A big move late in the yen (FXY -1.2% in regular trade, -0.6% AH) takes the currency to its...

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Whitehawk Comments (2778)
 
On Yen weakening: U.S. Treasury's Brainard said "the U.S. supports Japan's efforts to reinvigorate growth and end deflation."

Yes, this has been a very profitable trade and will likely hit 95 before taking another breather. However, the Japanese have started to feel the pain of higher energy prices and reduced purchasing power. The alternative to Yen weakening to spike export growth: competition. However, China boycotting Japanese goods has taken its hit. This is an economic war, with the U.S. siding with its ally on a brute solution that will have unintended consequences.
11 Feb, 06:17 PM Reply Like

pollyserial Comments (891)
 
Whitehawk, what do you think those consequences will be, other than a lower SPX over here?
11 Feb, 11:17 PM Reply Like

Whitehawk Comments (2778)
 
The rush to currency devaluations in the past has not led to real growth. War bailed economies out, but at a cost. My answer here is win with true competition based on product differentiation: if Japanese products are superior, they should have no trouble, especially in this age of rapid information dissemination, regardless of "controls." People will want the next best thing. Devaluing a currency for the sake of waging an economic war is a flimsy attack. It may be a good relatively short-term trade for us in the currency market (it is for me, I can tell you that), and perhaps the Japanese look forward to more carry trade charades*, but in the long run only true competition and productivity win.

*People wonder why the AUD is declining: the Japanese are pulling (some) money from this carry trade, as they did in prior carry trades.
12 Feb, 12:38 AM Reply Like

Steve Bass Comments (109)
 
Why is there any criticism of Japan until the OECD's PPP is at 100??

http://bit.ly/XUC0fe

People advising them to be more competitive, not weaken the currency, etc.?

Some think of this as a race to debase. Perhaps the more important effect is Japan is only joining the US and EU in devaluing debt....and the US treasury appears ok with this (not that it matters).

Until the intersection of the column and row for the US and Japan reads 100, I think we should quit complaining.
12 Feb, 04:44 AM Reply Like

Michael Clark Comments (7800)
 
You're absolutely right. But the expectations was that America, England and Europe (the white cultures that run the world) could do what they wanted. Now to have Japan follow suit, there is a kind of flurry of feathers.

Japan is doing nothing Bernanke has not been doing all along, and the UK. Europe is now on board, with interest rate suppression and bailouts and more debt -- the only reason Europe tolerates a higher Euro is that is saves them for the moment from fears of EU disintegration. But a strong Euro is what ultimately CAUSES EU disintegration. A strong Eruo forces all the periphery south countries deeper into recession, which the north strong-Euro lovers then use against the south demanding more 'structural' change in the undisciplined south. The only structural change that will work for the EU is the end of the Euro. But that is a different story.

Bernanke loves Euro strength because he loves the devluation of the Dollar as a way of trying to stoke fires in asset bubbles. Of course, this is why food is becoming so expensive also.

It's a madhouse run by blind madmen pretending they know what is going on.
12 Feb, 07:02 AM Reply Like