Welcome to European Tribune. It's gone a bit quiet around here these days, but it's still going.
How could inflation account for the conversion?

On the ground, I can tell you that the change was certainly felt. Overnight. It really was stunning.

In tourism too. No inflationary measure or market oriented growth analysis can account for 400% increases in room rates over 5 years.

Haven't spent so much time there, I have favorite haunts and favorite hotels, and I know for certain that the cost increases were far beyond anything that economic analysis can account for.

Unless of course, there's a way to measure Greek greed, but I really don't think it's that. The smallest item changed price.

by Upstate NY on Fri Feb 12th, 2010 at 11:46:28 AM EST
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"Having spent" not "haven't spent." Jeez.
by Upstate NY on Fri Feb 12th, 2010 at 11:52:19 AM EST
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Inflation wouldnt account for it, but the increase in prices would appear in inflation figures, and would be a visible bump in the graphs at the time.

Any idiot can face a crisis - it's day to day living that wears you out.
by ceebs (ceebs (at) eurotrib (dot) com) on Fri Feb 12th, 2010 at 12:01:21 PM EST
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This part of the diary was totally anecdotal. I can't account for it.

Unfortunately, I can't be convinced it didn't happen. I was shelling out money out of my own pocket and just shaking my head in amazement.

by Upstate NY on Fri Feb 12th, 2010 at 12:06:09 PM EST
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Unfortunately, I can't be convinced it didn't happen. I was shelling out money out of my own pocket and just shaking my head in amazement.

This is anecdotal, yes, but a highly significant sort of data. We are all FORTUNATE that you can't be convinced, because it is exactly this sort of anomaly that points toward real insights---sometimes.

Perhaps because my point of view tends to see a strong social component in most of my useful insights (if any) I smell--a strong social component here.
The oft-repeated euroskeptic fear that the adoption of the euro could create massive conversion costs---created massive conversion costs. Partly, larger businesses- hotel chains, etc. seized on the perceived opportunity to raise prices, knowing that they had a convenient scapegoat, and smaller businesses did the same, or felt obligated to raise prices to cover their own added costs. Or both.
Sometimes the most powerful economic forces stem from a social perception- a story, true or false, internalized on a micro level.
Then we get lost in looking for some macro force at work--

Capitalism searches out the darkest corners of human potential, and mainlines them.

by geezer in Paris (risico at wanadoo(flypoop)fr) on Sat Feb 13th, 2010 at 03:31:23 AM EST
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I totally buy into what you're saying and it seems the most logical explanation. I sort of accounted for it in one of my posts as "greedy Greeks."
by Upstate NY on Sat Feb 13th, 2010 at 10:38:56 AM EST
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Just as Blue Cross and Blue Shield of California have just announced 30%+ increased in rates for medical insurance for 2010. Everyone said Health Care Reform would drive up prices.  See!

"It is not necessary to have hope in order to persevere."
by ARGeezer (ARGeezer a in a circle eurotrib daught com) on Sat Feb 13th, 2010 at 09:30:35 PM EST
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ie claims that basic goods (like the daily espresso) got a massive bump when priced in euros rather than the earlier currency. It's never been visible in inflation statistics, but it's led to endless bitching and moaning - maybe because it probably did apply to goods like espresso, which are highly visible (you buy some every day) but meaningless in terms of overall spending power.

In the long run, we're all dead. John Maynard Keynes
by Jerome a Paris (etg@eurotrib.com) on Fri Feb 12th, 2010 at 12:24:37 PM EST
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What about in one of the country's income streams, tourism?
by Upstate NY on Fri Feb 12th, 2010 at 12:26:04 PM EST
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If highly visible goods become more expensive it would not be unreasonable for tourists to take it as a signal that the destination has become more expensive. This could send the tourists to - perceived or actual - cheaper locations.

For that matter the fact that 1 drachma was so much smaller then 1 euro might have created an impression of cheapness. When exchanging money, you used to get lots of drachmas.

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by A swedish kind of death on Sat Feb 13th, 2010 at 05:05:34 AM EST
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