questions?
Are you talking to me ?.... Are you talking to ME ??... [read it as the line in the movie Taxi Driver by Robert Deniro]
If so.... well, I am not the best individual to answer these questions, but what the heck, how else am I going to learn....
These would be my answers... go ahead, economists, this is your chance to get back at me for poking you in the past... <g>
Flame suit on....
$/yen how long can this intervention go on?
As long as the Central Bankers deem it necessary, to target whatever levels they are aiming at.... I believe there has been a post or two that has covered this subject, even mentioned the targets.
Unless a massive (and successful) "attack" to such policies (larger than the resources and determination of two, [or possibly more] central banks determined to keep it that way)... is mounted by a(several) speculator(s). "a la George Soros".
However in the end, free markets seem to have their way.
what events will cause the $ to weaken?
....I assume you mean against the YEN.... if so:
* more people wanting to buy Yen -Vs- Dollars.
Because:
* rise in Japanese interest rates. (probably combined with stagnant or lowering of US interest rates)
* repatriation of Japanese investment $$. (i.e. selling USD, then buying Yen.)
* worsening of trade deficit between US/Japan, (from the US perspective).
* dramatic change in the outlook of the Japanese stock market over the US stock market.... i.e. anticipating future gains, triggering a migration of investment funds from one market to the other.
what damage will prolonged intervention create?
disruption of logical events such as the proper valuation by free markets of the Japanese Yes/Us Dollar assets... which in turn may create further valuation damage, once free market forces take hold.
In other words.... it is best to take your medicine now, rather than later, as it seems to me that influencing the prices established by a true free market, always seems to fail.
Best example I can think of is the Savings and Loan debacle in the US, where valuation of specific real estate assets where inflated by bogus appraisals, triggering a frenzy for adjacent properties to those that where targeted for "inflated valuation", just to obtain 100% (or more) financing...
In the end, the free market realized that such valuations where ridiculous and, unsustainable.... crashing down the RE market, not only in dreamy California but in many other places.
The longer the intervention prevails, the deeper, (and longer), the damage will be. I understand that in the case of Japan, not recognizing that insurance companies, banks and pension programs may be holding portfolios with irrational valuations, or... the institutions themselves are bankrupt based on free market valuations of their assets.
who will win --- who will lose?
Win: Whoever figures this correctly, rides it, and eventually exits timely.
Lose: Whoever is seduced and is left holding the bag, once real free market valuations set in.... the last of the mohi....er, no, no,... morons.
Disclosure:
The above answers are "to the best of my knowledge", or WAGA (Wild Arse Guess-Answers.
I am no expert in any of the fields taht are covered above, nor I have a particular knowledge of the Japanese market...
By no means should be taken or assumed to be as any form of "advice".
I answered, based on the combination that the post was addressed to me, (assuming directed to me), and I happen to feel desirous of risk taking, (for the risk of being flamed), particularly this morning...
Besides, I may learn something out of this....
.... must go now... (Flog). |
