Foreign Perspectives

Archive for the ‘Business’ Category

This is the first really serious recession that the euro has had to deal with and there are starting to be signs appearing that it’ll be the last.

The problem arose basically because the entry requirements for going into the euro were created with the political aim of getting as many countries into the euro as possible. Net effect of that is that countries never got around to getting the basics of the operation of their economy into line and that’s why we’re now seeing a number of countries getting into more serious trouble than they would do otherwise.

Ireland is perhaps the worst case of this as it was an economy very dependent on European grant money. Go down any new road up to a few years ago and there was a panorama of “x% supported by the European Regional Development Fund”. That was courtesy of its status as a deprived region up until a few years ago. Now the situation is that not only do the roads not get that European support but the Irish are effectively paying for the roads in Poland. Combine that with the global economic crisis and you’ve a big problem.

However, it’s not just Ireland that has problems. Greece is paying its bills by borrowing short term which is a very dangerous game. Italy is in little better shape. For the worst case you need to look at the former eastern bloc countries who went into the Exchange Rate Mechanism which is a pre-euro state: going directly from one of the softest currencies in the world to using one of the hardest is, to put it mildly, a major shock to the economic system.

Will the euro survive all this, or will we see some countries dropping out soon?

If you wanted to send a small amount of money to someone, for most people the simplest thing to do is to either pop a cheque in the post or simply to post the cash. If it’s a large chunk of cash then cheques and bank transfers are the way to go normally.

However, what if it’s a sum that lies in the middle ground and you want to send it internationally? For most people the answer isn’t nearly so cut and dried there. For instance, if you were sending EUR 200 from the UK to France or vice versa you’d be looking at around £25/EUR 20 in bank charges for the cheque or transfer and that’s before you factor in the tourist rate of exchange that you’d be getting.

If it’s a company you’re sending it to then you could use a credit/debit card of course, but that’s not really an option for an individual, is it? Well, actually these days it is as the person you’re sending it to could have a paypal account in which case, if they upgrade it to a premium account, then they could take the money off you at a cost of around 4%.

However, if it’s a family member a more practical way is to pop into the post office and pick up a travel money card and just post it to them. There’s no security risk as you can wait ’til it arrives before enabling the card. It costs around 4% to exchange the money from sterling to euros or dollars and it’ll be £5 or so two years later to renew it.

Although we set off for France with the intention of spending the rest of our lives here, in practice I left on a career break which left open the chance of me returning to work at any time up to five years from my departure from work way back on February 20th 2004.

Whilst at the time we thought of it as essentially free unemployment insurance, as y’all know we’re currently in the process of returning and with the global economy being in the current mess that notional “free insurance” has turned out to be quite valuable to us now. Not only do I have a guaranteed job waiting for me, but it’s a nice safe one at that and seems a good place to be sitting to ride out the coming recession/depression for the next year or two.

Although obviously not everyone will have the opportunity to leave on a career break, it’s definitely worth taking that route just in case things don’t work out. If they do work out then there’s no downside as you don’t have to return from a career break but on t’other hand if they don’t or your plans change as ours did…

Not a massive one but a jump nonetheless.

Chances are that it’s down to one of the oddities of the recession. Most of our internet income comes via the stable of accommodation listings sites that we run. Since holiday accommodation falls in the category of discretionary expenditure you’d think that this income would go down quite sharply during a recession. So it did initially, but the accommodation owners read the news too and have realised that their income should be dropping. This in turn means that they start advertising more which initially showed up in increased numbers of new entries on the sites and now seems to have started to show up in increased adsense revenue.

Definitely peculiar effects, but the question is what’ll happen during the rest of the year?

Sometimes it seems that it’s purely the UK that’s in the doldrums economically at the moment whilst France appears to be sailing merrily along.

However, locally we have seen that both of the local cafés are now closed. Whilst one does close for the winter normally it’s now closed down altogether and its premises have been taken over by the local youth club. The pizza outlet is still open but sporadically whilst the hotel seems to have closed up for the winter at least if not for longer. Perhaps the best indication is the local bakers who have severely cut back on their production and have commented that it’s “bad everywhere”.

Perhaps most tellingly, the toy shop was virtually empty at the peak of the Christmas shopping season.

So, whilst at the top level all seems relatively OK, the bottom level tells quite a different story.