US Relatively Richer, YTD

The US stock market is down about 32% year to date, but most other developed countries are down around 40%. The emerging market stock markets are generally down 40 to 60% year to date. Yields on US government bonds are down about 50 basis points on the long end, about about 3% (to near zero) on the short end. The trade-weighted dollar is up about 6% year to date, which increases the relative value of US equities even more.

The genesis of this crisis is the fall in US housing prices, which caused a lot of mortgages, and their various securities, to fall in price. I would think, therefore, the US would be the worst off, because no matter how much China and UBS bought, most of those mortgages are owned by the US. The fact that relatively, the US has become richer, in this mess, is therefore rather puzzling.