The following is commentary notes in reference to this article
by Elaine Meinel Supkis.
SEPTEMBER
17, 2010...3:29 AM
Schizophrenic
Status Quo: Japan Deliberately Weakens Yen, US Demands Stronger Yuan
The entire
and only excuse for running the present floating fiat currency/no
gold standard system is that currency values
should restrict trade surpluses and deficits. That is,
if a country has a trade deficit, its currency was supposed to
decline in value until trade balanced again. Obviously, this
stupid system has been gamed to death by export powers and currency
traders working off of the backs of central banks which play currency
games via their FOREX holdings and debt buying/creating operations.
And none do this more aggressively than the Bank of Japan, the
originator of many of the schemes to keep a currency weaker than it
really should be.
.
ΩΩAs
I also have pointed out over the years, Japan has gotten a free ride
on the back of the US in being allowed to run a trade surplus that is
double the trade rate with the US. At no time in the last 35
years has the US run more than 50% of Japan’s trade with the
US. This trick is done by various tools and mechanisms which
the Japanese developed and honed over the years so this 50%
differential would never budge no matter if trade shoots up or drops
like a rock. All other nations have observed how Japan pulls
off this neat trick and nearly all have successfully imitated Japan
to the point, the US runs trade deficits with nearly everyone.
.
ΩΩNow,
the Japanese Model for Tricky Trade Surpluses is breaking down at
last. This is a good thing but it shows clearly the weakness of
the philosophical ‘floating currency’ system which should
cause us to come up with a better system. Since much of the
wealth creation system for international dealers, investors and
traders well up from this goofy, destructive and stupid floating fiat
currency system, it is nearly impossible to alter it even slightly.
The very rich have discovered every possible flaw in this
system and of course, as is usual in all economic systems, the flaws
are where all the easy wealth comes from so the rich cling to these
flaws with greatest tenacity and will fight to the death to prevent
any reforms or changes that fix obvious problems.
.
ΩΩLike
helpless passengers on the Titanic as it roars into a field of
icebergs at night, workers in various first world countries have
given up even the illusion of having some say in the direction things
are going. Well, we hit a major iceberg in the fall of 2007
which was the Japanese Carry Trade behemoth which promptly changed
the direction of money flows that supported the status quo back then.
That is, the system which supported the carry trade business
crashed. This stopped the flood of easy credit which carpeted
the world’s economy causing huge real estate bubbles all over
the first world countries. EXCEPT FOR JAPAN.
.
ΩΩThe
country which is the basis for any carry trade system by providing a
ZIRP lending rate of nearly zero percent while not allowing any
lending within itself, that is, no home buyers in the ZIRP country
can buy housing at near zero rates, this would travel out of country
via currency traders to flood high interest rate countries with
stronger currencies. Now that the US has joined Japan in the
ZIRP cellar, we see our own housing market crash just like Japan’s
did in 1991 and we see the US being used as the
carry trade source
so that our money that is lent by international bankers is being used
to inflate the Chinese housing market instead of our own.
.
ΩΩSince
we are now the ZIRP carry trade currency, we see China desperately
trying to suppress a housing bubble while our own government
desperately tries to inflate our own bubble back to where it was in
2006. This business is hammering Japan since China wants a
strong yen, unlike the US, China is a creditor nation and could pull
off this trick. So China now buys Japanese debt and is no
longer in the market for US debt and China is also holding more and
more yen, infuriating the Japanese no end.
.
ΩΩThe
Japanese have been forced by China to stop pretending they don’t
manipulate their currency and now have openly defied the EU and US
and are doing exactly that, starting yesterday. The yen
strengthened to 82 to the dollar which is fatal for the perpetual 50%
plus trade surplus Japan loves so much. So, world FX markets
were roiled by this obvious and ultimately futile gesture from a very
desperate Bank of Japan. For the problem here is, Japan may be
a creditor nation but so is China. Japan can play these games
against debtor nations like the US but not against creditor nations
like China!
ΩΩ
U.S.
Adopts Tougher Stance on China – NYTimes.com
The United
States brought two cases to the World Trade Organization on
Wednesday, accusing China of improperly blocking imports of a
specialty steel product and denying credit card companies access to
its markets. The move came just hours before House lawmakers demanded
action on the currency issue….The currency issue is
increasingly likely to be a focus when leaders of the Group of 20
nations meet in November in Seoul, South Korea. A bill with support
from 143 House members from both parties would allow the United
States to impose tariffs and other penalties on countries that
undervalue their currencies….The United States should seek to
mobilize the European Union and countries like Brazil, Russia and
India to press China to realign the renminbi, and should seek W.T.O.
authorization to impose restrictions on Chinese imports if it does
not do so, Mr. Bergsten said.
.
ΩΩFrugal
Japan » Blog Archive » Credit Cards in Japan: Cracking
the Code:
like all things in Japan, this system is deliberately different from
the US system and the
Japanese way of dealing with credit cards is to make it nearly
impossible to get one!
So US companies can operate there but must do so the same way
the Japanese companies operate there. If the US tried to flood
Japan with easy credit at low rates, the Japanese government will
find other means to stop this.
.
ΩΩNote
here that the US wants everyone BUT Japan to try to force China to
rejigger their currency! HAHAHA. The US knows this is as
cynical and crude as our demands that Iran not have nuclear bombs
while openly preventing the UN to even see how many illicit nukes
Israel has hidden in its own arsenal! International coalitions
based on lies are fatal. In this case, the US is running off to
trade partners who all run surpluses with us, trying desperately to
isolate China and keep the illusion that we lead the ‘free
world’ which is ‘free trade’, etc.
.
ΩΩOf
course, we must fight off all countries running trade surpluses with
us! This goes under ‘DUH’ as the obvious thing we
must do if we wish to survive. Instead, we sell our future down
the tubes by letting ‘allies’
ravage us in trade. Of course, everyone will do whatever
we want in other areas if we let them destroy our industrial base and
bankrupt our country. They will join our embargoes on Iran and
Cuba. They will happily bark at China in public while kissing
ass in private. They will vote with us in the UN and let us
attack various countries with our bloated military so long as we let
them destroy our domestic economy.
.
ΩΩThis
pisses me off no end. The trade off here is highly destructive
and will kill our nation! It is treason.
Yet, it rolls blissfully onwards. We continue to attack
China for imitating South Korea and Japan but lately, both Asian
powers are now not barking at China when we demand this. They
know that if China’s unbalanced trade ends, so will their
own unbalanced trade. That is, they are all in the same boat as
China.
ΩΩ
Stocks,
U.S. Futures Fall on Concern Recovery Is Stalling; Yen Strengthens
Stocks fell
for a third day in Europe and U.S. index futures declined as an
unexpected drop in U.K. retail sales revived concern the economic
recovery is stalling. The
yen gained after Japan’s intervention yesterday spurred its
biggest slide in 22 months. Gold
rose to a record.
.
ΩΩThe
Japanese rescue operation failed. This
shows that once things get totally unbalanced, the floating fiat
currency regime does
deal with trade imbalances. But it is a very stupid tool since
it takes 35 years to
even begin to operate properly and it will take another 35 years for
US trade with Japan to come into balance.
Due to Japanese protectionism, this balance will probably be at $0.00
trade as Japan resumes its ancient Hermit Kingdom sort of culture as
it did repeatedly in the past.
ΩΩ
BOJ
Governor Defends Policies As Pressure Builds To Do More
Bank of
Japan Gov. Masaaki Shirakawa said Thursday that unconventional
monetary easing measures were “highly effective” against
“acute pains” during the recent financial crisis, but
also spoke of the long-term risks of excessive easing and ultra-low
interest rates….Shirakawa has strongly defended the steps
taken by the BOJ,which
he said have already gone well beyond conventional tools of monetary
policy.…
Under
intense pressure from the government as well as from markets, the
central bank expanded a special lending program at an emergency
policy meeting on Aug. 30. The bank decided to offer financial
institutions Y10 trillion worth of six-month loans at a rock-bottom
0.1% interest, in addition to the Y20 trillion in three-month loans
it has been offering over the past few months.
.
ΩΩThe
gold bubble continues to grow as desperate Japanese savers who get 0%
interest on savings move to gold. Ditto, US savers. Might
as well play the gold markets if banks are ZIRPing us to death.
There is gross inflation underfoot. The insurance I pay
to keep my son alive went up $70 this year, for example. I am
on a fixed income and this is terrible since my grocery shopping
costs me $100 a week and I remember when it cost half that…less
than 10 years ago. The Bank of Japan admits to going deep into
the currency manipulation game but the sumo wrestling game with China
means, even heroic cheating won’t work.
.
ΩΩThat
is, if the Chinese want a strong yen, it will strengthen. This
is because, as I pointed out in the past, this year, Japan’s
trade with China has surpassed Japan’s trade with the US. This
is a key moment in history. Japan can’t turn back the
clock when it was the US #1 trade partner. China has been the
US top trade partner during most of this last decade. So
Japan’s grip on international currency has declined RELATIVE TO
CHINA. And this matters a great deal. Japan’s
leverage over the value of the yen and the dollar has declined in
direct proportion to China’s leverage growing greater. China
now controls the value of the yen versus the dollar since China holds
both hostage.
ΩΩ
Japan
Likely Sold Y1.7-1.8tln In Intervention Wed
Japanese
monetary authorities apparently sold 1.7-1.8
trillion yen in intervening in the foreign exchange market Wednesday,
data released Thursday by the Bank of Japan suggests.
.
ΩΩJapan
is on the cusp of ushering in hyperinflation. The desperate
moves to weaken the yen will work if Japan suddenly prints tons of
yen a la Zimbabwe! And they will do this if this is the only
way to get the US/Japanese 50% differential trade back on track for
the rich owners of Japanese corporations! The nature of
Zero/Infinity is a classic yin/yang situation. The goddesses of
Inflation and Depression are twin sisters or maybe, the same Gorgon
creature that can take off to the heavens or crush you into the
earth.
.
ΩΩAvoiding
both Infinity and Zero is vital for all banking systems and they, in
turn, are based on land and trade. The very first banks lent to
land owners and enabled trade. This has been true since the
city of Ur was founded thousands of years ago.
.
ΩΩJapan’s
Solo Run on Yen Exposes Flaw in World Export Strategy:
Bloomberg news is most amusing. Of course, everyone wants
to export their way to wealth. It works! The obverse side
of the coin is, all nations must protect themselves from everyone who
are trying to export their way to wealth! Countries like Japan
who succeed in protecting themselves while ravaging others are now in
trouble as world trade hits a brick wall: the US has been the dupe
all these years and is now pretty much going bankrupt.
.
ΩΩJapan
can’t export to China in a one way fashion because the Chinese
know this is the Japanese plan and have turned Japanese systems back
on itself: they figured out how to use FOREX holdings and buying
government debt to force trade in their favor! And guess when
they figured this out! In the mid-1980′s when they cooked
up their 50 Year Plan. True, it began very small and slow in
1990 but picked up speed in 2000 and by 2007, thanks to immense US
trade deficits, it shot to the forefront and China is on track to be
the world’s #1 economic power by their target date of 2020.
.
ΩΩJapan
has to begin negotiations with China over how to do world trade.
Already, by openly declaring currency war on the US dollar,
they have moved towards a position whereby they MUST join China in
fighting US currency demands. I keep telling everyone the fix
for us is simple: we give up on world export trade and the impossible
dream of exporting our way to a trade balance and we put up severe
protectionist barriers and hunker down until we have some sort of
FOREX holding. Our present one is the smallest on earth, most
of our holdings are in US $ which is insane. We need to hold
yen, yuan and euros.
.
ΩΩThe
way we can do this is to restart the gold standard and dump the US
dollar. This means no more oil imports but then, this will
happen anyway by 2020 so we may as well do this now when we can
survive it. But the US public loves cars and won’t accept this
draconian move. So we will motor happily onwards until the
Chinese buy up all the oil and leave us high and dry.
ΩΩ
Kan
Hones `Fighting Spirit’ in Authorizing Yen Intervention to
Disarm Foes
“The
debate with Ozawa may have honed Kan’s fighting spirit,”
said Jesper Koll, Tokyo-based head of equity research at JPMorgan
Chase & Co. “This
hopefully signals the end of complacency, and the best sign of that
is in the currency market, because Japan lives and dies with the
yen.” The
DPJ, which took power for the first time in September 2009, has
struggled to meet campaign promises to improve social welfare without
adding to the world’s largest public debt, which is approaching
200 percent of gross domestic product.
.
ΩΩNote
how floating currency rip off artists at JP Morgan applaud this
obvious and hostile manipulation of the yen! The Japanese were
‘complacent’ when letting the yen float to its real value
based on Japan’s trade profits. The debts owed to the
Japanese taxpayers should not exist. The rich industrialists
and currency traders and bankers in Japan all got much, much better
while the condition of Japanese workers and taxpayers declined
dramatically. The once-egalitarian
society has now the same gaps between rich and poor as the US and UK.
The rich want a weak yen, the poor need a strong yen. The
rich want no cheap imports, the poor need these desperately.
.
ΩΩInstead,
half of Japan is now going into social destruction unable to create
families, feed themselves or live in homes larger than a postage
stamp. Schools and hospitals are falling apart. More than
half of present students in Japan are now listless in school since
they have little to no job prospects upon graduation except to live
at home and work part time jobs at a minimum wage.
ΩΩ
Japan
slips in global university rankings, overtaken by China
On the
country ranking table, the United States was in first place, with
China at eighth and Japan 10th.
.
ΩΩJapan
falls relative to the rest of Asia in education figures. Japan
is being beaten by Korea and the various Chinese nations in all sorts
of areas from winning Go games, collecting gold medals in the
Olympics, winning math contests, etc. The US is still #1 in
many areas but internally, this is due mostly to sucking in Asians
who now are filling many university positions. The US main
population has gone down the tubes, going for easy solutions instead
of hard work. That is, we want to gamble our way to wealth or
eke out a living on the economic fringes. You don’t need
a college degree to work in a auto factory but wages there are
collapsing and more and more are working for foreign countries like
Japan.
.
ΩΩRelative
rankings matter a lot. China was nowhere on this list a mere 20
years ago. Now, China is highly represented and I know first
hand how heavily the Chinese invested in their education system. Of
course, the lack of freedom of speech is a major, major barrier to
further triumphs but as the US and Japan and EU muzzle scholars, this
matters less and less over time.
ΩΩ
Walter
Kasper, Top Pope Adviser, Calls UK ‘Third World’
Kasper made
the remarks in an interview with the German magazine Focus. ”When
you land at Heathrow you think at times you have landed in a third
world country,” the German-born cardinal is quoted as saying by
the Telegraph.
.
ΩΩHAHAHA.
And the German is correct! Indeed, when moving from US
airports and train stations to Chinese ones, it is obvious who is a
third world country and who will be the first world country by 2020!
Maybe this Cardinal can come here and tell us how we can’t
make our trains run on time. Germany has a big trade surplus
with the US.
Email:
emeinel@fairpoint.net
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