We all know there's some financial news stirring stateside, but there are plenty of other countries keeping a watchful eye on what we do. We may make some pretty large errs in both domestic and foreign affairs sometimes, but many countries still recognize that we have a fairly impressive track record in matters of wealth. Japan, for example, frequently follows our lead to a certain extent and, consequently, they have run into the same issues we have in the past. Coverage in national news on the whole kit 'n caboodle in America lets people know what is happening, a fairly objective view. But it also serves to remind people that America is not infallible. Back in March, due to the rising yen and falling dollar, the exchange rate briefly hit 96 yen to the dollar, bad news for travelers. Last July, when I withdrew funds from my American account, I was getting 117 yen per dollar. It has been declining gradually ever since, but in the last week, it plummeted. The first picture shows the first time I have ever witnessed a single yen valued higher than a penny. Although if you pick up a yen, it's amazingly light weight and weakness make it feel all but worthless. In the midst of all this, I've read that confidence in the American economy is fairly strong, at least abroad. Foreign investors are not likely to get too timid; in fact, their confidence may show a surge in the dollar's value after the Fed starts hacking away at interest rates. Today's slash apparently didn't do the trick, but I guess we'll see. Personally, it's hard for me to know how to feel. Monitoring the news from abroad gives me, despite being an American, a typically foreign view. I'm not out and about in the society daily, so I just can't understand how people are feeling about it. I hope that people are optimistic but not blind. Awareness is possibly the most important thing to have, because we can't act without it. And surely we can't individually fix these issues, but we can certainly work to protect ourselves. How do we do that? Wow. I'd ask someone who knows. I read, but I don't claim to know much about money. Anyway, take it easy America, I'm trying to come home in December and I'd be glad if I saw everyone smiling.
Bye!
As an addendum to matters of exchange rate, I just logged in to my American bank account. I recently was charged for an order from an Amazon Japan site, but the product was unavailable. Three days later, I received a refund for this charge, but since the charge and refund are both conducted with yen as the base currency and my bank uses dollars, I profited 38 cents on the affair due to rate changes in the last three days.
1 comment:
Hey, first off it's nice to hear that you'll be back in December. Second, it's really refreshing to hear someone under the age of 45 write so intelligently, and in such a fluent manner, about economics.
Unfortunately, the declining value of the dollar is one of the reasons I'm not leaving for Africa until June. While I don't really get paid by the Peace Corps, I do get a stipend and over the past several years, the value in dollars of the stipends given to volunteers has risen considerably. Combined with budget cuts, they've had to reduce the number of volunteers they send abroad and (in my case) push back the departure dates of the volunteers they do decide to send. Other than that, it is hard to put something like this financial crisis into context. When I talked to my parents, they told me they didn't even know what to do with their money since they had never lived through something like this. Needless to say, it was a very disconcerting conversation.
Ultimately, I don't think mere interest rate cuts will do much to improve confidence and bring about any serious prospects for recovery. I do think that more coordinated action between the major central banks of the world is something that is here to stay. In reality, there really isn't an American economy or a Japanese economy or a European economy, but instead just one big world economy.
Anyway, hope you're doing well. Do you ever go on Skype? I use to stay logged into Skype all the time but a few months ago I stopped doing that since I would get bombarded with spam for French porn. Also, I have to get a new microphone/headset since my old one broke. I would talk to you on xbox live, but I canceled my account a few months ago.
Congrats on the exchange rate arbitrage, I'll see you in December.
- Brendan
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