I admit that I don't have the slightest idea what fuels the New York stock markets. For that matter, you can add all the stock exchanges around the world. When I look at the automaker, dealer and supplier stocks, I get completely discombobulated. When I think a company is in the tank, its stock goes up. When a company looks hot to me, the stock goes down. It's a mystery to me and to more people than would admit it.
So imagine what fun I have trying to understand the relationships among currencies around the globe. In the past few weeks, we have seen a swing between the Japanese yen and the U.S. dollar of more than 25 percent. It now takes $1.25 to buy something in Japan that six months ago you could get for $1. That ratio holds for cars, trucks and anything else you might want from Japan. And American goods are now that much cheaper for the Japanese. That includes all your Saturns, Cadillacs, Fords and Jeeps that you're trying to sell in Japan.
Now, I've heard at least 20 plausible explanations for the yen-dollar fluctuation. But the fact remains that the U.S. economy is the strongest in the world and shows no sign of slowing. And the Japanese economy is still struggling and shows only modest indications of recovery. So I just don't get it. And when it reverses itself, I won't get it either.
But what will happen to the price of all these products? Sure, many Japanese cars and trucks are made in America, so the companies have insulated themselves from wild currency swings. But what about the imported vehicles and the cameras and computers and everything else? Why haven't we seen a huge rise in prices? I guess the companies are eating the losses. Or is that currency-induced dumping? Beats me.
And for those of you living in Japan, have you seen a huge price drop on your Levis? Or Saturns or Boeing 747s? Hardly. Does that mean the Japanese importer is pocketing the savings?
This is a complicated process. It's tough enough to figure out where to put your money in this exciting stock market. Folks are getting rich all over the country and the world. But only the brave hearts deal in currency speculation. They require the strongest constitution of all.
And meanwhile, you and I don't see any penalty or reward for swings in currencies and we wonder why.
It used to be a lot simpler.