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Re: Euro go-ahead

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  • 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 1 of 18 , May 2, 2008
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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 2 of 18 , May 3, 2008
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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 3 of 18 , May 3, 2008
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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 4 of 18 , May 3, 2008
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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 5 of 18 , May 3, 2008
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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 6 of 18 , May 3, 2008
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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 7 of 18 , May 3, 2008
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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 8 of 18 , May 3, 2008
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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 9 of 18 , May 3, 2008
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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 10 of 18 , May 4, 2008
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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 11 of 18 , May 4, 2008
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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 12 of 18 , May 7, 2008
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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 13 of 18 , May 7, 2008
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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 14 of 18 , May 7, 2008
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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 15 of 18 , May 7, 2008
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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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