PPP?

Some of you may be wondering since my last post, "Aren't things cheaper in pounds compared to dollars?" If so, you are a budding economist! [allow me to be a dork for a few minutes, you may actually find it interesting]

The Law of One Price suggests that identical goods and services can only have one price in an economy. Therefore, if I multiply the price of something in GBP by the spot exchange rate it should equal the price of the same good in the US priced in US dollars. Let's try an example: Say you would like to buy an iPod. If you were in the US you might head to Best Buy, there the 30 GB video iPod sells for $249.99. If you lived in the UK you might head to Curry's Digital where the same iPod sells for 189 GBP. Wait- if I multiply 189GBP * 1.95 $/GBP (the prevailing exchange rate) that equals $368.55!!

Ohhh, I left an important statement out of the law of one price. It should read "in an efficient market identical goods and services must have one price." I'll let you in on a secret, economics likes to assume lots of things. But when the assumptions don't hold the theories don't necessarily work. In this case an efficient market refers to a lack transportation and other significant transaction costs.

From the law of one price comes the theory of Purchasing Power Parity (PPP) that says exchange rates between currencies are in equilibrium when their purchasing power is equal in two countries. The theory is that market forces will drive out imbalances in the exchange rate. However, in addition to the fact that the market isn't really perfect as the theory assumes, there is a significant time element involved. In the short term exchange rates are driven by news (such as the weak economic forecast for the US last week). Thus people from the UK flock to the US for cheaper goods. But that's the beauty of it! This process will [over time] drive down the imbalance in the exchange rates so equilibrium is achieved.

Floating

Economics is killing me.

Last week the dollar fell to a 5 month low due to weak economic reports. That means that today my dollar will buy only 51p. That's down from about 53p when I first arrived. It doesn't seem like a big difference but it adds up...not that 53p is good by any means. One to one would be nice, but I would even take 75p- the way I remember it when I came to London on vacation about 10 years ago.

Maybe this will paint the picture a little better. I saw a headline today that said bargain hunters from the UK are heading to New York to do their Christmas shopping. That's because 1 GBP is worth $1.95! Imagine, it's actually more cost effective for them to pay to fly to New York and shop than it is to stay here.

I'm an advocate of floating exchange rates because it helps balance the global economy work better but right now I'm on the wrong end of things!

still in it

I can't let the Bengals shut out yesterday go unnoticed. It also helped our playoff chances that the Steelers were shut out, although it makes Thursday's game against Baltimore a little more scary. Congrats to my favorite players, Chad and Kevin, who I know read my blog and who have been putting up great stats in the last few games!

America?

In case you haven't heard, today is a big shopping day. It's interesting that the retailers don't begin to make a profit until the holiday season but I suppose it's possible. Anyway, I'm usually one of the few Americans not shopping today. I could go either way with it but my family isn't too into crowds and I also prefer to shop when it's less crowded. So, what did I do instead?? Ran errands with my mom. Groceries, Paint store, Office Max...it's great to be home! (Just kidding, Mom)

While we were eating lunch I saw something truly original - and frightening. No doubt she was a bedraggled shopper taking a break from the hustle and bustle. How could I tell? Let me describe her. First, she was wearing a purple track suit. Not particularly flattering to anybody but I wouldn't have held it against her. Second, she was wearing a belly bag. Ahh yes, the classic 80s/early 90s accessory that no one should have ever worn. That would be enough to take notice of, but certainly not original.

Lastly, hanging from the belly bag was a plastic Kroger shopping bag. Inside the shopping bag was a stack of sale ads from the newspaper! This caused the bag to fall around her knees and was also weighing down the belly bag so it sat at a particularly awkward angle. As she walked along the bag kept hitting her knee. You know, they make tote bags for that sort of thing but apparently she wanted hands-free accessories so she could shop completely unencumbered.

If only I'd taken a picture I could have posted it as a warning from the fashion police with a black bar over her eyes or her face fuzzed out. Actually, it wouldn't require the fashion police, even the common sense police would know better.

You wouldn't see that in London.

H+C

In honor of Thanksgiving I'd like to touch on one thing I've learned to be thankful for in America on this trip home. Hot and cold water coming out of the same faucet.

I know, it's deep and thoughtful but what can I say? It just makes more sense.

Happy Thanksgiving!

Re-entry

I'm home! That trip was definitely smoother than the last one.

Wait, what's that sound? Can you hear it? Oh, it's all the American accents. Kind of weird. When I was in London for awhile I kind of forgot some of the differences between England and America. On the plane back I watched "Talladega Nights," and that was a sharp reminder! It was such a hyperbole of [some aspects] of American culture I could hardly forget the differences. Maybe I'll write more about that later. I actually felt weird getting on the "right" passenger side of the car.

For now, I want to wish a big Happy Birthday to my little sister Melissa!! The big TWO-THREE. I remember that age, I liked being 23. 23 definitely sounds cooler than 22. Today we are off for a day of Target, Kenwood Towne Centre, and manicures. Oh yeah Melissa, this is going to be your year!

economics tribute

Nobel Prize winner economist Milton Friedman, died today.

I don't keep up with economics in as much detail since school, but my main interest was monetary policy. Therefore I always had an interest in monetary theory and Friedman was one of my favorite economists. I also always had an interest in the workings of the Federal Reserve Board.

Here is an interesting quote (as written in the linked article above) from Friedman to get you thinking:

In an essay titled "Is Capitalism Humane?" he said that "a set of social institutions that stresses individual responsibility, that treats the individual ... as responsible for and to himself, will lead to a higher and more desirable moral climate."

World Music Awards

Last night London hosted the World Music Awards at Earl's Court. that means I was just a 20 minute tube ride (a ticket and a few body guards) away from Michael Jackson...crap, and I didn't get his autograph! Apparently he had late night private shopping trip to Topshop the night before. I also missed out on a chance to see my hero, Lindsay Lohan, host the awards.Fortunately I will be able to watch them on TV next week! Although I already know who won (see the website) so that takes out a little of the suspense. But really, how many awards shows do we need? I suppose the WMAs are a little more unique than the Grammys or VMAs because they claim to be the only "international" music awards. So watching the show could be a good chance to see some performers I haven't seen before. I'll let you know if there were any outstanding performances.

Also, according to Wikipedia all the proceeds from the show go to The Monaco Aide and Presence Foundation. I'm a little curious as how to a show that gives awards generates extensive proceeds, I suppose through the advertisers. Anyway, it seems like a noble cause. The charity assists underdeveloped areas mainly in Africa, Asia, Eastern Europe and Brazil.

The WMAs are awards based on public popularity, not the music industry. This can have it's pluses and minuses. I don' t always agree with the critics, but I also don't always agree with the public (of course, my opinion is always the right one!). Allow me to provide several case studies that illustrate the problem with awards based on popularity and record sales. This year's best rock group was awarded to Nickelback. Seriously? Out of the pool of Coldplay, Keane, Red Hot Chili Peppers and Greenday, Nickelback won? Perhaps a better award for them might be "Most Overplayed Rock Group." Also, the Best New Artist was awarded to James Blunt. I am very thankful the award didn't go to The Pussycat Dolls but would have preferred one of the other nominees - KT Tunstall, Gnarls Barkley or even Carrie Underwood.

Alias

I live a double life.

Trying to remember when to use certain words is tricky…

Flat/apartment
Mobile/cell phone
Jumper/Sweater
Trousers/Pants (you don’t want to mess that one up!)
Cinema/movies
Car park/parking lot
Diary/calendar
Lift/elevator
Chips/Fries
Hob/Stove
Biscuits/cookies
Pudding/dessert

…and the list goes on. I try to say the right things to the right people. Here they say half eleven instead of eleven-thirty and 13 November instead of November 13^th. I live in between. I try to use British English when I’m talking to people here and then revert to American English when I talk to people at home. If I mess up I tend to hear one of the following comments:

“Ah, I love Emily and her funny American sayings”

Or

“Ohhhh, aren’t you becoming all European?”

I still can’t anticipate all the phrases I use that are particularly American and will make people here laugh. What can I do? I embrace my American-ness but am trying to adapt, too. Fortunately the real me doesn’t have anything to do with what phrases I use.

I’ll still never be as cool as Sydney Bristow. I mean, if I can't handle different versions of English there's no way I can keep up with her.

Next stop, USA

I need to go home. I think I might be entering another phase of culture shock because things are starting to catch up with me. Seemingly minor complications result in more anger and frustration than they are worth. I was going to rant about them but it won't do much good and there's no need for you to hear it.

Instead I'll tell you what I'm looking forward to. I'm looking foward to coming home to something familiar. To seeing my family and friends, driving a car, going to Target, going to Echo, and watching the Bengals on a real TV. Oh, and pumpkin pie with cool whip!

Fortunately last night was fun and relaxing. I had some friends over and we made pancakes and watched a movie. I know it's a weird combination but I've been wanting to make pancakes since Mom and Dad brought me Bisquick! Here's a picture of me with my new friends - Ruth, Wakako, Shari and Shameka :-)

mmmmm

I'm going to leave the political commentary to others - call me apathetic but I don't have anything original to say. I've even decided not to comment on Britney filing for divorce because that can't go anywhere but bad.

I've decided to discuss something much more enjoyable - Chocolate. Maybe this will spark as much passion as writing about coffee.

Hersheys could certainly learn a few things from Cadbury. I've been trying the new selection of chocolate delicacies here and they really are better than Hersheys. I had to figure that Cadbury bars would be great based on my experience with Cadbury cream eggs and the little candy coated eggs. I never did like Hershey chocolate that much anyway. I don't mind it when it's mixed with other things, but I only eat plain Hershey bars if I'm in need of a serious chocolate fix and have no other options. Here there are so many new options that I feel like I should try them all...as if I needed another incentive to eat chocolate. So far I really like Revels, Maltesers and most Cadbury bars, although I would be fine without the Fruit and Nut bar. I did try a Nestle Aero bar which was supposed to be chocolate filled with all these little air bubbles you can feel when you eat it. I didn't feel anything special.

Are you craving choclate yet? I am. I'll be sure to bring a bunch home for the holidays!

It's the little things

Wow...writing about Starbucks is the way to generate comments!

It's time for another shout out. Thanks to my new friends Shari and Shameka for reading my blog :-) I met Shari and Shameka at a meetup for the American Expat Group I joined in London. For some reason we all clicked at the mexican dinner event and have been hanging out ever since! Shameka is even a fellow Cincinnatian. I'm looking forward to hanging out with you both and doing some traveling together as well.

Okay, now back to business. There are a few things I'm looking forward to this week but I'll just focus on one for now. Thursday night I'm going to the supermarket. Sounds exciting, right? Well it gets better. My friend Wakako has recently gotten her drivers license and has a car. So she is going to pick me up and we are going to DRIVE to the supermarket. That means instead of getting a basket full of groceries I can get a whole trolley (aka. cart) full of things! I'm like a kid on Christmas Eve thinking about it. I have a whole list of items saved up and I don't have to worry about carrying them all 4 blocks. Yeah, it's pretty great.

Caffe Nero vs. Starbucks vs. Costa Coffee

There are just as many Starbucks here as in the states, and an equal or greater number of Caffe Nero and Costa Coffee shops. Within 3 blocks on the Wimbledon high street there are 2 Caffe Neros, 1 Starbucks, 1 Costa and 1 Coffee Republic (in addition to coffee shops in the train station and bookstores, and the crap espressos you can get from a machine in sandwich shops) Apparently tea is in danger of losing it's status as the preeminent English drink. I've even seen billboards advertising the benefits of drinking tea. If I was tea, I'd be afraid of coffee too. Everyone knows coffee is great, no billboards needed.

Since I'm in a new country I thought I'd try new coffee shops. Maybe it's just my rebellion to the proliferation of Starbucks in America, but I like Caffe Nero better. But because Caffe Nero is just as widespread here as Starbucks, it's only my foreign eye that is attracted to Caffe Nero as someplace different. However, I do think Caffe Nero has better coffee and espresso than Starbucks. As a result, they have better coffee drinks. The one exception are Starbucks' seasonal drinks. I love, love the Peppermint Mocha, Toffee Nut Latte, Eggnog Latte and Gingerbread Latte...but as they are only available for a limited time they are not enough to outweigh the overall better taste of Caffe Nero all year round.

Costa Coffee does have a pretty amazing mocha. In fact, it might be a little too much. I couldn't even drink the whole thing (and if you know me, that's pretty amazing). The best mocha I've ever had was still from Sitwells in Clifton. I probably need to try Costa a few more times until I can make a fair assessment of coffee quality.

I still haven't found any place with cappuccinos as good as Rohs Street. I'm sure they exist somewhere in London but it's going to take some more research.

Quite.

When you say "quite," what exactly do you mean?

"Quite" is a common adjective here. I guess we use it in the states, but I feel like it's used more often here. When I hear someone say "It's quite far" or "It's quite good" I would take that mean to mean it's "really far" or "really good." But my friend Hilary here said she didn't use it that way. She said if "it's quite far" she would think of it as sort of a medium distance.

So, we turned to dictionary.com:

quite (kwt)
adv.

1. To the greatest extent; completely: quite alone; not quite finished. See Usage Note at perfect.
2. Actually; really: I'm quite positive about it.
3. To a degree; rather: quite soon; quite tasty.

So apparently it can mean "to the greatest extent" OR only "to a degree." But how can it mean both? If you say "quite" how do I know if you mean only to a degree or if you mean to the greatest extent??

I think I need a little help from my English teacher friends!

Imports or Exports, depending on where you live

Here are some great albums - Amy Winehouse "Back to Black" and Corinne Bailey Rae.

I don't know if they're brand spanking new, but they're relatively new. Both have very soulful, retro sounds that I like a lot. Check them out if you're in the mood for a nice, chill, groove. I don't know if Amy Winehouse is available in the US yet but her old album is, or you can listen online.

The Saints are Coming

New video from U2 and Green Day. It's a pretty cool cover...clearly they are trying to make a statement with the video.

Fireworks night

Remember, remember the fifth of November,

Gunpowder Treason and Plot,

I see no reason why gunpowder treason

should ever be forgot.

So this weekend is an interesting holiday here in the UK. It's called Guy Fawkes Day/Night, Fireworks Night, or Bonfire Night. You can read about it here. In 1605 a plot was discovered to blow up the parliament building in protest to oppressive legislation towards Roman Catholics. The holiday celebrates the discovery of the plot. So on November 5th people have big bonfires and shoot off fireworks.

Oh, I should mention that in the bonfires they burn effigies of Guy Fawkes, the most famous conspirator. Yikes...that seems a little harsh. Nearer the actual event they also burned effigies of the Pope. Since then the anti-Catholic sentiments of the holiday have faded. Above are the lyrics to a rhyme associated with the holiday. This excerpt also does not include some of the original lines with much more violent remarks towards the Pope. [Anybody read the book "Angels and Demons" by Dan Brown? I just finished reading it and learning about this holiday reminded me of some of the more gruesome scenes in the book.]

Very interesting. I suppose our Independence day is in some way "anti-British" but I don't think we ever [symbolically] burned anybody in our fireworks! To be fair to my British friends, I should note Bonfire Night is not actually a public holiday and today it's really just an excuse to have bonfires and fireworks shows.