That’s right kids, you now only need 82 Yen to buy a US Dollar!
That’s down from 125 Yen in 2007 and down 15% since May alone. That means that, even if your $300,000 home kept 80% of it’s value during the last 3 years, it still dropped from 37.5M Yen to 19.7M Yen, almost 50% less – and the Japanese STILL don’t want to buy our real estate! Maybe it’s because we totally burned them on that in the ’80s and, unlike American investors, they have learned their lesson.
The S&P priced in Yen looks similar to this chart of the S&P priced in gold – a very sad downtrend that is unlikely to be broken and, even if it is – so what? Are we so easily fooled that we actually believe that, just because it takes more of our hard-earned dollars to buy a stock, that the market is recovering? Surely we have a better grasp of finance than that, don’t we? It’s like me giving my daughters Monopoly money for an allowance and selling them various household fixtures. I can tell them they earned $10,000 and that they bought the living room sofa for $10,000 so they can pretend they have an asset but the whole thing kind of falls apart if they try to sell the sofa at a garage sale or if they try to take their fake $10,000 and buy something outside the house.
That’s what the US economy is like right now – it’s all well and good as long as we’re all willing to “extend and pretend” but, whatever you do – do not attempt to leave the boundaries of the game. Banks are looking mighty fine with Bank Bonds back at the best levels since before the EU bailout – even though derivatives (remember those?) are now at an all-time high. All of the banks are doing it so what’s the harm if we do it too? Just like all the Central Banks are devaluing their currency – ours just happens to be the best at it and that makes our market LOOK strong at the moment – kudos to Ben!
Not only have I been advocating a cash-out into this nonsense rally but we actually went with UUP at $22.50 yesterday in Member Chat as I simply don’t think the dollar can lose that much more ground.
If I’m right, then our cash…