What's up with the value of the YEN?

[Jack]

I'm not disagreeing with you as the BoJ doesn't seem to be willing to take necessary measures to adjust the exchange rate.

However, I do wonder why you feel the dollar will fall against the yen but maintain strength against the Euro. Any elaboration?

Actually I think the dollar will fall against the Euro as well but the yen will gain even more. The Yen along with the Swiss Franc are the only two strong safe havens out there right now. Those selling their US treasuries will seek refuge in the yen and Swiss Franc, but since the Swiss Franc is a small currency, the majority of buying should go towards the yen. It's just my opinion. I am very long the yen right now.

[FG Lurker]

Actually I think the dollar will fall against the Euro as well but the yen will gain even more. The Yen along with the Swiss Franc are the only two strong safe havens out there right now. Those selling their US treasuries will seek refuge in the yen and Swiss Franc, but since the Swiss Franc is a small currency, the majority of buying should go towards the yen. It's just my opinion. I am very long the yen right now.

I agree that this is what has been happening, and after the past few months of market insanity I wouldn't bet against it continuing.

That said, Japan's economy is fucked already and over the next 3-6 months it is going to get a lot worse. I can also see the BoJ matching the Fed's money-flooding actions in January or February if the yen doesn't weaken.

If Japan cranks up the bad news and the BoJ starts pumping out more yen, do you think the yen will still appreciate?

[Catoneinutica]

I'd argue that the Swiss Franc is the ultimate safe haven (disclaimer: I'm a Francophile). The Euro is probably a pretty safe bet, but there are political problems in the Eurozone. I don't think the yen will ever be as cheap against the dollar as it has been, though I'd never characterize it as a safe haven on the level of the Franc. Ask yourself, which countries are likely to engage in Keynesian hole-digging boondoogles over the coming months and years to prop up their economies: England, the US, and Japan are high on the list. The Swiss, uh, put them in the "no friggin' way" column, and the Germans, with their fear of hyperinflation, haaaate the idea (though again, the Euro isn't just a German currency, though it sometimes seems like it).

[GuyJean]

I've been playing with idea of precious metals. Or, are they just called 'metals'?.. Yeah, that's how much I know.

Silver looks kind of fun. Gold might be too expensive for my blood. 'Yeah, I'll take a gram of gold, please'.

I'm looking for a metal I can eat if the shit hits the fan.. Iron?

Maybe I should start another thread..

GJ

[hundefar]

My good friend, who is an investment banker and a bit of a goldbug, says to stay away from precious metals as an investment object at the moment. Gold has not been doing well the last 6 months.

Best thing seems to be government bonds these days

[Buraku]

[FG Lurker]

I'm pissed off

next year can get way more serious !!!
really fucked !!!

Buraku and Take, separated at birth?

[Jack]

I agree that this is what has been happening, and after the past few months of market insanity I wouldn't bet against it continuing.

That said, Japan's economy is fucked already and over the next 3-6 months it is going to get a lot worse. I can also see the BoJ matching the Fed's money-flooding actions in January or February if the yen doesn't weaken.

If Japan cranks up the bad news and the BoJ starts pumping out more yen, do you think the yen will still appreciate?

If I am not mistaken and someone else can correct me, much of Japan's sovereign debt is so long term that it is quasi perpetual so there would be little chance for the BOJ to buy bonds to inject liquidity like the Feds are doing.

I think the Japanese economy will do well because of the decline in raw materials prices.

In any event, I think the Yen will rise to 80 and whether or not it goes higher remains to be seen but if it gets close to 80 I'll go short yen. I may not wait until it actually hits that number.

[Jack]

You win the bet. I'm in Tokyo 2-4 times a year. I'm buying.

I'll send you a PM when I'm in Tokyo.

[FG Lurker]

If I am not mistaken and someone else can correct me, much of Japan's sovereign debt is so long term that it is quasi perpetual so there would be little chance for the BOJ to buy bonds to inject liquidity like the Feds are doing.

I'm not sure how they flooded the banks with yen last time but they did do it. Will they do it again? They might if the yen keeps getting stronger.

I think the Japanese economy will do well because of the decline in raw materials prices.

Certainly cheap raw materials and a strong yen help Japanese manufacturers on the supply side.

The problem is that a huge percentage of what they make gets exported again, and the strong yen kills them there. I suppose eventually it would balance out with cheaper materials allowing for lower selling prices to offset the stronger yen... The question though is if Japanese manufacturers and exporters could survive long enough for things to balance out. Some would, but how much damage would the others going under do?

In any event, I think the Yen will rise to 80 and whether or not it goes higher remains to be seen but if it gets close to 80 I'll go short yen. I may not wait until it actually hits that number.

It could certainly go to 80, it has been as far as 85 before and a quick drop to 80 is not out of the question. I think it is getting less likely though as the recession here deepens. That said I am keeping lots of yen cash on hand right now just in case things really go to hell.

[Jack]

The problem is that a huge percentage of what they make gets exported again, and the strong yen kills them there. I suppose eventually it would balance out with cheaper materials allowing for lower selling prices to offset the stronger yen... The question though is if Japanese manufacturers and exporters could survive long enough for things to balance out. Some would, but how much damage would the others going under do?

I did some quick calculations and it seems though the decline in raw materials prices more than offsets the rise in yen. things like oil, steel, copper, nickel and so on. You just have to pick companies and industries that have a high component of raw materials in their products. I'm thinking plastics, cars, textile and heavy machinery. No one knows if commodity prices or the yen will stay at current levels, probably not, but until industries find their niche, they the strong yen will hurt them. I have the data but no time to do it, however, it would be interesting if someone could chart the price of oil in USD and JPY over the past two years.

[ichigo partygirl]

well the value of the yen is what is keeping me out of Japan. The original plan was to come back in May after my graduation but now that the yen is so strong i am going to have to save money for at least an extra 4-6months. le sigh

[AlbertSiegel]

well the value of the yen is what is keeping me out of Japan. The original plan was to come back in May after my graduation but now that the yen is so strong i am going to have to save money for at least an extra 4-6months. le sigh

Tell me about it! I was planning to visit Japan in March and now it looks like I may move that to November!
.

[Buraku]

Asian stock markets rebounded Friday from the previous day's rout, with Tokyo's index gaining nearly 3 percent, as the U.S. bailed out Bank of America again and a weaker yen lifted exporters like Toyota Motor Corp. (nyse: TM - news - people ) Major European markets opened higher. After a tumultuous week that saw markets fall sharply, early trade in Asia was cautious but picked up later in the day as investors snapped up beaten down shares.

TOKYO (AP) - In currencies, the dollar was trading at 90.36 yen on Friday from 89.92 yen late Thursday.

Dollar Rally Coming - up up up

but later followed by possible catastrophic collapse



so says Greenrushcapital

[FG Lurker]

so says Greenrushcapital

So the US$ is going to go through it's death throws and the Euro is going to self-destruct. Of course he has no comment on what might become the next currency of reserve for the world, or maybe he just thinks the entire world economy is going to just......stop. He sounds like your kinda guy!

BTW, I looked up the company. Their office is on the 2nd floor of a strip mall, on a side street, out past West Hollywood. Sounds like a successful "capital manager" to me.

[Buraku]

California Economy Bankrupt?

http://www.californiachronicle.com/articles/view/88112

California Facing a Financial State of Emergency

Bill Lindner
January 16, 2009
Because lawmakers have failed for months to address California's growing budget crisis, income tax refunds as well as hundreds of millions of dollars worth of other bills won't be paid on time.

In his recent State of the State address, California Governor Arnold Schwarzenegger said "I will not give the traditional State of the State address here today because the reality is that our state is incapacitated until we solve the budget crisis. The truth is that California is in a state of emergency."

California State Controller John Chiang says to make sure the state has enough money to meet its mandated obligations such as payments to public schools, debt service and other payments deemed by the state Constitution, federal law or other court rulings, certain payments will be delayed by 30 days.

California faces a more than $41 billion deficit over the next 18 months if nothing changes.

If the Governor and the Legislature fail to enact a sound budget solution that provides much-needed cash by February 1, the state will be $346 million in the red at the and of February and $5.2 billion in the red in April according to Mr. Chiang.

Payments that assist more than a million aged, blind and disabled Californians --- that go to pay their rent, utilities and put food on the table --- and payments to state agencies that fund critical public services ranging from public safety to health and welfare will be delayed if a budget solution isn't passed.

Tax refunds will also be delayed.

Mr. Chiang also noted that if tax refund payments are postponed beyond the date prescribed by law, it will end up costing the state tens of millions of dollars in interest payments.

As pointed out by Mr. Chiang, delaying these payments will hurt real people, many of whom are barely hanging on financially in these tight times and Businesses who have state contracts may have to lay employees off.

If California still has a cash fund crisis in March or April, the suspended payments could become IOUs.

A list of payments to be made can be found here. A list of payments to be delayed can be found here.

[FG Lurker]

[Catoneinutica]

The UK - aka Southeast Iceland:

http://www.order-order.com/2009/01/what-are-chances-of-imf-bailing-out.html

[Phantom]

I see a sudden weakening of the Yen against the USD and AUD. Government / BOJ intervention?

[FG Lurker]

I see a sudden weakening of the Yen against the USD and AUD. Government / BOJ intervention?

The JPY and USD fell against all major currencies.

It seems that expectations for next week's TARP announcement and anticipation of the US stimulus plan have prompted investors to buy stocks and enter currency carry trades. As a lot of the parked cash is sitting in the yen and dollar, movements like this cause both to lose value.

If Monday's TARP announcement follows expectations then this will probably continue for at least a little while longer. It then depends on how much longer the US Senate sits on their hands and does nothing... If the stimulus plan progresses then we could be seeing the very early days of a recovery. If the US Senate fucks around for too much longer then things will come crashing down again as investors once again lose confidence.

That's my take on it anyway. Keep in mind that it's worth every penny you paid me for it.

[Iraira]

[quote="FG Lurker"]The JPY and USD fell against all major currencies.

It seems that expectations for next week's TARP announcement and anticipation of the US stimulus plan have prompted investors to buy stocks and enter currency carry trades. As a lot of the parked cash is sitting in the yen and dollar, movements like this cause both to lose value.

If Monday's TARP announcement follows expectations then this will probably continue for at least a little while longer. It then depends on how much longer the US Senate sits on their hands and does nothing... If the stimulus plan progresses then we could be seeing the very early days of a recovery. If the US Senate fucks around for too much longer then things will come crashing down again as investors once again lose confidence.

That's my take on it anyway. Keep in mind that it's worth every penny you paid me for it. ]

I can stop the yen rising against the dollar. Have a trip planned to LA in late April, so I'll go convert a bunch of yen to dollars tomorrow. My currency exchange anti-luck is so strong, the yen will be at 70 come late April.

[FG Lurker]

I can stop the yen rising against the dollar. Have a trip planned to LA in late April, so I'll go convert a bunch of yen to dollars tomorrow. My currency exchange anti-luck is so strong, the yen will be at 70 come late April.

I think you might have your rising/falling terms mixed up.

[Buraku]

[Jack]

I'm buying yen futures like crazy. The USD is going gown to zero. I don't know when but I see nothing on the horizon that says the USD will aprreciate. China is beginning to buy commodities again and you know that will mean an appreciation in commodity prices and the reciprocal depreciation of the US dollar. The USD under 80 yen is very possible by the end of summer.

[Phantom]

The USD is going gown to zero.

Burn baby, burn! But watch out for U.S. pressure on the Japanese government to artificially weaken the Yen.

[FG Lurker]

Burn baby, burn! But watch out for U.S. pressure on the Japanese government to artificially weaken the Yen.

US pressure? It'll be a pressure cooker from j-companies and j-society in general. The LDP must call an election before September and they're not going to want to deal with endaka during an already difficult campaign.

[Buraku]

The LDP must call an election before September and they're not going to want to deal with endaka during an already difficult campaign.

The Dollar is starting to dive again



Against the Japanese currency, the US Dollar dropped to 91.14 yen. European banks are pretty fucked also, but what worries me is Taro Asshole Aso ain't doing shit about the J-economy. Nakagawa seems to be working his butt off and hinted Japan might go interventionist again against such currency moves. Obama warned Congress of catastrophic declines if it did not pass the package this week. The President mentioned the Japan years in his first live press conference but wouldn't be drawn on an overheard remark where VP Biden spoke of a 30% percent chance of fail. The United States is expected to sell a record 67 billion dollars of new debt, Bush already broke the NYC debt clock in 08. Don't ask me what Obama is going to do with the deficit and rising debts, I've started to ignore that kind of news...its just too depressing.

80 levels are really shit, but I think Japan can weather it for a little while. What would worry me is if it heads to 70 territory, this is formula economic apocalypse

EDIT
stupid mistake pointed out by FGLurker

[FG Lurker]

The Yen is starting to dive again

If the yen was diving it would be great news. Unfortunately that's not the case and the dollar is weakening against the yen.

I'm surprised Japan hasn't intervened already but I guess they are watching and waiting to see if the markets will correct on their own. If it gets too far below 90 I can see them stepping in though. The yen being too strong will push large J-companies to send more and more manufacturing overseas which will kill jobs here rather rapidly...

[Number11]

Here is a C-SPAN interview a few weeks ago with Rep. Paul Kanjorski. The interesting part starts at 2:09. It's like a scene from a fictional economic thriller.

So, what do you think? Did he overstate the cliff, brink, abyss; or are we headed for The Great Depression II? I really don't know.

[YT]<object width="425" height="344"><param name="movie" value="http://www.youtube.com/v/m_atOvrTtT8&hl=en&fs=1"></param><param name="allowFullScreen" value="true"></param><param name="allowscriptaccess" value="always"></param><embed src="http://www.youtube.com/v/m_atOvrTtT8&hl=en&fs=1" type="application/x-shockwave-flash" allowscriptaccess="always" allowfullscreen="true" width="425" height="344"></embed></object>[/YT]

[Buraku]

Dollar at 90.20 Yen today, will be at 80 again soon. I think they need to think about stepping in if they don't want it heading to 70 territory


British pound v US dollar

So, what do you think? Did he overstate the cliff, brink, abyss]

Unfortunately currency collapse is the fate of some fiat currency, the money needs to be backed by growth in production but more importantly it's a bit like a kid believing in SantaClaus.... backed mostly by confidence in something that sometimes isn't really there. Greenspan was actually a closet metals supporter. He wrote in one of his early essays

The financial policy of the welfare state requires that there be no way for the owners of wealth to protect themselves.
This is the shabby secret of the welfare statists' tirades against gold. Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists' antagonism toward the gold standard.

Two years later Nixon was to close the gold window and Greenspan was told by Nixon advisers to shut up about the metals