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GRG55
03-26-08, 07:12 AM
A little anecdote, from the Magic Kingdom, about the effects of a rapidly falling currency, and another example of how the internet transfers power to the consumer...

Yesterday I bareboat chartered a sailboat for this summer in the Mediterranean. I've been a customer of the same worldwide charter company for several years now. After doing my own research on their UK website (dot.com.uk) I called the same office I've used before in England and made the arrangements, telling them I would call back and make my deposit (in UK Pounds) after they emailed me the details so I could first verify everything was correct.

I went back to the website to check something about the boat, but without realizing it I was on their dot.com USA version of the website, which looks identical at first glance. When I keyed in the specific boat information I discovered, to my great surprise, that the US $ charter rate for the same boat, out of the same port, on the same dates was exactly 49.5% cheaper than the UK-office charter rate converted to Dollars. :eek:

After a series of amusing (for me, not them) telephone calls on both sides of the Atlantic the explanation I finally got was that it's near impossible to get USA tourists to Europe for holidays any more, hence the steep, steep discounts even for peak summer season...but only if you book through the US office. Which is what I did.

Not sure what this does to official US $ PPP, but clearly in some situations the US $ buys more than one might expect. ;)

BiscayneSunrise
03-26-08, 07:42 AM
GRG,

I think that sort of reverse arbitrage has been going on for a while. Over the years, during my travels to Britain I noticed many items were priced in the same numerical amount whether in the US or GB.

In other words, if something in the US was $5, in GB it would have been priced at 5 pounds. $50 in the US, 50 pounds in Britain and so on. I saw this at least as high up to the price of economy cars, $15,000 in the US, 15,000 pounds in GB and now that I think about it, even extended into real estate.

Perhaps, the people who determine price points just charge what the market will bear and hope various customs restrictions and general laziness will prevent prices from joining globally.

Greg

Greg

GRG55
03-26-08, 10:33 AM
GRG,

I think that sort of reverse arbitrage has been going on for a while. Over the years, during my travels to Britain I noticed many items were priced in the same numerical amount whether in the US or GB.

In other words, if something in the US was $5, in GB it would have been priced at 5 pounds. $50 in the US, 50 pounds in Britain and so on. I saw this at least as high up to the price of economy cars, $15,000 in the US, 15,000 pounds in GB and now that I think about it, even extended into real estate.

Perhaps, the people who determine price points just charge what the market will bear and hope various customs restrictions and general laziness will prevent prices from joining globally.

Greg

Greg

Greg: Agree. That numerical similarity has been around a while and I noticed it too. However, what you are comparing is the cost of purchasing an item in Dollars in the US vs purchasing an identical/similar item in Europe (you could not purchase the 15,000 US Dollar car in Europe, it would cost you 15,000 Pounds if you bought it there).

If I was comparing the charter cost in Europe versus chartering the same size boat in Florida, that would be comparable to what you are describing.

The difference here is that the charter I just arranged is not in the USA. I just purchased the exact same thing, in Europe for one-half the price by booking and paying for it in the USA. That would be like buying a 15,000 Pound economy car in Great Britain, and paying only US $15,000 for it just because you put it on your US $ credit card.