Anyone noticed how the Japanese Yen is close to its previous highs. I am sure I have wrote about this before, however it kind of defeats the idea of foreigners who are non-residents investing in Japan. Anyway you can check out the price action on Google Finance. There are few currencies which are performing as well as the yen. In fact I could not find one. I was expecting the AUD to hold its own, but its about where it was 5 years ago.
The implication is that it only makes sense to buy property in Japan if you are planning to live here for a while, and you will otherwise be paying high rental yields. Even then, I think if I was a US citizen living in Japan, I would be sending my money to the USA and buying foreclosed properties or gold/copper/tantalum stocks, and perhaps a few other strategic metals. There are two reasons:
1. The very low USD compared to the yen
2. The depressed property market, which must be close to a bottom.
3. Metals are denominated in USD so benefit as the USD falls
4. The US will benefit from immigration and recover quickly, whereas Japan will be a slow process
5. The Yen is destined for the same debasement as the Euro and USD. Why? Because the govt has to repay a lot of debt to the people. It does not have the courage to raise taxes when demand is so weak, and for the same reason, it is not going to be cutting spending so much. It has no choice but to print money. That equals debasement given that the debt is 200% of GDP. Yes, I know its owed to Japanese. But last time I looked, Japanese investors expected interest, and they don't like to be taxed.
If you are looking for a protracted US recession of the type experienced in the 1930s, think again, it will not be as bad for a number of reasons:
1. There is no huge over-capacity in the world
2. The central banks back in the old days made a lot of mistakes, so the commercial banks lost a lot of credibility. There has consequently been no run on the banks like in decades past. Too soon to say? I don't think so. Most are adequately capitalised, and they are backed by paper money. Worthless? Yep, but so are all the paper currencies, and that is why I'd go for gold for protection against debasement.
3. The global story is not as bad as indicated for several reasons - (a) The trade liberalisation of China, India, Latin America, Africa has resulted in an escalation of commercial activity on an unprecedented level. This is reminiscent of the sugar, coffee, cotton booms of centuries past. We are having the same technological boom, but on so many levels, i.e. Miniaturisation of products, high strength steel alloys, outsourcing to Asia, the internet, voice over the internet (i.e. less travel), work from home. There is more coming in energy saving technologies and solar cells, new steel making technologies like HIsmelt.
If you must buy property in Japan, and we like to help, I'd confine myself to a lifestyle home in the countryside. You can avail of the Japan Rail Pass and travel around the country on a tourist visa from your new-found home base. That is what I do. A $300 gets me a week on Japan trains. I have the odd night out on the far-reaches of the country, but otherwise I return home. i.e. Get up early to get to Shibuya by 6AM. Shinkansen to Yokoyama, overland train to Tottori or such places, staying at some lodge, drinking in some small bar with weird people, then next overland train along some great canoeing/kayaking rivers. Its actually amazing how much forested wilderness Japan has.....if only the Japanese people could afford to see it. But you can with a Japan Rail Pass!
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