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Every day that goes by, I watch the tuba I'd like to get (a Gronitz PCK) get more and more expensive. Nobody has any in stock, and I'm just sitting around waiting for the factory to ship some out.

I feel like I'm buying a house - "Maybe if I wait until next year, the bubble will have burst and prices will be dropping."

Yeah, right.

There are some very intelligent, informed folks on this board, and I was hoping to solicit opinions on the dollar vs. Euro issue.

Any thoughts on how long will the dollar keep losing ground? When it comes to trade deficits, exchange rates, and economics in general, I'm afraid my knowledge pool is pretty shallow. Nobody wants to pay $10K+ for something they could get in a year for $8K, but... ??????

I know that, in some ways, I may be asking an unanswerable question, but I thought I'd give it a shot. Thanx in advance for your input...

...Dave

poomshanka wrote:Every day that goes by, I watch the tuba I'd like to get (a Gronitz PCK) get more and more expensive. . . . . There are some very intelligent, informed folks on this board, and I was hoping to solicit opinions on the dollar vs. Euro issue.

Dave, now is a good time to hedge the spread between dollars and Euros by opening a savings account in Euros. Make your deposit now and be protected against further dollar depreciation.

Fortissimosca wrote:We just coverd all the trade balance and exchange rate stuff in economics:

Apparently, the dollar will continue to rise unless the Fed (and *insert heavenly music here* Alan Greenspan) raises interest rates. This would promote individuals to save money and spend less so consumer spending and investment would both decrease. Those two components of GDP would trigger a little deflation causing there to be less dollars compared to the Euro, closing the gap between the trade currencies...

...if all nice assumptions hold...

sorry for the smart *** remark, but I'm a big supporter of applying what you learn in school, and I guess this applies to tubas...

Actually, covered interest arbitrage drives the foreign exchange market. That means that "real" interest rate disparities are the primary reason for exchange rate differences. Of course central bank intervention can have a short term impact, but over the long term the markets will overwhelm any intervention.

Federal deficit spending is the primary mechanism that has driven interest rates down and caused the exchange rate changes. Until our government gets some fiscal control, the dollar will continue to be weak. Greenspan takes the actions necessary to try to balance monetary supply with demand, but he is mostly reacting to factors such as the deficit. Remember in the 1990s, when the budget deficit was smaller, or actually a surplus, the concern was a strong dollar hurting US companies' ability to export. Therefore, the dollar will continue to weaken as long as our beloved president continues to spend money as fast as he can print it.

The best advice I have heard is to not try to time the market, whether that's for stocks or for goods. If there's something that you need for your profession, like a tuba, or want for a hobby, like a tuba, then make the best deal you can today to buy the one you want when you want it, and don't worry about what it may cost tomorrow.

Lew's got a good point.

In particular, if a vendor doesn't have the tuba you want, and there's a substantial waiting time, negotiate a price guarantee when the tuba is delivered.

For example,

My wife ordered an alto flute from Europe that was a custom job. I mentioned to her that I didn't think the dollar was going to hold its value as mutterings about the US fiscal policy were getting pretty loud. This was back when the euro was worth about $0.94. She asked if she could pre-pay the balance and take delivery whenever the flute was ready (about a year down the road, if everything went well).

When her flute was ready, the euro was worth about $1.20--and the vendor had raised the price of her work in euros, to boot.

At about the same time, she ordered a bass flute from Japan and obtained a price guarantee in dollars from the seller when there were about 120 yen to the dollar. She took delivery when the exchange rate was about 107 to the dollar--not as dramatic, but the extra money was nice.

Both of these purchases were iin the today's Miraphone 1291 price range, BTW.

Many economists expect a $1.50 euro by mid year and about $1.60-1.75 by year end. But that's everyone's best guess. The US could revamp its monetary policies or Europe could suffer a financial crisis and the situation could reverse. While not a lead-pipe cinch, the prediction feels pretty safe to me.

Basically, the exchange rate, like the stock market, begins as an emotional reaction. In point of fact, nothing substantial has changed in the US economy in the last year, but the worldview of the strength of the dollar has undergone a weakening. However, as US producers begin to pass the difference along, real inflation will set in.

For what it's worth, I visited a friend today who's been working on some silverplated Conn 14K sousies (and one big Holton). Really sharp-looking horns that he's had kicking around his shop for years. One of the horns was picked up from the late Buddy Hayes' estate. He wants to sell them locally (he's 79 and doesn't want to haul a lot of heavy brass around town to get it shipped), but probably wouldn't have a big problem if someone arranged shipping for him or came and picked up a horn.

I agree with Lew and Chuck.

Furthermore, don't feel too afraid to finance right now. A loan is a contract and the rate of interest (if you get one that is fixed) won't change.

I would see if one of the two guys in the US is willing to take a deposit for a PCK to hold the price until delivery. The higher the deposit, the better chance of them saying yes. You could even see if the factory could be talked to directly and if they would take a deposit through the vendor and hold the pricing in USD.

The Euro savings account is also a great idea. Essentially you'll be hedging on a small scale. You'll be charged a smalle fee or percentage for this, but you will be well protected.

I remember buying a Culbertson 6/4CC for $8K. About 1 year later the horn was selling for $6K.

IIRC, that was around the time of the origination of the Euro. The Euro is overvalued right now. While it stinks that the dollar is weak, it does encourage foreign investment. Inflation will come. The the Euro will tank because people will realize that it is goofy.

I read some big report today that in 15 years India and China may be in the same league as the USA in terms of rGDP.

The best thing to do is not worry about it.