Weak Dollar Makes US MBA A Bargain...For Foreigners

1.00 GBP

=

2.00367 USD

Gotta love the UK

we will see $2 to 1 Euro before long (6-18 months)

Ya but remember if you dont return to those locations you are earning weak dollars after grad. Also the cost of living in London is worse than NYC, Boston, San Fran, Chicago...

It was interesting to hear a 29% increase at Wharton.

hmmm... London is bad (lived there for a year) but not NYC-bad. Rent is crazy in Manhattan.

Were apps up 29% at Wharton this year?

Really?? that would make things very complicated for the world economy which is almost based in USD

2:1?? uf! it seems too far...

Well that's the case if either you have a lot of savings, or are going to borrow in EUR, which is not the case for many international students (personally I only have USD 12k savings and I don't know any continental bank ready to sponsor my MBA).

I bet you didn't imagine $149 oil? or $1030 gold?

The flipside to this whole topic would be to attend a European MBA program and borrow in US dollars, and then stay on to work in the European country and earn that currency. Assuming the US dollar keeps declining (which I certainly believe will happen until some major monetary and fiscal policies are put in place to strengthen the dollar), then the value of the US dollar denominated debt becomes cheaper to pay down should you earn in a foreign currency that is rising against the dollar.

However, all European currencies aren't created equal, so you can't assume that all European currencies will strengthen at increasing rates against the declining US dollar. The GBP:USD has strengthened only 15% over the last 3 years, while the EUR:USD and CHF:USD has strengthened at much higher rates, i.e. 35% and 28% respectively.

Just look at the charts:

https://stockcharts.com/h-sc/ui?s=$USD&p ... 7376278007

for those of us thinking about EU MBA's ... this FX change has increased the burden even more.

Actually weak dollar and high oil prices makes competition for applicants from my region even weaker, as people are getting paid higher due to high oil prices resulting in dminishing incentives for obtaining graduate degrees or an MBA.

Before burying the Dollar and the US economy as dead or a has been it is useful to look at history. And history tells us that US to European (incl Britain) currencies tend to normalize around the PPP par exchange rate. Guess what - both are tremendously overvalued to par (Europe has gained less than 10% on relative PPP). The economist in me says start buying dollars - in the long run you are going to be well off for it.

Here's my take. I believe that the dollar has about another 20-30% drop to go. It's OK to be buying into a bottom, but you would need to scale in your buys, i.e. don't put everything in at once into the trade. Under our current international system, if the USA wants to maintain its superpower status, the USA will need to ensure that the USD is still the world's reserve currency. (This is assuming that the current international currency system remains as it has, but history has shown that this is subject to major change in how currency values are determined.)

Many central banks and investors have been diversifying their assets away from USD. The trend will continue until something fundamentally changes in how everyone views the USD. There is a mistrust (both foreign and domestic) in USA management, i.e. the executive and legislative branches of the govt.; a worsening picture of the financial crisis' impact on the US economy; and, simply the USA's balance sheets (if we were viewing them as a public traded company) are atrocious.

So, what will need to happen in order to restore the confidence in the USD? Basically, the USD would need to be made "as good as gold" again, i.e. something which has tangible value. I'm not calling for a return to the gold standard. But, what monetary and/or fiscal policy would be required in ordered to restore both US consumer's purchasing power and also foreign confidence in USD assets? I don't pretend to know the answer to this, but until something fundamentally changes in the perception of the USD value, then the demand for all USD assets will decline, which of course brings down the value of the USD. And, I haven't even brought in the supply side of this equation, which looks like at the current juncture, the supply of USD is only set to increase in order to address the failing economic situation in the USA.

This simply is a downward spiral.

To be honest... no, never. However, analyst said that oil would reach 200USD and I think it has never reached that (maybe, because goverments did the impossible to avoid it), hasn't it?

Despite, I'm not an expert on this topic... just my two cents

[EDITED] this post is becoming very interesting!