Not so fast

One meme that’s floating around the blogosphere in the runup to the US election is “If Bush wins, I’m moving abroad.”

I’d just like to throw a damp towel on such sentiments, if only for a very practical reason. If Bush wins, I’d venture to say that the dollar will stay low relative to the Euro (and, by extension, the Czech crown). I’ll get to why in a couple of paragraphs.

The low dollar means that your savings won’t get you very far out this way. And if you happen to be paid in dollars, effectively your salary has been cut by between 20 and 30% in the last two years, as is shown by this chart. Combine that with rising prices in the EU’s new member states, and that money really doesn’t go far anymore in Kafkaville.

Maybe there’s an economist out there who’s able to better explain the phenomenon (please post in the comments), but as I understand it, the exchange rate is tied to the size of the deficit your country is running, both in terms of the government budget deficit and the trade deficit. And both aren’t going to move any time soon.

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