Skip to comments.Here's What's Behind The Collapse Of The Japanese Yen — The Biggest Economic Story In The World
Posted on 12/27/2012 7:52:42 PM PST by blam
Here's What's Behind The Collapse Of The Japanese Yen The Biggest Economic Story In The World
Dec. 27, 2012, 7:26 PM
Earlier we joked that lost in all of the Fiscal Cliff shuffle was the fact that the yen has been getting clobbered.
SocGen's FX guru Kit Juckes jokingly responded that far from getting "lost" the yen carnage was actually the only game in town.
Indeed this is really the huge story in global markets right now. In addition to being a major shift in one of the world's biggest and strongest currencies, it affects all sorts of manufacturers who do business in yen, or compete with companies that do business in yen.
Here's a three-year chart of the CurrencyShares Japanese Yen Trust, an ETF that's designed to track the yen. As you can see, it's been collapsing, and is now at a level that hasn't been seen in over two years.
So what's causing the yen carnage?
There's actually no one thing.
But a few of them are:
-- Shinzo Abe: Japan's new Prime Minister (who took office yesterday) has pledged to force the Bank of Japan into ultra-easy monetary policy, and he's even favored bond purchases for the direct purpose of funding stimulus money.
-- Japan's trade situation also seems to be deteriorating. Whereas previously the country was running big, consistent trade surpluses, it's now in steady trade deficit.
-- The US economy is strengthening. This isn't about the yen, but it does help boost what the yen is being compared to, the dollar. A strengthening economy helps contribute to rising US interest rates, which will help the US dollar.
(Excerpt) Read more at businessinsider.com ...
We are in a crisis, 16 trillion in debt with our two parties out to lunch.
Our government is huge and wasteful, and the good guys sold out and support China.
Nothing is working at present.
It is quite frustrating.
Actually QEinfinity is fueling Asia’s growth. That is the real reason the yen is falling.
I think we are talking the US is less worse than other countries.
Could have fooled me, lol!
Stocks getting crushed and people dropping out of the job market to make fake unemployment numbers!
If it is it wont be for long.
Obama Care is coming and it wont be good.
A falling yen would create the illusion of a strengthening dollar. You probably have to compare the strength of the dollar to something a little more substantial, like pixie dust.
100,000 Japanese families can’t go home because their homes are glowing. That took some production out of the economy there, not to mention the mess Fukushima raised with the economy.
Imagine the economic impact if Southern California’s San Onofre nuke plant did the same and displaced forever the million or so that would be affected.
Think of all those people having to move out of California and what it would do to the economy
I guess that's the proclamation from Axelrod's disinformation machine and the claim is backed up by stats showing the number of discouraged (former) job seekers skyrocketing.Hey,there's more than one way to nudge that unemployment rate down.
Yen is not collapsing was lower last year as seen in this graph , just up and down not huge long term pattern:
This appears to me to be hyperbole. I track the DOW and the major currencies, and the dollar had been falling against the Yen for, I don’t know, many months. I was waiting to see if it would go below 80 Yen. Well, it rebounded from the low 80’s to 86, and this is a collapse of the Yen ? The dollar was 90+ Yen in the 1990’s.
that is the Swiss Franc .... wild ride. the Yen is crashing cuz the Jap Gov wants to weaken their strong currency. They will stop the crash when it gets down to their target level. Whatever that is.
Do we buy now? FXY? or FXF? or FXA? (Australia)
or the Pound? not the Euro.
You buy gold or silver.
I do not see it that way at all. One party controls the MSM, the Presidency, the Senate, and has manged to intimidate the Supreme Court. A large number of the Republicans in the House are terrified of the MSM.
Consequently, they have not been able to stop the Democrats from a calculated path to reduce military power, make more people dependent on the Government, and blame it all on the Republicans via the MSM.
i thought the idea was to buy gold when it was $400/oz?
I’ve been trying to communicate to my peers what a robust economy means and why our present economic and regulated government prohibits our successful return to a healthy economy.
I’ve tried to reduce it to the concept of centralized command and decentralized control. Economically, were becoming more and more centrally controlled without any rational economic command, even regulations inhibiting rational economic command.
Here’s a military parallel.
From WWI thru Vietnam, the US military trained their junior ranks to be able to survive during attrition warfare. If calamity struck, destroying the normal operations of a unit; a ship; a battalion; a squadron; those in the military had been trained to be able to respond with what they had available to continue to fight the war as the situation was immediately obvious to everybody throughout the ranks.
An enemy which struck a US military unit, would face intelligent defense by the use of immediate offensive counterattack in breadth and depth. An infantry unit exposed to an ambush, would immediately flank into the direction of the threat and immediately counterattack. Nobody had to ask permission or wait for somebody else to come up with a plan or provide a comfortable solution to the threat they faced. Everybody responded immediately.
There have been times in the history of the US where Americans have been free with liberty to respond to economic hardships immediately.
Those times are manifest by people identifying opportunities to contract, transact, generally work in return for either compensation, barter or trade without being fettered to complete their contracts.
We don’t have that today.
Try to start a business and look at the encumbrances lumped in front of those seeking to work. In almost every endeavor, it costs more to file and gain permission to work, than it does to perform the task at hand.
When Americans migrated west, many pioneers shifted their trades, jobs, businesses from what they had previously thought they would perform to meet the situation they found themselves. They weren’t artificially hindered from their right to pursue happiness and they recognized that meant they had liberty to pursue other endeavors (not a preference in sexual orientation).
Until we have a body politic devoted to the removal of 90% of our regulations, and a return to God, we won’t see a return of our freedoms, liberties or economic prosperity.
Japans economy contracted in the third quarter and may have slipped into recession, while Novembers trade deficit widened nearly 38% from a year earlier. They need a weak yen to compete internationally. Japan has had almost two decades of deflation in part because the BOJ allowed it to happen and never fought it seriously until today. Deflation is the reason why Japan’s lost decade turned into two decades. Of course what we really need is that the governments of the world stop borrowing fake money from each other and return the money to the people to let the people care for each other.
hedge fund guy Kyle Bass believes the japanese yen drop is being driven by a sovereign debt crisis in that country
And to think that it was 320+ yen back in the wee early 70’s. Amazing!
Japan has the highest debt to GDP ratio of any country bar none. Japan’s debt to GDP ratio is about 2.33 to 1. A ratio above one is generally a cause of concern in the financial markets.
China's manufacturing sector has slowed, Europe is a mess, and we're still the last place to go.
So, despite the debt and deficits, you aren't seeing the inflation that has been predicted fo SIX YEARS, nor are you seeing enough economic hardship that people would turn out the Dems. My conclusion has to be, then, that things aren't all that bad, and certainly not bad enough to spark widespread unrest. There is some venture capital for sure-fire projects, although high risk stuff is still tough to finance.
It's possible this is a lull before the taxamaggedon---but again we heard this for years now, that it's all "about to blow." So far, again aside from debt, no big indicators this is happening.
Don’t think stocks are “crushed”-—they just haven’t moved for 3 years. We were at 14,000 under Bush, fell to 10,000, and ve hung in the 12,000 for a while. In a robust economy, we should be at 17,000-18,000 Dow.
Japan has far mor serious problems than a falling yen or the BOJ. It’s population is aging faster than any in the world, Japanese youth are depressed and according to most sources and polls “without hope” for a better futur, and about 1% of young men are “shut ins” literally not leaving their rooms for YEARS. This is not a yen or trade problem.
Thanks I wondered how Joe Weisenthal suddenly became trustworthy
Just another “unexpected” story from a so-called expert crap shoot at the local financial casino.
The fundamental cause of deflation is a protracted downward trend in Japan’s GDP growth caused both by the decrease in the number of workers and declining productivity. They need a combination of approaches to end it: Monetary easing, a higher consumption tax, boosting domestic demand (especially among the elderly) bringing more old people and women into jobs to counter the decline in the working-age population, free trade, etc.
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