Fed Blows Up Japanese Currency

Originally posted by James1982
I am not understanding something here, why on earth would they admit to doing this?!?!?

I mean, I understand WHY they would do it, as evil as it is, but who in their right mind would be like "yeah, i did it, wannafightaboutit?"

I don't think the all Americans understands what this means for the Japanese people. The day it happened on Facebook, one of my alumni from high school asked - "what does this mean about the PS3?" I am not saying all Americans (I am from the US) only care about their own comforts, but I see alot of this kind of blindness. So, slimy Feds can say these kinds of things - and as long as our precious goods and dollar is safe - life can carry on.

reply to post by PuterMan


Loved your post cause it felt like dirty mad-libs

I'm not sure some of you even understand currencies and why this was done. The Japanese govt asked the g7 to do this in order to weaken the yen so there economy can export goods cheaply and hopefully save Japan from falling back into a recession. Wich when added to the problems they all rdy have would probably leave them as a 3rd world country.

Originally posted by PuterMan
reply to post by mnemeth1

 

I shall simply say that the T & C prevent me from venting my wrath at these buffoons and their machinations.

I would love to put the whole bunch of pricks in a ship, sail it over the Mariannas Trench and pull the plug sending these turkeys to their doom. The world would be a better place if these moronic greedy birdbrains were disposed of.

I leave you to fill the blanks as you see fit.

Or they're forcing the Japanese' hand on something that would eventually happen anyway, Japanese dump of US bonds to pay for the extensive disaster they are facing + massive losses due to lack of industrial output.

S is Hitting The Fan right now and most people don't even know it.

Good thread.

Originally posted by Dance4Life
Umm.. what?

This is good for the world to weaken the YEN. It is far too strong.

It is good for US and Japan equity markets as well. Blow it up? It is the strongest currency in the world.

What?

Destroy other countries economies to make it better for us?

reply to post by Dance4Life


That would make sense if they weren't in the hole 233% of GDP. This will cause a deflationary depression for them. Compounding the danger of the BOJ, and insurers cashing in those US bonds. They've been trying to drive up inflation to make it easier to pay off their debts... It's a scam against the Japanese people who are the primary holders of their own national debt and foreign buyers of Japanese debt. Going the opposite way would force deflation and drive the government further into debt increasing the need to acquire liquidity elsewhere...That elsewhere is the 885 billion in US debt.

reply to post by projectvxn


This is all a farce.

The JPY has been the carry trade for too long. It is mostly all speculation. Time to unwind. JPY needs the NIKKEI to go back up. They are back down to early 2009 levels.

There is no reason for them to "cash in bonds". It doesn't even make sense because US Bonds over the past several years have been one of the best performing instruments.

I just don't understand how some ATS people think they know what is best for JPY government. It certainly isn't to cash in US Bonds. I still am not sure why this would even be the case.

reply to post by John_Rodger_Cornman


Why would it destroy other governments? Have you seen the performance of the NIKKEI over the past 5 years? Making the YEN weaker ONLY HELPS THE JAPANESE.

reply to post by Dance4Life


It's simple really: Too much debt + giant disaster + decreasing industrial output + appreciating Yen = not enough cash to cover expenses.

You either print like crazy or find liquidity elsewhere.

There's a reason why the G7 is in a frenzy over it.
english.donga.com...

reply to post by projectvxn


yes..

APPRECIATING YEN is what they are looking to NOT DO.

They want to WEAKEN IT.

What is wrong with this to you?

reply to post by Dance4Life


The intervention won't work.

They'll have to keep doing it with printed money from the Federal Reserve. This may backfire on the Fed if the flight continues from Japanese markets. The real loser here will be the US.

reply to post by projectvxn


It hasn't worked well for BOJ.

The Federal Reserve really doesn't work with limited funds. They may be able to persuade with enough money.

If you don't think the it will work then you must also believe POMO does nothing? I don't believe it does, although most on this board would swear it does. So you can't have it both ways. I believe in the past I have read a remark from you stating something about these open market opeations and how it curtails the market. If you believe that then you have to believe the FR can manipulate that market as well.

Here is why all this POMO talk is pure BS. What other equity markets have central banks with these open market operations? None that I know of. All other markets are up just like the USA. Do you think the USA is only up because of this? Once you start to understand this concept then you must acknowledge that the FED cannot carry a market on their own. But only encourage. I believe I am correct in stating these facts, but I am not 100%.

Regardless, I agree that it is risky. There aren't a lot of options now. But I do not believe that selling on of the best performing asset classes over the history of investing is a good way to go about it. If the carry trade unwinds with help from the FED then I think that this is the most efficient way of handling this. Should have been done a while ago, IMO.

The Japanese are quite fine right now and will continue to be fine. They don't have a nameless government overrun with con artists who find some way to bleed money out of the system in order to get hefty kick backs from contractors, consultants, and lobbyists.

They are fiscally responsible government and they probably don't really owe to domestic investors except for appearance sake. I am predicting they will come out of this whole thing just fine, if not stronger.

The US would like very much to get those bills back, but it's not going to happen with either China or Japan. I am sure there will be major wars first. I have a nagging suspicion that this whole event or the severity wasn't induced by nature alone.

The Yen appreciated to new highs (vs usd) after the japanese government added reserves to their banking system shortly after the earthquake/tsunami to lessen the impact of a possible panic. The intervention came several days later from those higher levels. If you look at what happened to the yen after the Kobe earthquake (15-6 yrs ago) you will notice that it dropped approx 20% in about 6 months or so.......I think that they are trying to facilitate that.

reply to post by MaryStillToe

The Japanese are quite fine right now and will continue to be fine. They don't have a nameless government overrun with con artists who find some way to bleed money out of the system in order to get hefty kick backs from contractors, consultants, and lobbyists.

The Japanese are NOT fine right now and haven't been for sometime.

They are fiscally responsible government and they probably don't really owe to domestic investors except for appearance sake. I am predicting they will come out of this whole thing just fine, if not stronger.

This is patently false. Apparently you don't know much about how "fiscally responsible" the Japanese government is. Answer this, how can a government be fiscally responsible with a projected debt 233% of GDP by years end? That number is likely to increase as the full tally of this disaster is recognized.

The US would like very much to get those bills back, but it's not going to happen with either China or Japan. I am sure there will be major wars first. I have a nagging suspicion that this whole event or the severity wasn't induced by nature alone.

This is just abject nonsense.

reply to post by Dance4Life


POMO is a pyramid scheme and we all know how those usually end. I agree that the Fed cannot carry the market on it's own. The FR does manipulate the market, this much is certain, but there is more to the Japanese crisis than simple carry trade schemes and fresh print injections.

I disagree that US Treasuries are a safe bet. PIMCO dropped it's holdings of US bonds and OPEC reduced their holdings by 9%. At some point it won't be worth the potential risk to continue to hold on to US treasuries. These aren't the only pressures on US debt.

The latest estimate on the Japanese disaster stands at $200 billion...That's just the disaster. This doesn't include loss of industrial output due to loss of power, infrastructure and private/public property destruction, and contamination of food supplies(which are a big export), and other products with radiation. Bans are already in place in Italy and the rest of the EU is expected to do the same. The Japanese simply don't have this money. It's prompting FX traders to speculate that the BOJ will turn on the presses at full speed, though, since the precedent set in 1995 of Japanese selling US bonds, it wouldn't make that a sure bet.

Originally posted by projectvxn
reply to post by Dance4Life

 

POMO is a pyramid scheme and we all know how those usually end. I agree that the Fed cannot carry the market on it's own. The FR does manipulate the market, this much is certain, but there is more to the Japanese crisis than simple carry trade schemes and fresh print injections.

I disagree that US Treasuries are a safe bet. PIMCO dropped it's holdings of US bonds and OPEC reduced their holdings by 9%. At some point it won't be worth the potential risk to continue to hold on to US treasuries. These aren't the only pressures on US debt.

The latest estimate on the Japanese disaster stands at $200 billion...That's just the disaster. This doesn't include loss of industrial output due to loss of power, infrastructure and private/public property destruction, and contamination of food supplies(which are a big export), and other products with radiation. Bans are already in place in Italy and the rest of the EU is expected to do the same. The Japanese simply don't have this money. It's prompting FX traders to speculate that the BOJ will turn on the presses at full speed, though, since the precedent set in 1995 of Japanese selling US bonds, it wouldn't make that a sure bet.

US T-Bills & Bonds are as safe as they come. I don't know how you could state otherwise. Never missed a payment.

In addition, PIMCO can say or do whatever they please. El-Arian ( sp? ) was dead wrong about the market as well at the bottom. They got burned, which shows their capability to be very incorrect.

Also, right after they announced this, 10 Yr Note and 30 Year Bond have gone up about 3-4 points I believe. Anyway, bonds have been a great investment over the period of my investing lifetime, no doubt.

The FED doesn't manipulate the market, IMO. They ENCOURAGE through interest rate policy. I really do not understand how these POMO's could carry the market anyway. Not even close to enough money to make that happen.

We are in the midst of a world wide recovery attempt. Japan, being what the 3rd biggest GDP in the world, can not be allowed to fail.

It seems like a negative for the yen to devalued, however on the world scene, this is there position when it comes to international trade

If a country's GDP rises to significantly it can cause a severe ripple effect to the recovery

For example, China is slowly raising there GDP, as they are now slowly switching from pure exporter to a mix bag of import/export as there middle class begins to grow and America starts to weaken too much

reply to post by Dance4Life


You call it "encouragement" I call it irresponsible monetary policy and easy money BS that inflates unsustainable bubbles.

How many times do we have to see this happening over and over again?

Sure, the US has never missed a payment, but inflation is no longer within target as set by the Fed. It is not within their control, and there's talk of QE three. It's not about missing a payment, it's about whether taking payment in ever devalued dollars is in the interest of heavy bond investors. Our debt and continued profligacy makes us a bad investment, to say otherwise is wishing against reality that people will continue to hold US debt in high regard.

Eventually there will be an auction failure, and it may be with Japan. Say they don't sell right away, say they just stop buying US debt(I don't see how they can continue considering the circumstances), how long before the flow reverses and they DO start selling? Moreover, where is the US going to find the buyers necessary to pick up the slack of debt purchases left by the Japanese?

Is the Fed going to further expand it's balance sheet by continuing to monetize the debt? Can they afford to?

I'm sure they'll come up with something in order to "encourage" the bond market.