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To: Hawkmoon who wrote (867)	11/23/2000 8:52:51 AM
From: Wyätt Gwyön	Read Replies (2) \| Respond to of 74559

re: "The Weight of the Yen", Can you provide a synopsis of the theme of the book? Murphy is/was an investment banker and wrote the book around 95, I think. I read the first edition in 96, so it is a bit dated. He starts by introducing some innocuous examples from the everyday life of the Japanese consumer--points out that broccoli costs like $5 for a few heads, for example. Then he goes into an explanation of the history of the yen's rise since the 70s, focusing in particular on how Japanese mfrs. recycled their dollar surpluses by buying US debt. Focuses on the interdependence there (if they repatriate the money, their currency will become extremely expensive, making their exports harder to sell; meanwhile, USD will depreciate causing inflation here). Goes into considerable discussion of the old bogey, the MoF (Ookurashou or "Ministry of Finance"). I had always wondered where they got that wacky term Ookurashou ("Ministry of the Big Warehouse), and Murphy explains that the term goes back to the 8th century or so, when rice was considered a store of value and housed in, you guessed it, big warehouses or somesuch. The characterization of the MoF as puppetmaster of Japan goes back to Karel van Wolferen (The Enigma of Japanese Power and various articles in Foreign Affairs...he is one of those Dutch dudes that writes English better than Americans, and I would consider his works to be the single best starting place for a Westerner interested in gaining an understanding of Modern Japan). Murphy is definitely indebted to van Wolferen and is not afraid to admit it. His (Murphy's) discussion of the MoF was actually more interesting than his discussion of the yen per se, IMHO. Murphy concludes with a play-by-play recount of the Plaza Accord, which is kind of interesting in that 8000-word-Wall-Street-Journal-read-on-the-weekend-article sort of way. I would really like to see how Murphy's thoughts may have changed since this book was published. Does it suggest what I'm saying, namely that the yen will have to be devalued in the future in order to monetize a national debt they don't have the tax base to finance? I really can't recall if he believes this is the inevitable course of events. You can tell just from the title that he believes the yen's strength puts pressure on things geopolitical. Incidentally, I have been a user of the yen since the mid-Eighties, and my subjective feeling is that a yen/dollar ratio of 120 yen per dollar or less is a strong yen. I always thought of 127 or so as equilibrium, and 130 or over as a strong dollar. When the yen hit 147-149 a few years ago, I considered buying some yen puts I was so frustrated (at having to buy expensive dollars with cheap yen). Of course, that was the ultimate high point of the dollar and in retrospect, would have been the worst time to buy yen puts. With the yen now below 110, I consider it quite strong. It is interesting that despite all the yammering about the dollar being overvalued vs. the euro, and the Japanese economy remaining weak (with high debt yadayada), the yen has really held its own against the dollar.