But the trickle could soon turn into a flood. The speculators of the world have been told by the new head of the BOJ, Haruhiko Kuroda, that they can now speculate with borrowed yen which has not only no cost but no currency risk. The borrowings, then, could be infinite. The foreigners increased their holdings of Japanese Government Bonds from four percent to nine percent in the two years before the break. No doubt much of that was sold on the break.
And the BOJ may well lose control of the pace of the descent in both the yen and JGB market. The Japanese domestics with a lag might start to sell big time. The faster and farther the yen falls the more likely that will happen. The situation is now very unstable. A deeper fall in the yen is going to force all of emerging Asia into a devaluation and that is gong to cause big problems down the road in places like Europe, particularly Germany.Pinetree Capital — Macrobits
Are Japanese Investors Starting To Yen For Foreign Currencies?
Marshall Auerback
Marshall speculates on China being forced into an RMB devaluation due to the falling yen.
Auerback's been wrong on Japan for some time now, I believe. A falling yen would probably help Japan. The stagnation in the Japanese economy has been over a period of steadily increasing strength for the yen. He could be right about the effect on Germany.
ReplyDeleteCurrent scoreboard in the 'ZombieBowl':
ReplyDeletehttp://www.treasury.gov/resource-center/data-chart-center/tic/Documents/mfh.txt
Looks like Japan is tired of remaining in second place and is going for the 'Hail Mary'.... in this contest to determine the winner between these two western wannabe zombie nations...
No wonder Abe has approval from DC to proceed. This turns everything into a knockout battle for 2nd place, between China/euro/Japan?
ReplyDeleteLooks like the Pentagon chose Japan.