Hi Luc, The Yen is in fact going higher, even as capital cost is zero.
I shudder to think what would happen if their economy actually allowed for a positive return on capital, or if they figure out that their money will get a gentler treatment elsewhere.
Message 15886227
<<I am staring at a fixed deposit interest rate sheet from HSBC, showing 3-month AUD @ 3.44%, CAD @ 3.25%, EUR @ 3.3%, HKD @ 2.25%, USD @ 2.37%, THB @ 4.125%, SGD @ 1.5%, NZD @ 4.39%, and all converging to Japan’s JPY @ 0.01% (another way to say – you pay us and we will hold your money until it becomes worthless).
The bank is not exactly trying to bribe my money. If I did not know better, I would say the CBs are uniformly all trying to rob me, even miserable Thailand!
Given the snap shot of the situation, I can appreciate
(1) The basically meandering and still high (tradition DCF, P/E, quality of earnings measures) equity levels are sustained by an extremely lenient cash rate,
(2) As long as competitive devaluations continue between the manufacturing economies of Asia ex-Japan and Japan, and Japan is building on its huge export driven surplus, and paying zerodotnaught interest rate, the US will be able to lower FED rate without suffering much from reverse capital flow, devaluation, stagflation, inflation, etc, and
(3) Thus delaying a deep cleansing, and postpone to unhooking its consumers from the credit drip-feed tube, resulting in even more dire balance sheet, until
(4) Such time when the situation looks different, which
(5) May cause much pain, because the boomers are then that closer to golden years, but without the gold.
What is a sane, diligent, thrifty, semi-well-to-do, cash flow positive, NAV OK person to do in a world where a bunch of rapidly aging folks are willing to work long hours making Lexus SUVs, earn money, live in a rabbit hutch, and provide the world with zerodotnaught financing?
(1) Borrow, spend on a Lexus SUV, and pressure the government to inflate away the sins;
(2) Do not borrow. Invest on inflation-proof things (positive carry real estate, dividend yielding stocks, TIPS, staggered 2-5 year government paper of various nationalities) and hedge with precious metals;
(3) Do nothing; or
(4) Do something else, as suggested by Pezz and you, in things that go “bump” in the darkness or “blip” in the light (<<Give me tamed and harmonized photons, electrons, gravitons>>).>>
Maybe a traffic jam of some sort ...
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Message 15886969
unless the big boys bought insurance ...
Message 15887011
Chugs, Jay |
