We’re all starring at things going on in stock exchange, see companies falling, billions vaporizing. Little is written about the shock wave going through the developing countries. I think, what’s becomes much more important, than the phantom accounting transactions, are the real exchange rates. What are these rates about? One interesting approach is the Big Mac Index. Wikipedia defines it as follows:
The Big Mac Index is an informal way of measuring the purchasing power parity (PPP) between two currencies and provides a test of the extent to which market exchange rates result in goods costing the same in different countries. As stated in The Econimist, it “seeks to make exchange-rate theory a bit more digestible” (http://en.wikipedia.org/wiki/Big_Mac_Index, 10.10.2008).
What’s meant here is not stock exchange, but real exchange rates, although it’s bitter that such a nonsense product like a Burger King ‘Big Mac’ serves as the measure.