Japan May Ready Sustained Yen Intervention

[Slimprofits]

http://www.bloomberg.com/news/2011-1...nt-to-act.html

By Aki Ito and Toru Fujioka - Oct 31, 2011 9:19 PM ET

Japan’s government signaled it is prepared for sustained intervention to ward off speculators from yen purchases after currency appreciation forced companies from Panasonic Corp. (6752) to Honda Motor Co. to lower earnings forecasts.

Finance Minister Jun Azumi said in Tokyo he will “continue to intervene until I am satisfied,” after yen sales yesterday that Credit Suisse Group AG analysts estimated may have exceeded $50 billion. The intervention was the first since August, when Japan spent 4.51 trillion yen ($57 billion) seeking to stem the currency’s surge to a postwar high against the dollar.

[doom&gloom]

Re: Japan May Ready Sustained Yen Intervention

Think about it. We send them paper with pictures of dead presidents on it for real stuff. Then we print more of it, their currency rises, and they have to buy MORE of our paper, just so they can keep sending us real stuff for even MORE paper with pictures of dead president on it.

Where is the logic in all this?

[touchring]

Re: Japan May Ready Sustained Yen Intervention

Think about it. We send them paper with pictures of dead presidents on it for real stuff. Then we print more of it, their currency rises, and they have to buy MORE of our paper, just so they can keep sending us real stuff for even MORE paper with pictures of dead president on it.

Where is the logic in all this?

From how I see it, there is logic because Japan is a defacto colony of America. However, the same cannot be said of China. China is aiming for the RMB to replace the dollar. When that happens, the dollar will become worthless.

[mooncliff]

Re: Japan May Ready Sustained Yen Intervention

Hmm, the yen, the dollar, and the euro are all declining against gold significantly over the last decade. However, the dollar and the euro are falling much faster than the yen. I think this is primarily a lower dollar, lower euro problem, and there is not much the Bank of Japan can do about it. Around 1995, I was fairly sure the equilibrium level of the yen to the dollar was about 70, or even 60 yen to the dollar. Everyone laughed at that. And here we are.

If they are intervening, then that makes one wonder what the equilibrium level of the yen would be without all the manipulation (although there is always manipulation). After all, if the equilibrium were at 75, and the yen was at 75, there wouldn't be much point in trying to drive it further. Perhaps they think the equilibrium is 65 or even 50? When Geitner and Bernanke talked about reducing the dollar index from 80 by half, that would make it about 40 yen to the dollar. Yikes! But of course, a century ago, one yen was one dollar, so it may be retracing that path.

The BoJ could hold the yen at 120 to the dollar for more than a decade by Zirp, but now that the whole world is Zirp, there isn't much difference. The Japan bubble popped 20 years ago, and it has mostly worked itself out. In fact from 2001 to 2008 was the longest economic post war boom in Japan.

Print yen and buy gold, silver, platinum, industrial metals, oil futures, food, etc., I say. Or they could print money and give it to me. I would ignite some inflation! Oh, wait, no, I would buy a small apartment that would be net zero energy...