        That perception of loss of purchasing power with the Euro is might
        strong, Martin. I have friends in Germany in a wide variety of
        professions, from engineering to secretarial, machinists, tradesmen,
        and grown students beginning their careers.

        Without exception they all have the same perception that Sven
        expresses in the posting you referenced. I have been back there once
        or twice a year since I left in 1997, and I cannot say I have seen
        anything to contradict their perception that costs have gone up
        substantially while wages remained relatively flat. They seem to have
        adapted a more modest life style without the luxuries they so readily
        enjoyed before (I am talking about both working class people and
        professional people), and it is common to hear them speak of weighing
        the costs and delaying purchases and vacations where they did not
        hesitate to spend money before.

        From my American perspective, it seems they went from a relatively
        care free life to worrying much more as we Americans always have;
        until this real estate crisis hit America, I would have said the
        Germans perhaps became even more worried about living and work
        security and expenses than we Americans. However, with the housing
        problems and recession, I hesitate to guess where any of us stand any
        more.

        I certainly hope the change to Euro in Slovakia is much, much better
        than the change as I witnessed it in Germany.

        Ron


        --- In Slovak-World@yahoogroups.com, "Martin Votruba" <votrubam@...>
        wrote:
        >
        > > whether it is fact or perception but it seemed when other
        > > countries switched to the Euro, prices went through the roof.
        >
        > Perception. Data have shown consistently that inflation
        attributable> to "euro rounding" was 0.2%-0.3% in all of the countries
        that adopted> the euro in the past. Sven has described recently how
        the perceptions> in Germany differ from that:
        >
        > http://groups.yahoo.com/group/Slovak-World/message/20614
        >
        > > I can't help but believe the perception at least
        > > will be the same in Slovakia.
        >
        > I'm sure it will. Opinion polls have shown that people in the euro
        > countries ascribed all the subsequent inflation (that would have
        > occurred anyway) to the adoption of the euro, and exaggerated the
        > total inflation to boot.
        >
        > Moreover, earlier opinion polls have shown the Slovaks have
        enormously> exaggerated negative perceptions of inflation and of what
        they see as> results of government policies, so the euro will most
        likely open the> floodgates for adverse overstatement and whining next
        year.
        >
        > In a poll four years ago, for instance, the Slovaks estimated that
        the> previous year's inflation was a staggering 18% while the actual
        > inflation was 3.3% and average salaries grew by 6.3%.
        >
        > There have been other polls that have shown a similar inclination
        > towards pessimistic overstatements concerning issues that can be
        > perceived as results of government policies. One comparative poll
        in> the Czech R., Poland, Slovakia, and Ukraine showed that the most
        > negative about such issues and farthest off the mark were the Slovaks.
        >
        >
        > Martin
        >
        > votruba "at" pitt "dot" edu
        >
      • Paul Guzowski
        Martin, Ron, et al.... There s an old saying that Perceptions can be reality but in the case of the change to the Euro, perceptions are just perceptions.
        Message 3 of 18 , May 3 5:24 AM
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          Martin, Ron, et al....

          There's an old saying that "Perceptions can be reality" but in the case of
          the change to the Euro, perceptions are just perceptions. When I was
          recently working in Central and Eastern Europe for six years, my boss used
          to say, "Everyone is entitled to his own opinion but no one is entitled to
          his own facts." Thank you, Martin, for providing the facts regarding what
          really happened to prices in other countries when the Euro was introduced. I
          personally observed the same kind of perception-driven predictions of doom
          when Britain changed to decimal currency in the late 60s but it never really
          happened.

          One of the things that will likely happen is some price leveling for goods
          and services across borders with other Euro-zone countries. That was
          predicted elsewhere and did occur, or so I remember reading. From my
          observation watching the introduction of the Euro in many other countries
          while I lived and worked in Europe, I found it very interesting that people
          were very quick to complain about prices that went up but I never heard one
          complaint concerning prices that went down.

          Paul in NW Florida


          [Non-text portions of this message have been removed]
        • Martin Votruba
          ... Thanks for the reminder, Paul. ... Rightly so, I d say, Ron, when they were talking about their purchasing power. Statistics have shown it s been dropping
          Message 4 of 18 , May 3 7:05 AM
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            > the same kind of perception-driven predictions of doom
            > when Britain changed to decimal currency in the late 60s

            Thanks for the reminder, Paul.

            > Without exception they all have the same perception that Sven
            > expresses in the posting you referenced.

            Rightly so, I'd say, Ron, when they were talking about their
            purchasing power. Statistics have shown it's been dropping in Germany
            for several years now. The problem is the perception that it is a
            result of the switch to the euro. It is a result of a variety of
            factors, including, e.g., the changes in the value added tax, and, of
            course, government policies. By comparison, Ireland is at the other
            end of the scale of the developments in the eurozone after its
            introduction -- rapid riches. Both the German decline and Irish rise
            happened regardless of the euro.

            In other words, if "B" follows "A," people often assume that "B" is a
            result of "A." Yet, with the same government policies, the changes in
            VAT, and economic developments, people's purchasing power would have
            probably followed the same trajectory in Germany had it kept the D-Mark.

            I don't assume that the euro must be automatically beneficial
            (especially in the situation when the monetary policy is adjusted
            according to the needs of the biggies like France and Germany rather
            than the post-com "specks"), but to be able to blame the real drop in
            the standard of living in Germany on the euro, or praise the euro for
            the rise in Ireland, we'd have to show that the euro resulted in a
            similar trajectory in all or most of the eurozone, and that it was not
            caused by other factors. I'm not aware of evidence that the euro was
            a key factor in either Germany or Ireland.


            Martin

            votruba "at" pitt "dot" edu
          • Nick Holcz
            Yes, perceptions are perception and the perception when Australia changed to decimal currency A$ ( way back in 1966, my God I am getting old) that prices went
            Message 5 of 18 , May 3 7:15 AM
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              Yes, perceptions are perception and the perception when Australia
              changed to decimal currency A$ ( way back in 1966, my God I am
              getting old) that prices went up and also when we changed our weights
              and measures system to decimal that the same thing happened.

              Nick
            • Martin Votruba
              ... Thanks for the examples, Nick. People are capable of projecting such perceptions on other creatures, too. After Switzerland first adopted daylight saving
              Message 6 of 18 , May 3 7:39 AM
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                > that prices went up and also when we changed our weights
                > and measures system to decimal that the same thing happened.

                Thanks for the examples, Nick. People are capable of projecting such
                perceptions on other creatures, too. After Switzerland first adopted
                daylight saving time in 1981, farmers swore that milk yield was
                dropping. The cows must have all rushed to the village square to
                check the church clock, and the Alpine grass never tasted the same.


                Martin

                votruba "at" pitt "dot" edu
              • Ron Matviyak
                Ahh, shaded of change. I remember a bit of hte same complaining when the US changed booze sales from fifths (English units) to metric (750ml). I was on Skype
                Message 7 of 18 , May 3 10:17 AM
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                  Ahh, shaded of change. I remember a bit of hte same complaining when
                  the US changed booze sales from fifths (English units) to metric (750ml).

                  I was on Skype with Germany last night and the senior salesman friend
                  replied "Kaufkraft ist nicht bei Gehalt angekommen , immer mehr Leute
                  haben Schulden und wenig Geld" Purchasing power hasn't kept up with
                  inflation, and more people are in debt and have less money.

                  To back up the argument for statistics and perception, the NY Times
                  recently published

                  http://www.nytimes.com/2008/05/01/business/worldbusiness/01middle.html

                  Ron

                  --- In Slovak-World@yahoogroups.com, "Martin Votruba" <votrubam@...>
                  wrote:
                  >
                  > > that prices went up and also when we changed our weights
                  > > and measures system to decimal that the same thing happened.
                  >
                  > Thanks for the examples, Nick. People are capable of projecting such
                  > perceptions on other creatures, too. After Switzerland first adopted
                  > daylight saving time in 1981, farmers swore that milk yield was
                  > dropping. The cows must have all rushed to the village square to
                  > check the church clock, and the Alpine grass never tasted the same.
                  >
                  >
                  > Martin
                  >
                  > votruba "at" pitt "dot" edu
                  >
                • skeeter
                  For what it s worth, though somewhat unrelated, there was a push on here in the USA 30-some years ago to switch from the English measurement system to the
                  Message 8 of 18 , May 3 11:26 AM
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                    For what it's worth, though somewhat unrelated, there was a push on here in the USA 30-some years ago to switch from the English measurement system to the Metric system. That never quite caught on. What did I get out of it? I had to buy two sets of tools. One metric for my Japanese motorcycles and German car, and one English for most everything else. I ws already savvy with the metric system (almost everything in the sciences was already measured in milliliters, centimeters, and the like). Now, if you don't know one from the other, you're out of luck.

                    ----- Original Message -----
                    From: Nick Holcz
                    To: Slovak-World@yahoogroups.com
                    Sent: Saturday, May 03, 2008 10:15 AM
                    Subject: Re: [Slovak-World] Re: Euro go-ahead


                    Yes, perceptions are perception and the perception when Australia
                    changed to decimal currency A$ ( way back in 1966, my God I am
                    getting old) that prices went up and also when we changed our weights
                    and measures system to decimal that the same thing happened.

                    Nick




                    [Non-text portions of this message have been removed]
                  • Martin Votruba
                    ... Thanks, Ron. It was refreshing to see no blame on the euro for that. Since the collapse of communism, not only that part of the continent, but also
                    Message 9 of 18 , May 3 1:46 PM
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                      > To back up the argument for statistics and perception

                      Thanks, Ron. It was refreshing to see no blame on the euro for that.
                      Since the collapse of communism, not only that part of the continent,
                      but also Western Europe has been slowly moving towards the large gap
                      between the top incomes and the middle- and lower-middle-class incomes
                      that has been typical of the US. The American laborers' average
                      purchasing power has been mostly oscillating rather than rising for
                      about three decades now.

                      The gap is already quite large in Slovakia -- fewer than 30% of the
                      population, a large segment of them in Bratislava, have salaries above
                      the country's average, 70% earn less than average salaries. A
                      specific post-com situation that fosters social discontent is that,
                      broken down by age groups, the highest average salaries are earned by
                      the 30-34-year-old Slovaks. By comparison, the people in their 50s,
                      whose incomes are the highest in most societies, which gives many of
                      them a sense of accomplishment and deserved status, are making about
                      10% less in Slovakia.

                      At the same time, while the gap between the middle-class and the top
                      earners has been opening faster in the post-com countries than in the
                      older European democracies, the purchasing power of all the employed
                      has been growing in Slovakia, and substantially so. A recent article
                      has worked out that the Slovaks were able to buy about 6.2% more with
                      their salaries by the end of 2007 than when the year began, an
                      exceptional year, but part of a trend. Of course, that's not what the
                      doom-and-gloom Slovaks say in opinion polls.


                      Martin

                      votruba "at" pitt "dot" edu
                    • Martin Votruba
                      ... As to Slovakia, here are a few price-to-salary comparisons -- how much a given item cost a Slovak with the average income in 2007 by comparison to the same
                      Message 10 of 18 , May 3 5:38 PM
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                        > To back up the argument for statistics and perception

                        As to Slovakia, here are a few price-to-salary comparisons -- how much
                        a given item cost a Slovak with the average income in 2007 by
                        comparison to the same in 2002 (a minus means a drop):

                        bread, butter: the same percentage of income as in 2002
                        pork (a popular cut): -42%
                        chicken: -31%
                        beer: -23%
                        TV: -65%
                        small Skoda car: -33%
                        bank account charges: +39%

                        The Slovaks' rising incomes have substantially outpaced the rising
                        prices of the listed items. On the other hand, an opinion poll among
                        the gainsaying Slovaks might suggest that everything is 2-3 times more
                        expensive now and that they are reduced to borrowing money to take the
                        bus to work.


                        Martin

                        votruba "at" pitt "dot" edu
                      • skeeter
                        The American laborers average purchasing power has been mostly oscillating rather than rising for about three decades now. I was watching the news last
                        Message 11 of 18 , May 4 3:37 AM
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                          "The American laborers' average
                          purchasing power has been mostly oscillating rather than rising for
                          about three decades now."

                          I was watching the news last night (I don't remember which network) and they said the average American CEO's salary has gone from 40-times the laborer's salary in 1980 to 433-times the laborer's salary today. The rich get richer, and the little guy gets screwed. That might explain some of it.



                          ----- Original Message -----
                          From: Martin Votruba
                          To: Slovak-World@yahoogroups.com
                          Sent: Saturday, May 03, 2008 4:46 PM
                          Subject: [Slovak-World] Re: Euro go-ahead


                          > To back up the argument for statistics and perception

                          Thanks, Ron. It was refreshing to see no blame on the euro for that.
                          Since the collapse of communism, not only that part of the continent,
                          but also Western Europe has been slowly moving towards the large gap
                          between the top incomes and the middle- and lower-middle-class incomes
                          that has been typical of the US. The American laborers' average
                          purchasing power has been mostly oscillating rather than rising for
                          about three decades now.

                          The gap is already quite large in Slovakia -- fewer than 30% of the
                          population, a large segment of them in Bratislava, have salaries above
                          the country's average, 70% earn less than average salaries. A
                          specific post-com situation that fosters social discontent is that,
                          broken down by age groups, the highest average salaries are earned by
                          the 30-34-year-old Slovaks. By comparison, the people in their 50s,
                          whose incomes are the highest in most societies, which gives many of
                          them a sense of accomplishment and deserved status, are making about
                          10% less in Slovakia.

                          At the same time, while the gap between the middle-class and the top
                          earners has been opening faster in the post-com countries than in the
                          older European democracies, the purchasing power of all the employed
                          has been growing in Slovakia, and substantially so. A recent article
                          has worked out that the Slovaks were able to buy about 6.2% more with
                          their salaries by the end of 2007 than when the year began, an
                          exceptional year, but part of a trend. Of course, that's not what the
                          doom-and-gloom Slovaks say in opinion polls.

                          Martin

                          votruba "at" pitt "dot" edu





                          [Non-text portions of this message have been removed]
                        • Martin Votruba
                          ... Yes, Skeeter, that s part of the difference between the European and American societies that I mentioned. That ratio has traditionally been 1:10 to 1:20
                          Message 12 of 18 , May 4 6:44 AM
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                            > the average American CEO's salary has gone from 40-times
                            > the laborer's salary in 1980 to 433-times the laborer's
                            > salary today.

                            Yes, Skeeter, that's part of the difference between the European and
                            American societies that I mentioned. That ratio has traditionally
                            been 1:10 to 1:20 in the European democracies, but it has started
                            moving faster in the direction of the US since the collapse of communism.


                            Martin

                            votruba "at" pitt "dot" edu
                          • Martin Votruba
                            As expected the European Commission has recommended today that Slovakia adopt the euro on Jan. 1, 2009. A report is below. Martin votruba at pitt dot edu
                            Message 13 of 18 , May 7 6:20 AM
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                              As expected the European Commission has recommended today that
                              Slovakia adopt the euro on Jan. 1, 2009. A report is below.


                              Martin

                              votruba "at" pitt "dot" edu

                              x x x



                              EU: No Country But Slovakia Meets Euro Adoption Criteria

                              DOW JONES NEWSWIRES, 5/7/2008 -- No other country but Slovakia meets
                              the criteria for euro adoption, the European Commission said Wednesday
                              in its latest convergence report, giving a green light to Slovakia's
                              bid to join the euro zone.

                              The commission, the E.U.'s executive arm, along with the European
                              Central Bank, reports at least once every two years on the progress
                              made by E.U. member states in fulfilling obligations to achieve
                              economic and monetary union.

                              Slovakia received recommendation from the European Union Wednesday to
                              join the fifteen member state-strong euro-zone, and is lined-up to
                              become the fourth country in two years to join the club after Slovenia
                              did so on the first day of 2007. Cyprus and Malta entered at the
                              beginning of this year.

                              Poland, Hungary, the Czech Republic, and the Baltic states of
                              Lithuania, Latvia and Estonia joined the E.U. along with Slovakia in
                              May 2004, while Romania and Bulgaria were the latest to join the
                              twenty-seven member free-trade block in January 2007.
                            • J Michutka
                              So how is the word euro declined in Slovak--like mesto? e.g. jedno euro, dva eura , sedem .... eur??? Or is it not declined, and just remains euro
                              Message 14 of 18 , May 7 7:07 AM
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                                So how is the word "euro" declined in Slovak--like mesto? e.g.
                                jedno euro, dva eura' , sedem .... eur??? Or is it not declined, and
                                just remains "euro" regardless of number? And what do they call the
                                "cents" in Slovak?

                                I really miss having different and interesting monies from country to
                                country, but on the other hand, it will be so much easier....no
                                looking for a place to get the local currency every time I cross a
                                border, or having to plan ahead and carry multiple currencies.

                                Julie Michutka
                                jmm@...


                                On May 7, 2008, at 9:20 AM, Martin Votruba wrote:

                                > As expected the European Commission has recommended today that
                                > Slovakia adopt the euro on Jan. 1, 2009. A report is below.
                                >
                                >
                                > Martin
                                >
                              • skeeter
                                It s not just in Europe. I ve traveled to Canada (Canadian dollars) and Mexico (Pesos), and had a hassle converting them back into US dollars when I got home.
                                Message 15 of 18 , May 7 8:03 AM
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                                  It's not just in Europe. I've traveled to Canada (Canadian dollars) and Mexico (Pesos), and had a hassle converting them back into US dollars when I got home. I should have just kept them -- their currencies are much more attractive than ours.

                                  ----- Original Message -----
                                  From: J Michutka
                                  To: Slovak-World@yahoogroups.com
                                  Sent: Wednesday, May 07, 2008 10:07 AM
                                  Subject: [Slovak-World] declining the euro


                                  So how is the word "euro" declined in Slovak--like mesto? e.g.
                                  jedno euro, dva eura' , sedem .... eur??? Or is it not declined, and
                                  just remains "euro" regardless of number? And what do they call the
                                  "cents" in Slovak?

                                  I really miss having different and interesting monies from country to
                                  country, but on the other hand, it will be so much easier....no
                                  looking for a place to get the local currency every time I cross a
                                  border, or having to plan ahead and carry multiple currencies.

                                  Julie Michutka
                                  jmm@...

                                  On May 7, 2008, at 9:20 AM, Martin Votruba wrote:

                                  > As expected the European Commission has recommended today that
                                  > Slovakia adopt the euro on Jan. 1, 2009. A report is below.
                                  >
                                  >
                                  > Martin
                                  >




                                  [Non-text portions of this message have been removed]
                                • Martin Votruba
                                  ... Yes, Julie (_dve_). ... _Cent_ [tsent] (masc., hard pattern: 2 centy, 5 centov). ... Since Slovakia is surrounded by countries that aren t meeting the
                                  Message 16 of 18 , May 7 8:05 AM
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                                    > how is the word "euro" declined in Slovak--like mesto? e.g.
                                    > jedno euro, dva eura' , sedem .... eur???

                                    Yes, Julie (_dve_).

                                    > And what do they call the "cents" in Slovak?

                                    _Cent_ [tsent] (masc., hard pattern: 2 centy, 5 centov).


                                    > no looking for a place to get the local currency every time
                                    > I cross a border, or having to plan ahead and carry multiple

                                    Since Slovakia is surrounded by countries that aren't meeting the
                                    criteria, this will not be different any time soon for the Slovaks who
                                    mostly travel to Poland, Hungary, and the Czech R. When they joined
                                    the European Union in 2004, all three were saying they would adopt the
                                    euro by 2009-2010, but have failed. The current very tentative
                                    estimates are that they might meet the criteria to adopt the euro by:

                                    Poland - 2012
                                    Czech R. - 2012
                                    Hungary - 2014

                                    Only the Slovaks' second major summer destination, Greece, has the
                                    euro, and Austria and the countries west of it (except Switzerland).


                                    Martin

                                    votruba "at" pitt "dot" edu
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