The Salary Calculator

Visualisation of large financial numbers

The well-known web comic xkcd has created a very detailed visualisation of what the large financial numbers, like millions and billions, actually mean. It’s sometimes difficult to comprehend exactly what it means when newsreaders mention a debt of £1 billion.

This visualisation is rather US-centric, but much of the information displayed is valuable for those of us on this side of the Atlantic. It starts with individual dollars, then compounds them to thousands (shrinking the scale). Continuing on to millions, billions and finally trillions, it gives a clear indication of just how much money we’re talking about. Check out the diagram here: http://xkcd.com/980/huge/ (you will need to zoom in!).

Tags: billions, dollar, economics, Economy, GDP, millions, trillions

Pound’s Euro rate improves

With the economy having improved over the last couple of months, and many people last year choosing to have a cheaper holiday and stay in the UK, perhaps this year there’ll be more of us thinking of treating ourselves to a trip to Europe this summer. And if you’re one of them, good news – over the last few weeks the Euro exchange rate has improved significantly!

Although €1.20 to the pound is not what you might consider a great rate, it’s not been at that level since the pound plummetted at the end of 2008. Unfortunately, it’s not all good news – this improvement is not due to the pound getting stronger but the Euro getting weaker – the pound continues to fall against the Yen and the Dollar (although it has seen a recent rally on this last count). The BBC’s Gavin Hewitt has written a great blog post explaining why the Euro is in such trouble.

When will the pound return to its previous strong position? Well, the rates we remember of a few years ago such as 2 dollars to the pound are not going to return anytime soon, but if confidence in the UK economy increases then investors will value the pound more. An increase in UK interest rates would also give a boost (since saving pounds then becomes more worthwhile) – but this would impact on mortgage interest rates for a lot of homeowners. Would you rather find it easier to pay your mortgage every month, or have a bit extra holiday money in the summer?

Tags: dollar, economics, Economy, euro, Foreign Currency, foreign exchange rates, holiday, holiday money, pound, united states, us, yen

Pound falling against the Euro

I have a trip to Paris coming up and it’s prompted me to check out the current exchange rate on the excellent X-Rates site. As you’ll see if you click on that link, Sterling has been falling over the last month or so.

As I wrote a few months ago, the Pound had improved both against the Euro and the Dollar during the summer months, which was good news for those of use on holiday there. It didn’t reach the highs of 2008, but it had improved since last winter. However, during August and particularly in September, a lot of the ground the Pound had made up was lost against both currencies. The pound is currently worth €1.09, from a high during the summer of €1.18, making travelling to Europe very expensive for us Brits.

I believe the reason for the Pound’s decline is the fact that the UK is still in recession whereas the powerhouses of Europe, Germany and France, have successfully grown their economies. Hopefully we will see in the next few months Britain exit from recession, and then the Pound will become a more attractive currency for investors, making it stronger and (importantly) worth more.

Tags: dollar, Economy, euro, Foreign Currency, foreign exchange rates, holiday, holiday money, pound, recession, recovery

Healthcare in the USA

Another thing that is being mentioned a lot in the news in the States at the moment is universal healthcare. They don’t have an equivalent of the NHS that we have in the UK, to get healthcare in the US you need to have health insurance. Just as with car insurance or travel insurance, the more you pay the better coverage you get – the cheaper insurance policies will have high excesses (the amount you have to pay in the event of a claim) and may not cover all treatments.

The cost of insurance has been going up in recent years, and more and more Americans can’t afford to have any insurance at all. Small businesses are also finding it difficult to provide healthcare for their employees, as they can’t negotiate big discounts with healthcare providers. The number of Americans without insurance has been increasing, and although hard numbers are difficult to find (different organisations count the uninsured in different ways), this study claims that it could be as many as one in three are uninsured.

President Obama is pushing for healthcare reform which would cover all Americans with a government-run system, the cost of which is estimated at $611 billion. That’s a lot of money, and it could hit American taxpayers for years to come. However, it may end up costing them less than the private insurance route – as this Wikipedia article says, more is spent per person for healthcare in the US than in any other country – a centralised approach may be more efficient.

What relevance does this have for us in the UK? I believe that healthcare reform could help improve the US economy, and as I said in my last post, that will help bring the world out of recession. Why do I think this? Small businesses in the US are struggling in the current economic climate – they are having to cut healthcare benefits for their employees, or face increasing costs. Citizens with insurance spend less time being ill (as they get better treatment, or indeed any treatment, and also can take preventative measures like regular check-ups) and therefore take less time off work and are therefore more productive. With the burden of providing healthcare for employees lifted, small businesses and family-run businesses should be able to weather the storm of the global recession, and turn a profit sooner.

This is all assuming that the cost of medical insurance as it is currently is higher than the increased taxes that will be required for government healthcare to be provided. This is by no means certain, and of course, health insurance is optional but taxes are not!

Tags: dollar, Economy, healthcare reform, recession, recovery, united states, us

Holiday exchange rates

Like a lot of people, I’m keeping my eye on foreign exchange rates at the moment. Those people lucky enough to go on holiday abroad this year have been worrying about the weak pound ever since they booked the ferry! Fortunately, the pound has been getting stronger over the last few months and while it’s nowhere near the levels it was this time last year, it’s a significant improvement on 6 months ago, when it was pretty much £1 = €1.

It’s improved against the dollar, too – from $1.38 a few months ago to $1.65. Although most of us will be comparing this with the $2.00 rate that was stable for some time in 2008, it’s worth remembering that that was unusually high, and $1.70 or $1.80 is more like the standard value. Compared to this, $1.65 is not too bad.

While a strong pound is good news for holidaymakers, the British tourist industry often suffers as fewer people visit our shores, and those that do come spend less while they are here. Hopefully this summer will see an improvement on previous years as visitors from the US, the Eurozone and even Japan are all still getting a good deal on their pounds, and more natives stay at home to beat the exchange rate!

Although some people in the industry are negative, believing that economic uncertainty and unemployment will mean fewer people will be taking advantage of the tourist industry, the fact that the pound is still lower than it was last summer should pull visitors in from abroad and hopefully give the industry a shot in the arm.

Exchange rates can be monitored here.

Tags: dollar, euro, Foreign Currency, foreign exchange rates, holiday, holiday money, pound