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 : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: russwinter who wrote (3252)	3/31/2004 1:10:02 PM
From: Wyätt Gwyön	Read Replies (2) \| Respond to of 116555

But why, you act like it's the "market"? it seems a dangerous strategy to assume the market is responsible for only the price movements one predicts, and ulterior forces account for everything else. e.g., you happily assume that skyrocketing commodity prices are "real" even as you are dismissive of bond gains. by contrast, i look at the market and prices in it as a complex system like the weather. it is impossible to know all the inputs and all their weightings, and all their dynamically changing covariances with perceptive feedbacks and feedforwards. looking at the UST "region", one can point to all the BOJ intervention, but that's not happening in isolation. there are also a lot of shorts, and low rates have caused a retreat from historical UST buyers--insurers and so on who see high quality fixed income as their preferred habitat. not to mention the universal negative sentiment on USTs on Wall St. and of course the UST "region" of this weather system is not isolated from other things like commodities. it has fed into their bubbles. More accurately the USD is back under pressure, forcing the MOF back into the intervention game this seems a rather strained reading of the tea leaves at this point. i mean, maybe it's happening, maybe not. but to call it "more accurately" without knowing what, specifically, BOJ was doing this morning after the press release is a bit of a stretch, methinks. in another week or so we will be able to see how much more the BOJ took from the FESA cookie jar thru end-March. here're the figs thru end-Feb boj.or.jp I have to ask: could they stay out for even a week, or a few days, without a collapse? i don't know. i will watch with great interest. John Succo is making the argument that the Japanese are "blinking" due to their losses of at least $27 billion from intervention over the last year. he sort of implies that the politicians are getting mad and going to "do something about it". this may play out, but it is rather different from my understanding of the Japanese situation. basically, the MOF is an entity unto itself, the strongest bureaucracy in Japan and outside political influence. if you read people like van Wolferen, you get the impression that the country is really run by the MOF and other bureacracies in their "fiefdoms", with the MOF being Tony Soprano. and if one accepts the arguments put forth by Murphy and Mikuni, then basically it is MOF policy to support the mercantilist state at all costs. that doesn't mean it is infinitely sustainable; just that change will not be effected by conventional political pressures as we understand them in our own pseudo-democracy. rather, the MOF will keep "pushing" to the point of systemic collapse, as the argument goes. but i guess time will tell whether they are "blinking" or not. my guess is the world economy will just run off a cliff with no blinking, but the recent behavior is interesting and could either indicate a changing situation (basically a change in MOF status within Japan) or the onset of collapse.