I am wrapping up my trip in Sydney (wonderful country, people, and beaches), and mentioned on Twitter yesterday that I thought the AUS $ was overpriced due to the prices of cocktails in the country. I was specifically referring to the Green Bison, which sounds a bit more manly than Green Destiny, but in any case they were made with Zubrowka which is a wonderful vodka. The last time I experienced prices that felt this out of whack was back when I was in London. Even the Panda Express stir fry is about $25 at the airport. Reminded me of the old Jim Rogers quote… “While I have never patronized a prostitute,” Jim Rogers writes, “I know that one can learn more about a country from speaking to the madam of a brothel or a black marketeer than from meeting a foreign minister.”
In a vaugely similar note, I really enjoyed this article on the carry trade. It takes a look at the carry trade but ranks currencies on real interest rates rather than just interest rates. I always hate it when journalists write an article about factor or approach X, then go on to state “no one know why X works.” I guarantee you there are people that understand why X works and are profiting handsomely (they just aren’t telling you about it). Currencies appreciating due to excess fear due to high inflation (and the subsequent risk premium built in to compensate the investor) makes sense to me. I’ll re-run the study on both G10 and emerging countries when I get back home from the airplane. Fingers crossed that there are bad movies, babies crying, and no internet so I’ll have 14 hours straight to write…
