Distant sound of a bank collapsing
The events in the financial markets last week were so significant that we even heard about them down here. Wow, they must have made some noise. In fact it was the noise of expats worrying about their savings and pensions that we heard first, followed closely by the sound of the dollar crashing into the Atlantic.
I didn’t shed a tear for the head of Bear Stearns, who thought he was worth $1 billion only to find he now only has about $11 million in shares. I do feel a lot more for some of the employees of the bank. Not all, you understand, I have worked in investment banks and can assure you there are many who don’t deserve sympathy, but there are some.
Employees at Bear Stearns were encouraged to put money into company shares. This is a fine idea, building up company loyalty and so on. As a result hundreds of secretaries, office staff, personnel assistants and so on had substantial savings in the company - they were to be pension funds, school funds etc. These have now all disappeared in a flash of smoke as $100,000 one day became $1000 the next.
What does this have to do with France, you might be wondering. Not much, except that I am here in France because I wanted to get out of the world of investment banking and asset management - I was never a zillion dollar bonus trader you’ll be surprised to learn but I also put money into company shares and so on. So I have a distant link with such things.
Happily I never had enough money to buy many shares, preferring immediate pleasure than long-term planning, so could never have lost too much. “When you got nothing, you got nothing to lose”, Bob Dylan once sang about myself and Mrs B.
Will the financial troubles affect expats? Will people stop booking our gites and paying our pensions? Will our savings be vapourised because of a computer glitch? Who knows.
‘The things we worry about aren’t the things we should worry about’, someone said. Or did they? Perhaps I just made it up, I’m not sure.
In any case I quite fancy living in South California, and in six months time when the US dollar and property market has completely collapsed I should be able to buy a nice villa overlooking the sea for about 20 euros. California This Way…coming soon?
Well, I did not shed a tear for Bear Sterns either, but our market and our dollar are going down fast! It’s very scary, some have predicted that the dollar vs euro might go to 2.50 - 3.00 for 1 euro. I hope they are wrong. We just rented a house for 1 year in France and will be going in September for our sabbatical. If the dollar continues to go down we’ll think about buying loads of euros and paying for a good portion of the rent in advance so that our budget doesn’t get blown so far out we can’t afford this sabbatical. I don’t want to be hit hard if things continue to crumble. I do know that many people here in the US are not taking their vacations to europe because of the dollar vs euro. It also doesn’t help when we have to lower interest rates because it makes our dollar even weaker. We are still coming to France, because we love it there, want to move there and need to follow our dreams.
I also hope they are wrong, since more than half my income is earned in USD, and we have a high percentage of Americans who stay in our gites (more this year than ever, curiously).
I wouldn’t like to guess whether it is worth buying lots of euros now. I guess if you can afford your plans at current rate but not at US2.50 to the euro, it is better to buy euros and be sure you can come, even if there is a risk that you could buy cheaper later on.
I suspect that the euro shouldn’t really be so strong, it’s just that people don’t know where to move their cash when they sell dollars.
As you say, troubling times for all of us.