What's probably keeping the yen steady is not only fear over intervention, but profit taking amid hedge funds' losses on Russian Debt. There have been several articles discussing losses by major fund managers on the GKO's as they're called, as they all believed the G7 would open the wallet and bail ot Russia. Thus they bet heavily and lost and have thus liquidated the yen positions for capital. This is the only reason I can think of that the yen went from 146 to the 142's in the past week & and half. As soon as things cool off with Russia, the yen shorts will reestablish their positions. Most banks probably have already - as this looks to be a good time to get in. The fear of intervention argument has merit, but I don't think its the main cause.
Since when has the market ever respected Sakakibara's warnings anyway?
The main thing is that the yen looks to go much lower... when has a 400 point drop in the Nikkei not been correlated with a 1 to 2 yen slide? I can't remember any week like this for the yen - where the averages are plunging but the currency is stable.
As for Russia, I must speak my peace.
What kind of crazy world are we living in? The G7 turns its back on Russia led by the lead constituent, the U.S. I am quite surprised that there's been little public outcry here, though it seems to finally be starting. Russia is a country that we've spent billions on for a sole reason - to put the nail in the coffin on communism, and it is our capitalistic ideology which is the cause of their current woes. No country can make the transition that Russia has attempted to make over the last 15 years without bumps along the way. Russia's has been compounded by low commodity prices. The total cost it would be to remedy Russia's short term problems is tiny, relative to the amounts thrown at Indonesia, for instance. I believe that the devaluation and default could have been avoided for less than $100B, from what I've read. The U.S. in particular has worked so hard to spread capitalism throughout the world - but we must by there to guide as well as implement. Now there all calls from the Duma for Yeltsin's resignation. The communists see an opportunity for a 'permanent revolution', which as Trotsky explained is to force communism on the world in 'one fail swoop'. Of course, the revolution would be limited to Russias borders but still, a return of the 'iron curtain' is now closer than its been since the mid-80's. With our pending budget surplus and general prosperity, I fail to see Clinton and Congresses reasons for refusing to fork over the desperately-needed money. God have mercy on them all if the days of old are revisited upon us - living in fear of nuclear attacks, restrictions on religious practices, the control of everything by and for the State. How can this be happening?
I respect Soros, as you can well imagine, but his article should have clearly lobbied for a G7 bailout instead of a devalution, which he knew would mean a swan song for Yeltsin.
I'm sure everyone on this thread has varied positions on this topic, so lets talk it up and get 'em out. |
