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Strategies & Market Trends : Currencies and the Global Capital Markets -- Ignore unavailable to you. Want to Upgrade?

To: Henry Volquardsen who wrote (1769)	6/14/1999 11:56:00 PM
From: Step1	Read Replies (1) \| Respond to of 3536

Henry, thank you for pointing out possible factors at play here. HV>>on a more specific current issue there are two points. the big Japanese insurers bet heavily on the Euro bond markets. Recently the regulatory agency that covers insurers told them they were overexposed and should scale back. This has been a big contributor to the weakness of the Euro and the strength of the yen. << (I was in the middle of a long response to your post, and bam! another of those system freeze ... "#$%#%( too many lately...) to summarize quickly what I was saying, the forex movement while not the cause of financial havoc in themselves, always indicate some bigger below the surface forces at play. The BOJ had been (at least publicly ) quiet in the last few months, so why the heavy intervention of late, a sign that strong currents must be once more gaining momentum again. The forex yen getting weaker doesn't always portend a higher stock market here in Tokyo, but the inverse, a stronger yen, is always bad news... I am posting two links here from Makin (Economic Outlook) and Armstrong (PEI ) for those interested. They both predict a yen at 180-200 in order for a recovery to take place in Japan... Makin at aei.org and PEI at : pei-intl.com >>> The dollar is poised to rise to at least 200 yen by 2003 due to the fact that the Japanese economy is NOT recovering. The extremely low levels of interest rates that have been the core policy of the government are in fact undermining the entire economy. While low interest rates were hoped to be the answer to the Japanese banking crisis, after more than 5 years of such a policy, the long-term damage to pension funds, life companies and now the Postal Savings System are becoming incalculable. All savings and pension funds need a base income of about 4% in order to meet future obligations. The extremely low interest rate policy has now taken the banking crisis and spread it into virtually every sector within Japan. There is no hope for recovery when the consumer lives in fear of both their job and pension. The number one concern in Japan is that the pension funds are now insolvent. Consumer confidence is starting to hit all time record lows in Japan and there is no hope in sight for the short-term. In order for Japan to recover, the dollar MUST strengthen – not weaken! A weak dollar raises the cost of production in Japan while a strong dollar LOWERS the cost structure in Japan allowing for corporate profits to rise. << sg