Well, as I understand it, the Japanese don't hold any substantial quantity of US equities.
They are primarily in US T-Bills and with Bush's plans on paying back debt this year with the surplus, it would be a good time for them to repatriate some cash back to Japan while they can get the best price.
But the Japanese don't want to throw out the baby with the bath water, because they need to have some assets that they can utilize to back up financial system, which is getting ready to go back to "free money" (spooling up the printing presses).
And since few non-foreign entities hold any particularly large positions in JGBs, the Japanese will be essentially devaluing the value of Yen denominated assets primarily held by their own people.
What will happen if these Japanese people finally realized how screwed they are about to become, and opt to invest in the US individually?
There is a HUGE MARKET OPPORTUNITY in Japan for US based financial companies, if only they can find the catalyst that will cause the Japanese people to lose faith in their postal savings plans and low paying JGBs, and elect to receive 4-5% in an appreciating dollar.
And as the dollar appreciates against the yen, it will appreciate against gold, imo. And it will provide the impetus for the Fed to lower rates to levels that match Europe. And capital that inexpensive will quite likely make many business projects (hopefully the solid ones) worth moving forward with.
But it will certainly be tough on those industries that compete with Asia for market share (autos, SDRAMs..etc) as the rest of Asia is forced to devalue their currencies in order to compete with Japan for export market share and to protect their domestic markets from cheap Japanese imports.
They be a time for gold in the future, but I just don't think it's right now while we're still dealing with global deflation.
Regards,
Ron |
