Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: russwinter who wrote (4386)	1/5/2004 9:27:44 AM
From: Wyätt Gwyön	Read Replies (2) \| Respond to of 110194

Chalk up another multi-billion dollar daily loss for Japanese taxpayers it doesn't make sense to look at BOJ/MOF purchases as "investments". they are blatantly nothing more than currency props. more than a third of Japanese corporate profits come from overseas. how much will come at a sub-par clownbuck? how much at 80, which might be the "natural" on the USD at this point? none, no profits. Japanese corporations at that point lose money on fixed and variable costs--the whole economy falls apart. compared with the whole Japanese economy falling apart, a daily multi-billion-dollar loss on UST holdings (which the MOF never intends to redeem anyway) is just a rounding error. thus the MOF (which directs the BOJ, as well as city/regional/industrial bank operations through madoguchi shidou or "window guidance") sees its only course as supporting the USD/JPY. they don't give a fying fluck about how their "investment" in US securities does (after all, the structural C/A surplus in Japan means that the govt is always and forever buyers), as long as corporate Japan is not bankrupted by an overly strong yen. that is not to say that their policy is not insane. but it is at the same time a logical outcome of a larger, structural insanity. kind of like how, in the good old days of the Cold War, the insanity of Missile Silo No. 10,001 was just a logical outcome of the structural insanity of Mutually Assured Destruction. in Japan's case, the structural insanity is called "mercantilism" and effectively necessitates currently manipulation when taken to the logical extreme a la Japan. is $1 trillion enough to support the USD? other countries like China do not have the luxury of Japan to pursue these extreme operations, as they have too much domestic demand for capital. this is perhaps a factor in the fall-off of Chinese govt purchases of USTs/Agencies. with other govts not as pro-active as Japan in currency interventions, what will the effects of the MOF's trillion-dollar bid be? will this result in a slightly weaker yen but commensurately stronger Euro, for example?