It is clear that the recent, one-sided climb in the yen is not reflecting the real state of Japan’s economy
Exactly, why can't there be some regulatory measures to reign in currency speculation.
samwatters at Jul. 25, 2012 - 08:36AM JST
"Exactly, why can't there be some regulatory measures to reign in currency speculation."
@ubikwit. Good question! And since the speculators keep overvaluing the yen, would it be possible for Japan to print more money to devalue the yen and then distribute that money to people who will most likely pump it back into the economy?
Dog at Jul. 25, 2012 - 09:18AM JST
Yeah..Azumi's right....The strength of the Yen is due to all those big bad speculators.
In the last 20 minutes Japan just posted a trade surplus of $61.7 billion.
What Azumi is saying is that the present level of the Yen is stopping us taking more of your money and more of your jobs. This is what we, japan, want sand the world is run according to the Japanese narrative.
Get a grip Azumi. The Yen is high because of Japan's current account surplus and Japan's debt is nearly all domestic. $3.5 trillion of Yen is traded on the FX every day.... who, apart from national govenments, have that amount of spare cash to go and be playing the FX markets?
Goals0 at Jul. 25, 2012 - 09:19AM JST
reign - rein
Ronald F Stark at Jul. 25, 2012 - 09:29AM JST
“We will closely watch foreign-exchange movements with a greater sense of caution from now. We will not rule out any measures against excessive moves and will take decisive action when that’s deemed necessary.”
Yet another "vowel movement" from the mouth of a powerless Japanese politician! He's been saying the same thing since he's been in the job. What has he done except for a few interventions that lasted mere days before the yen climbed again?
The high value of the yen is eroding what is left of the Japanese economy and they do nothing but talk, talk, talk. This is typical of everything in Japan! Bullying? Let's form a committee and send out questionnaires! Yen overvalued? Let's just keep watching and talking! Grow some BALLS PEOPLE! Watching is going to do nothing! Speculators are LAUGHING all the way to the bank at the Japanese government!
paulinusa at Jul. 25, 2012 - 09:47AM JST
Unfortunately, market distortions in this "connected" world are everywhere and here to stay. Money surges into stocks, bonds , commodities, currencies, derivatives, market to market, country to country without rhyme or reason and defies traditional investing logic. As the saying goes: " Expect the unexpected"
Wakarimasen at Jul. 25, 2012 - 09:55AM JST
This is not due to speculation. due to high trade suerplus, high reserves, high rate of domestic savings and the chaos amnd money printing going on elsewhere in the world. It will end eventaully when the government finally overborrows and becomes unable to pay back debt.
ExportExpert at Jul. 25, 2012 - 10:47AM JST
Dog
who, apart from national govenments, have that amount of spare cash to go and be playing the FX markets?
Correct China is manipulating the yen, (speculation)
CrazyJoe at Jul. 25, 2012 - 10:59AM JST
It's the undervaluation of the U.S Dollar that is causing the overvaluation of the Japanese Yen.
Dog at Jul. 25, 2012 - 11:24AM JST
Correct China is manipulating the yen, (speculation)
True, but tjat doesn't mean Japan should do likewise and set the world down the rocky path of 'begger thy neighbour' policies.
China has to be dissuaded from currency manipulation, rather than Japan should be encouraged.
Azumi and the govenment are just hiding behind the excuse of the Yen's high exchange rate for Japan's economic ills which are nearly all domestic in happening and the making. Exports are only 11% of the Japanese economy. The real problems are
A government overspends and wastes money as if we are still living in the booming 80s.
An over developed and over sized manufacturing sector.
An aging and declining domestic consumer market.
A workforce still living under economic developing conditions where consumption is discouraged and production is encouraged through small housing and limited free time. Japan is a developed economy and should have a more active domestic consumer living in better conditions.
A generational disbalance of Japan's wealth where the dankai generation have it all and the younger, natural consummers, generation have nothing.
Koizumi's changing of the employment laws, which basically made 30% of the japanese workforce temporary contract workers with no economic/financial security.
I know that Azumi, ex-NHK talento, is as thick as two planks, but I expect better of some of JT's readers. Do the math, the Japanese Yen has been under 80 to $1 for the last 3 months and Japan manged to squeeze a $61 billion dollar trade surplus, while in the first 3 months it was over 80 to the dollar and Japan had a trade defecit.
It doesn't take a rocket scientist to see that the strength of the Yen is a very weak variable in the economic well being of the Japanese economy.
FernandoUchiyama at Jul. 25, 2012 - 11:32AM JST
It is interesting how the japanese are patient. Forty years later I will wake up and will read the same bull shit on the news. The patient japanese will still be there, waiting for the yen to recover...
Japan must wake up. The yen is not the only problem the country has.
kurisupisu at Jul. 25, 2012 - 12:11PM JST
The yen goes up and down as all other currencies-not news.....
basroil at Jul. 25, 2012 - 12:20PM JST
CrazyJoeJul. 25, 2012 - 10:59AM JST
It's the undervaluation of the U.S Dollar that is causing the overvaluation of the Japanese Yen.
And an overvaluation of the euro that causes an overvaluation of the Yen.
basroil at Jul. 25, 2012 - 12:25PM JST
kurisupisuJul. 25, 2012 - 12:11PM JST
The yen goes up and down as all other currencies-not news.....
If it went up and down, sure, but in the last five years the yen has be increasing in value with pretty much no large year to year variations. The total increase in five years is 50%, and that's five times higher than the GDP growth rate target and almost ten times higher than actual GDP growth.
On the other hand, the euro to dollar has been very cyclical, averaging less than a quarter of that difference. That would be a normal trend, not the constant increase in value that the yen has for no reason (of Japan's making)
basroil at Jul. 25, 2012 - 12:30PM JST
DogJul. 25, 2012 - 09:18AM JST
$3.5 trillion of Yen is traded on the FX every day.... who, apart from national govenments, have that amount of spare cash to go and be playing the FX markets?
If you assume that the average trade is 10ms, you only need about $450000 worth to trade that much yen. if we cut down the day from 24 hours to 8 hours, you need under $1.5 million. If someone really wanted to, they could easily trade that much if they had the funds of a small company. For places like China though, it becomes very easy to manipulate prices by a percentage point if they used the over a trillion dollar level reserve funds they have
ubikwit at Jul. 25, 2012 - 12:32PM JST
@Goals0
right, "rein".
@Dog
What Azumi is saying is that the present level of the Yen is stopping us taking more of your money and more of your jobs. This is what we, japan, want sand the world is run according to the Japanese narrative.
And what narrative is yours? Let me guess, you work in finance? Or for the CIA maybe?
Who is it that you think the Japanese government should be working for?
ihope2eatwhales at Jul. 25, 2012 - 12:32PM JST
It is not speculators who spent money they did not have, driving European nations towards bankruptcy. This is the work of politicians, and the people who voted for them.
The yen will weaken very rapidly once Europe and US resolve their issues. However, Japan is seen as a safer place to store wealth, for the time being. Japan has the deflation which means yen increases in value as time goes by. It is quite attractive now, even for Japanese investors, I think.
But if Europe and the US can become attractive, by resolving their issues, then the strength of the yen will be lost. If not, we will have to wait for Japan's fiscal problem to become even worse relative to Europe and US for yen to weaken.
It is the folly to blame everything on speculators.
ExportExpert at Jul. 25, 2012 - 12:45PM JST
DogJul. 25, 2012 - 11:24AM JST
Correct China is manipulating the yen, (speculation)
True, but tjat doesn't mean Japan should do likewise and set the world down the rocky path of 'begger thy neighbour' policies.
So Dog you now agree that others are driving the yen price by speculating, where as the other day you said it wasnt due to speculation.
Swiss cheese anyone?
Dog at Jul. 25, 2012 - 12:48PM JST
@Dog Who is it that you think the Japanese government should be working for?
Well it isn't working for the Japanese people that's for sure. It's the same old tired voice of a one trick pony policy of export export and more export.
It should have, in the good days of the early 2000s, prepared for the days that Japan could not be export dependent, have a decreasing comsumer population base, China and S Korea would manufacture to the same quality/quantity as Japan at a much cheaper cost base and distortion of the eventual wealth generational discrepency.
It wasn't rocket science, Noriko Hama was commenting on the dark days to come weekly in the Monday edition of the Japan Times in early 2001.
ExportExpert at Jul. 25, 2012 - 12:50PM JST
Speculation is not the sole factor in it either but it most certainly is a large contributing factor, and I agree once the US and europe get sorted the yen will drop as the speculating scum will chase the proift of specualting on those currencies, but untill those days come we will have to deal with over inflated yen.
Unless they start the printing press in tokyo.
ihope2eatwhales at Jul. 25, 2012 - 12:59PM JST
FX market trading is very easy for anybody to participate. Japan is the largest market in the world for so-called retail traders, famous as Mrs Watanabe. Of course many overseas companies offer such service as well. Using the leverage, it is possible for even one with low amounts of money to speculate.
Tom Webb at Jul. 25, 2012 - 01:58PM JST
Bet those currency traders world-wide has an understanding to manipulate certain currencies to benefit their own pockets.
ubikwit at Jul. 25, 2012 - 02:24PM JST
Every country on the planet is trying to focus on exporting. It is ludicrous to suggest otherwise, and I havent heard one constructive idea in from anyone about what Japan is supposed to do.
You do occasionally hear idiots talking about increasing domestic demand, but for what? By whom? How?
It's pure nonsense.
The reason that the USA is down is because idiots from Reagan to Clinton deregulated the finance industry and pushed for free-trade agreements that enabled corporations with capital to decamp to exploit lax labor laws and environmental laws outside of the USA. And the rhetoric they sold was that of becoming a service sector economy! As if everyone in any one country is going to be of the same competence.
It was a false notion that essentially paired nationalism with social-darwinism, and ended up birthing the Empire FInance Frankentein for the politicos and their cronies, and third world USA for most everyone else.
And now Empire Finance is so strong that it has overcome all international regulatory regimes, and can still reap a profit from margin trading in the FX market while economies are broken down everywhere, and no investment is being made to get them moving again.
Meanwhile, I could be wrong but it sounds like I'm hearing some contradictory remarks.
First, the empire state class of the USA sold the plebians down the river, so to speak, whereas the Japanese maintained a more balanced economy by preserving their manufacturing base instead of hollowing it out, and now people from the USA or wherever are crying foul at Japan?
I don't see where the justification for any of that is.
ubikwit at Jul. 25, 2012 - 02:29PM JST
And by the way, Japan has many more leading edge technologies than Korea--let alone China--so cheaper labor is not a factor that can take away the market for high-end consumer electronics and the like from Japanese companies that keep their factories in Japan and pay a living wage.
Tiger_In_The_Hermitage at Jul. 25, 2012 - 03:22PM JST
The Yen is over valued for many reason's rightly pointed out by others. Regulating currency is an offence against Capitalism and the free world.
Ultimately the Yen is so over valued partly because of Western Hedge Funds, they borrow the yen for next to nothing buy high yeilding currencies and make a spread. When the market tanks, like now, hedge funds sell those assets to avoid risk and return to money to Japanese lenders, pushing up the yen. The Evil Capitalists at work.... not China, they are Communists...
Thomas Anderson at Jul. 25, 2012 - 03:35PM JST
ubikwit
And by the way, Japan has many more leading edge technologies than Korea--let alone China
Lol only a clueless Japanese person would say something like this nowadays. Just look at what Samsung, LG, Foxconn, etc are doing to Sony, Panasonic, Sharp, etc.
Thomas Anderson at Jul. 25, 2012 - 03:38PM JST
Japanese Businessman #1: There's no way that Korea and China would lead over Japan! We have the superior technology!
Person #1: Then why are Samsung, LG, etc are beating the crap out of you in market shares?
Japanese Businessman #1: Er... we don't know.
ExportExpert at Jul. 25, 2012 - 04:10PM JST
Some of the reason why samsung etc are doing so well relates to the high yen, the won is cheap in comparison making korean goods more affordable, i have had two samsung phones and i must say they were and are such a crappy product, so i would not say korean goods are quality going on experience but they are affordable. High yen / low won = cheap korean stuff.
SenseNotSoCommon at Jul. 25, 2012 - 04:37PM JST
Ubikwit, "And by the way, Japan has many more leading edge technologies than Korea--let alone China"
But it doesn't have the entrepreneurial spirit or the cojones to bloody Samsung's nose.
ExportExpert, I wouldn't shortsell Samsung so readily - they have leapt up the value chain with an aggressive, single minded focus on being number one.
BertieWooster at Jul. 25, 2012 - 04:59PM JST
I wonder why we don't go back to the Gold Standard.
It wasn't perfect, but it was something to measure the value of currency by.
Now there isn't one.
So, "undervalued," or "overvalued" can only be seen as opinions.
alliswellinjapan at Jul. 25, 2012 - 05:02PM JST
While the yen may indeed be overvalued in the sense that it does not represent the true strength of Japan's own economy, it's more a representation of how worse the situation in Europe and the US may be, not just economically, but more so fiscally. While Japan has enormous debt, it's covered by a larger amount of personal financial assets and savings domestically. The situation in Europe and the US may be much scarier from a solvency perspective. Yen probably appears to be a safer investment despite the debt and aging/population decline. By no means saying Japan is in great shape because it absolutely isn't, only that this is all just relatively speaking.
ubikwit at Jul. 25, 2012 - 05:02PM JST
ExportExpert
Yes, junk. This maybe a little off topic, as the only Japanese company involved docomo, but as you point out it is the exchange rates that are allowing samsung to gain market share (along with some tech pilfered from i-phone).
My wife got the samsung junk smartphone because she didn't want to switch from docomo.
I, on the other hand, was fortunate enough to get a motorola photon, and there is simply no comparison.
Her phone literally overheats and the battery is gone in less than a day.
Motorola is not a japanese company (comparable product quality-wise), but one of the few real american companies left standing.
The rest have all dropped off into the netherland of built-in obsolescence.
ubikwit at Jul. 25, 2012 - 05:13PM JST
BertieWooster
That's an interested comparison, because at least the "Gold Standard" would be a "Standard".
On the other hand, wouldn't the cowgirl hedge funds just find away to manipulate gold prices to their advantage, avoiding the risk associated with actual venture entrepreneurial capitalism?
ubikwit at Jul. 25, 2012 - 05:48PM JST
alliswellinjapan
Yes, but you are just pointing at the symptoms of the problems.
Why is it that the same marginal players--the hedge fund cowgirls--can move their funds from the countries where they have created a mess and destroyed the economy, to a country that has a more sound economy which, conversely, is thereby undermined by the introduction of the unwanted, unproductive investment by the parasite funds?
As with Mr. Azumi, some people would say "all is not well in japan", thanks to the blatant speculation against the yen.
CrazyJoe at Jul. 25, 2012 - 05:52PM JST
In the good old days (1949-1971) , the exchange rate was fixed at 360 Japanese Yen to the U.S Dollar. General MacArthur asked one of his advisers in post war Japan what the YEN (円) stood for, and the adviser told him it stood for a circle. And since a circle has 360 degrees, General MacArthur is said to have set the exchange rate to 360 Yen to the U.S Dollar.
BertieWooster at Jul. 25, 2012 - 08:21PM JST
Brother ubikwit,
I'm afraid you lost me when you started talking about cowgirls and hedges.
One just wishes life were a little more simple, so that when one popped into one's local for a refreshing pint, one didn't have to pay one doubloon this week and two the next.
If it gets much worse, we'll be back to bartering.
"Give you six eggs for that hamburger over there."
ubikwit at Jul. 25, 2012 - 09:16PM JST
BertieWooster
Yeah; I feel somewhat ashamed of the descent into name calling.
I find it rather irksome that some people try to defend this speculation in the name of the Free Market.
The market is distorted and there is nothing resembling competition or risk in the gaming of the system by hedge funds--the most prominent of the "institutional investors".
They are conducting a sort of illicit activity behind a "freemarket" smokescreen, and causing a lot of damage.
mrmalice at Jul. 25, 2012 - 09:39PM JST
@ubikwit because a system of different currencies in itself implies inequality and with current tek its practically impossible to track everything. The only 'real' currency as such is in fact 'energy'. One global measurement for this would clarify things a lot, see : a guy needs a car, this costs that much yen in japan, this much dollars in us, and that much euros in europe. But the thing is : the cost in energy is the same everywhere. This system of economics has long been outdated and the fact the old world clings to it this hard is what you see now : they grasp so hard the new wolrd gets choked before its born
Dog at Jul. 25, 2012 - 10:21PM JST
Thomas AndersonJul. 25, 2012 - 03:35PM JST
Lol only a clueless Japanese person would say something like this nowadays. Just look at what Samsung, LG, Foxconn, etc are doing to Sony, Panasonic, Sharp, etc.
I was thinking the same.......
ubikwit at Jul. 26, 2012 - 12:12AM JST
@mrmalice
that is an interesting point about energy, which I suppose leads to a discussion of oil and commodities in general.
what bothers me about the present scenario is that transnational finance entities are basically parasitical on the nation state system. they are siphoning off wealth and causing real economies everywhere to deteriorate, and there would appear to be not countervailing positive contribution by such entities to offset that at all.
i don't think that having different currencies is bad, as it does relate to political and social issues that are connected to economic culture and performance, let's say, and people don't want to part with their currencies without good reason, as in the case of the euro being brought about in connection with the formation of the EU.
on the other hand, i don't understand the workings of the finance system, so don't have any insight into possible regulatory fixes aimed at preventing epiphenomena like currency speculation from having an adverse impact on the regular economy.
and since that is the case, it may very well be that switzerland has already pointed to the only possible countermeasure that a country has against such speculation, i don't know.
but that does raise an interesting question as to what type of reactions happen in the global currency trading should japan implement something similar.
i don't think that japan can continue to afford letting its companies be battered and be forced to move production facilities overseas because of hedge funds, in particular, and other "institutional investors" with no real stake in the economy, anywhere.
kchoze at Jul. 26, 2012 - 12:44AM JST
Dog
True, but tjat doesn't mean Japan should do likewise and set the world down the rocky path of 'begger thy neighbour' policies.
In a "beggar they neighbor" world, you must either beggar they neighbor or be beggared by him. You are asking for Japan to unilaterally give in to China's currency manipulations and let its industry vanish (BTW, the balance of trade of Japan is already negative, the current accounts is positive only because Japanese investors are selling overseas assets and repatriating money to benefit from the strength of the currency, but that will also go negative someday).
Furthermore, the "free trade" ideal already forces countries into "beggar they neighbor" dynamics. You know all that talk about being "competitive" by deregulating, cutting taxes and lowering wages? That is pure "beggar they neighbor" policies, that are forced upon all countries by the free trade deals. Once upon a time, countries could just hike tariffs to protect themselves from such attempts, but currently that is ever harder to do, and will become almost impossible if more "trade deals" are signed.
This is a race to the bottom, and it is destroying the world's ability to generate growth, because it is destroying the base conditions for the generation of growth, namely well-paid consumers who can consume the new production of the growing economy without resorting to debt and good distribution of capital to allow for more economic initiatives from a variety of sources.
As to your other points, you disregard manufacturing at your own risk. Manufacturing may not seem big in the entire economy, but most of what is traded in the world is manufactured goods, not services, and manufacturing has strong impacts on the rest of the economy. A lot of service jobs depend directly on the presence of factories in the neighborhood. In the US, when a town built around a factory saw the factory close, not only the factory workers lost their jobs, but a lot of people in shops and the like lost theirs because these people lived off of the wages of their customers, the factory workers.
ubikwit at Jul. 26, 2012 - 01:16AM JST
kchoze
another interesting post.
but do you think it's fair to single out china? is it really the case that their sovereign wealth funds or central bank are targetting japan? didn't they just sign a deal with korea and japan on mutual currency swaps or something like that?
i think that the post by
Tiger-In-The-Hermitage
is right about hedge funds, generally speaking. These are transnational parasites with no stake in the nation state system aside from not killing of the host.
Ultimately the Yen is so over valued partly because of Western Hedge Funds, they borrow the yen for next to nothing buy high yeilding currencies and make a spread. When the market tanks, like now, hedge funds sell those assets to avoid risk and return to money to Japanese lenders, pushing up the yen. The Evil Capitalists at work.... not China, they are Communists...
kchoze at Jul. 26, 2012 - 01:41AM JST
ubikwit, I agree. I was talking of China because that's what Dog was talking about, but hedge funds and speculators are the major culprits in the rise of the Yen. China mostly manipulate its own currency to keep it lower, but I don't think that it aims to make the Yen more expensive versus the US dollar. It doesn't care much for that.
I also replied about China to mention how the focus on "international competitiveness" is largely a "beggar they neighbor" policy like Dog was decrying. It's not a policy that seeks to foster the conditions for growth: innovation, well-paid workforce, increasing productivity, etc... It's simply a policy to attract investments from other countries, to basically "steal" their growth, even as those policies reduce the available investments and economic opportunities.
globalwatcher at Jul. 26, 2012 - 11:06AM JST
The gobal bubble is bursting. Financial hawks are just moving to Japan to park their money. China is doing a massive buying of Japanese yen while US FED will come up with QE3 within 4 to 6 weeks.. You have not seen anything yet. Probably yen may be pushed up to 60 yen level within a couple years.
Seiharinokaze at Jul. 26, 2012 - 11:37AM JST
In the last quarter of last year, the Finance Ministry raised 10 trillion yen by issuing short term government securities and spent it on forex market intervention. The amount is as much as will be gained by 5% sales tax increase. It's as if they add to national debts so that they may keep 220% debt to GDP ratio as a good excuse for implementing a tax hike.
Or rather, seeing as the head of IMF says the same thing recently about the yen being overvalued, does the Finance Minister Azumi as another spokesman mean to say to the investors that they will not suffer loses if they borrow the yen and invest it in the US dollar? The US may want to absorb money from the world again so that they can reproduce a spending spree of buying cars (in place of houses this time) without down payment on deferred credit. They are suggesting carry trade.
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ubikwit at Jul. 25, 2012 - 07:35AM JST
Exactly, why can't there be some regulatory measures to reign in currency speculation.
samwatters at Jul. 25, 2012 - 08:36AM JST
"Exactly, why can't there be some regulatory measures to reign in currency speculation." @ubikwit. Good question! And since the speculators keep overvaluing the yen, would it be possible for Japan to print more money to devalue the yen and then distribute that money to people who will most likely pump it back into the economy?
Dog at Jul. 25, 2012 - 09:18AM JST
Yeah..Azumi's right....The strength of the Yen is due to all those big bad speculators.
In the last 20 minutes Japan just posted a trade surplus of $61.7 billion.
What Azumi is saying is that the present level of the Yen is stopping us taking more of your money and more of your jobs. This is what we, japan, want sand the world is run according to the Japanese narrative.
Get a grip Azumi. The Yen is high because of Japan's current account surplus and Japan's debt is nearly all domestic. $3.5 trillion of Yen is traded on the FX every day.... who, apart from national govenments, have that amount of spare cash to go and be playing the FX markets?
Goals0 at Jul. 25, 2012 - 09:19AM JST
reign - rein
Ronald F Stark at Jul. 25, 2012 - 09:29AM JST
Yet another "vowel movement" from the mouth of a powerless Japanese politician! He's been saying the same thing since he's been in the job. What has he done except for a few interventions that lasted mere days before the yen climbed again?
The high value of the yen is eroding what is left of the Japanese economy and they do nothing but talk, talk, talk. This is typical of everything in Japan! Bullying? Let's form a committee and send out questionnaires! Yen overvalued? Let's just keep watching and talking! Grow some BALLS PEOPLE! Watching is going to do nothing! Speculators are LAUGHING all the way to the bank at the Japanese government!
paulinusa at Jul. 25, 2012 - 09:47AM JST
Unfortunately, market distortions in this "connected" world are everywhere and here to stay. Money surges into stocks, bonds , commodities, currencies, derivatives, market to market, country to country without rhyme or reason and defies traditional investing logic. As the saying goes: " Expect the unexpected"
Wakarimasen at Jul. 25, 2012 - 09:55AM JST
This is not due to speculation. due to high trade suerplus, high reserves, high rate of domestic savings and the chaos amnd money printing going on elsewhere in the world. It will end eventaully when the government finally overborrows and becomes unable to pay back debt.
ExportExpert at Jul. 25, 2012 - 10:47AM JST
Dog
Correct China is manipulating the yen, (speculation)
CrazyJoe at Jul. 25, 2012 - 10:59AM JST
It's the undervaluation of the U.S Dollar that is causing the overvaluation of the Japanese Yen.
Dog at Jul. 25, 2012 - 11:24AM JST
True, but tjat doesn't mean Japan should do likewise and set the world down the rocky path of 'begger thy neighbour' policies.
China has to be dissuaded from currency manipulation, rather than Japan should be encouraged.
Azumi and the govenment are just hiding behind the excuse of the Yen's high exchange rate for Japan's economic ills which are nearly all domestic in happening and the making. Exports are only 11% of the Japanese economy. The real problems are
A government overspends and wastes money as if we are still living in the booming 80s.
An over developed and over sized manufacturing sector.
An aging and declining domestic consumer market.
A workforce still living under economic developing conditions where consumption is discouraged and production is encouraged through small housing and limited free time. Japan is a developed economy and should have a more active domestic consumer living in better conditions.
A generational disbalance of Japan's wealth where the dankai generation have it all and the younger, natural consummers, generation have nothing.
Koizumi's changing of the employment laws, which basically made 30% of the japanese workforce temporary contract workers with no economic/financial security.
I know that Azumi, ex-NHK talento, is as thick as two planks, but I expect better of some of JT's readers. Do the math, the Japanese Yen has been under 80 to $1 for the last 3 months and Japan manged to squeeze a $61 billion dollar trade surplus, while in the first 3 months it was over 80 to the dollar and Japan had a trade defecit.
It doesn't take a rocket scientist to see that the strength of the Yen is a very weak variable in the economic well being of the Japanese economy.
FernandoUchiyama at Jul. 25, 2012 - 11:32AM JST
It is interesting how the japanese are patient. Forty years later I will wake up and will read the same bull shit on the news. The patient japanese will still be there, waiting for the yen to recover...
Japan must wake up. The yen is not the only problem the country has.
kurisupisu at Jul. 25, 2012 - 12:11PM JST
The yen goes up and down as all other currencies-not news.....
basroil at Jul. 25, 2012 - 12:20PM JST
CrazyJoeJul. 25, 2012 - 10:59AM JST
And an overvaluation of the euro that causes an overvaluation of the Yen.
basroil at Jul. 25, 2012 - 12:25PM JST
kurisupisuJul. 25, 2012 - 12:11PM JST
If it went up and down, sure, but in the last five years the yen has be increasing in value with pretty much no large year to year variations. The total increase in five years is 50%, and that's five times higher than the GDP growth rate target and almost ten times higher than actual GDP growth.
On the other hand, the euro to dollar has been very cyclical, averaging less than a quarter of that difference. That would be a normal trend, not the constant increase in value that the yen has for no reason (of Japan's making)
basroil at Jul. 25, 2012 - 12:30PM JST
DogJul. 25, 2012 - 09:18AM JST
If you assume that the average trade is 10ms, you only need about $450000 worth to trade that much yen. if we cut down the day from 24 hours to 8 hours, you need under $1.5 million. If someone really wanted to, they could easily trade that much if they had the funds of a small company. For places like China though, it becomes very easy to manipulate prices by a percentage point if they used the over a trillion dollar level reserve funds they have
ubikwit at Jul. 25, 2012 - 12:32PM JST
@Goals0
right, "rein".
@Dog
And what narrative is yours? Let me guess, you work in finance? Or for the CIA maybe?
Who is it that you think the Japanese government should be working for?
ihope2eatwhales at Jul. 25, 2012 - 12:32PM JST
It is not speculators who spent money they did not have, driving European nations towards bankruptcy. This is the work of politicians, and the people who voted for them.
The yen will weaken very rapidly once Europe and US resolve their issues. However, Japan is seen as a safer place to store wealth, for the time being. Japan has the deflation which means yen increases in value as time goes by. It is quite attractive now, even for Japanese investors, I think.
But if Europe and the US can become attractive, by resolving their issues, then the strength of the yen will be lost. If not, we will have to wait for Japan's fiscal problem to become even worse relative to Europe and US for yen to weaken.
It is the folly to blame everything on speculators.
ExportExpert at Jul. 25, 2012 - 12:45PM JST
DogJul. 25, 2012 - 11:24AM JST
True, but tjat doesn't mean Japan should do likewise and set the world down the rocky path of 'begger thy neighbour' policies.
So Dog you now agree that others are driving the yen price by speculating, where as the other day you said it wasnt due to speculation.
Swiss cheese anyone?
Dog at Jul. 25, 2012 - 12:48PM JST
Well it isn't working for the Japanese people that's for sure. It's the same old tired voice of a one trick pony policy of export export and more export.
It should have, in the good days of the early 2000s, prepared for the days that Japan could not be export dependent, have a decreasing comsumer population base, China and S Korea would manufacture to the same quality/quantity as Japan at a much cheaper cost base and distortion of the eventual wealth generational discrepency.
It wasn't rocket science, Noriko Hama was commenting on the dark days to come weekly in the Monday edition of the Japan Times in early 2001.
ExportExpert at Jul. 25, 2012 - 12:50PM JST
Speculation is not the sole factor in it either but it most certainly is a large contributing factor, and I agree once the US and europe get sorted the yen will drop as the speculating scum will chase the proift of specualting on those currencies, but untill those days come we will have to deal with over inflated yen.
Unless they start the printing press in tokyo.
ihope2eatwhales at Jul. 25, 2012 - 12:59PM JST
FX market trading is very easy for anybody to participate. Japan is the largest market in the world for so-called retail traders, famous as Mrs Watanabe. Of course many overseas companies offer such service as well. Using the leverage, it is possible for even one with low amounts of money to speculate.
Tom Webb at Jul. 25, 2012 - 01:58PM JST
Bet those currency traders world-wide has an understanding to manipulate certain currencies to benefit their own pockets.
ubikwit at Jul. 25, 2012 - 02:24PM JST
Every country on the planet is trying to focus on exporting. It is ludicrous to suggest otherwise, and I havent heard one constructive idea in from anyone about what Japan is supposed to do.
You do occasionally hear idiots talking about increasing domestic demand, but for what? By whom? How?
It's pure nonsense.
The reason that the USA is down is because idiots from Reagan to Clinton deregulated the finance industry and pushed for free-trade agreements that enabled corporations with capital to decamp to exploit lax labor laws and environmental laws outside of the USA. And the rhetoric they sold was that of becoming a service sector economy! As if everyone in any one country is going to be of the same competence.
It was a false notion that essentially paired nationalism with social-darwinism, and ended up birthing the Empire FInance Frankentein for the politicos and their cronies, and third world USA for most everyone else.
And now Empire Finance is so strong that it has overcome all international regulatory regimes, and can still reap a profit from margin trading in the FX market while economies are broken down everywhere, and no investment is being made to get them moving again.
Meanwhile, I could be wrong but it sounds like I'm hearing some contradictory remarks.
First, the empire state class of the USA sold the plebians down the river, so to speak, whereas the Japanese maintained a more balanced economy by preserving their manufacturing base instead of hollowing it out, and now people from the USA or wherever are crying foul at Japan?
I don't see where the justification for any of that is.
ubikwit at Jul. 25, 2012 - 02:29PM JST
And by the way, Japan has many more leading edge technologies than Korea--let alone China--so cheaper labor is not a factor that can take away the market for high-end consumer electronics and the like from Japanese companies that keep their factories in Japan and pay a living wage.
Tiger_In_The_Hermitage at Jul. 25, 2012 - 03:22PM JST
The Yen is over valued for many reason's rightly pointed out by others. Regulating currency is an offence against Capitalism and the free world.
Ultimately the Yen is so over valued partly because of Western Hedge Funds, they borrow the yen for next to nothing buy high yeilding currencies and make a spread. When the market tanks, like now, hedge funds sell those assets to avoid risk and return to money to Japanese lenders, pushing up the yen. The Evil Capitalists at work.... not China, they are Communists...
Thomas Anderson at Jul. 25, 2012 - 03:35PM JST
ubikwit
Lol only a clueless Japanese person would say something like this nowadays. Just look at what Samsung, LG, Foxconn, etc are doing to Sony, Panasonic, Sharp, etc.
Thomas Anderson at Jul. 25, 2012 - 03:38PM JST
Japanese Businessman #1: There's no way that Korea and China would lead over Japan! We have the superior technology! Person #1: Then why are Samsung, LG, etc are beating the crap out of you in market shares? Japanese Businessman #1: Er... we don't know.
ExportExpert at Jul. 25, 2012 - 04:10PM JST
Some of the reason why samsung etc are doing so well relates to the high yen, the won is cheap in comparison making korean goods more affordable, i have had two samsung phones and i must say they were and are such a crappy product, so i would not say korean goods are quality going on experience but they are affordable. High yen / low won = cheap korean stuff.
SenseNotSoCommon at Jul. 25, 2012 - 04:37PM JST
Ubikwit, "And by the way, Japan has many more leading edge technologies than Korea--let alone China"
But it doesn't have the entrepreneurial spirit or the cojones to bloody Samsung's nose.
ExportExpert, I wouldn't shortsell Samsung so readily - they have leapt up the value chain with an aggressive, single minded focus on being number one.
BertieWooster at Jul. 25, 2012 - 04:59PM JST
I wonder why we don't go back to the Gold Standard.
It wasn't perfect, but it was something to measure the value of currency by.
Now there isn't one.
So, "undervalued," or "overvalued" can only be seen as opinions.
alliswellinjapan at Jul. 25, 2012 - 05:02PM JST
While the yen may indeed be overvalued in the sense that it does not represent the true strength of Japan's own economy, it's more a representation of how worse the situation in Europe and the US may be, not just economically, but more so fiscally. While Japan has enormous debt, it's covered by a larger amount of personal financial assets and savings domestically. The situation in Europe and the US may be much scarier from a solvency perspective. Yen probably appears to be a safer investment despite the debt and aging/population decline. By no means saying Japan is in great shape because it absolutely isn't, only that this is all just relatively speaking.
ubikwit at Jul. 25, 2012 - 05:02PM JST
ExportExpert
Yes, junk. This maybe a little off topic, as the only Japanese company involved docomo, but as you point out it is the exchange rates that are allowing samsung to gain market share (along with some tech pilfered from i-phone).
My wife got the samsung junk smartphone because she didn't want to switch from docomo.
I, on the other hand, was fortunate enough to get a motorola photon, and there is simply no comparison.
Her phone literally overheats and the battery is gone in less than a day.
Motorola is not a japanese company (comparable product quality-wise), but one of the few real american companies left standing.
The rest have all dropped off into the netherland of built-in obsolescence.
ubikwit at Jul. 25, 2012 - 05:13PM JST
BertieWooster
That's an interested comparison, because at least the "Gold Standard" would be a "Standard".
On the other hand, wouldn't the cowgirl hedge funds just find away to manipulate gold prices to their advantage, avoiding the risk associated with actual venture entrepreneurial capitalism?
ubikwit at Jul. 25, 2012 - 05:48PM JST
alliswellinjapan
Yes, but you are just pointing at the symptoms of the problems.
Why is it that the same marginal players--the hedge fund cowgirls--can move their funds from the countries where they have created a mess and destroyed the economy, to a country that has a more sound economy which, conversely, is thereby undermined by the introduction of the unwanted, unproductive investment by the parasite funds?
As with Mr. Azumi, some people would say "all is not well in japan", thanks to the blatant speculation against the yen.
CrazyJoe at Jul. 25, 2012 - 05:52PM JST
In the good old days (1949-1971) , the exchange rate was fixed at 360 Japanese Yen to the U.S Dollar. General MacArthur asked one of his advisers in post war Japan what the YEN (円) stood for, and the adviser told him it stood for a circle. And since a circle has 360 degrees, General MacArthur is said to have set the exchange rate to 360 Yen to the U.S Dollar.
BertieWooster at Jul. 25, 2012 - 08:21PM JST
Brother ubikwit,
I'm afraid you lost me when you started talking about cowgirls and hedges.
One just wishes life were a little more simple, so that when one popped into one's local for a refreshing pint, one didn't have to pay one doubloon this week and two the next.
If it gets much worse, we'll be back to bartering.
"Give you six eggs for that hamburger over there."
ubikwit at Jul. 25, 2012 - 09:16PM JST
BertieWooster
Yeah; I feel somewhat ashamed of the descent into name calling.
I find it rather irksome that some people try to defend this speculation in the name of the Free Market.
The market is distorted and there is nothing resembling competition or risk in the gaming of the system by hedge funds--the most prominent of the "institutional investors".
They are conducting a sort of illicit activity behind a "freemarket" smokescreen, and causing a lot of damage.
mrmalice at Jul. 25, 2012 - 09:39PM JST
@ubikwit because a system of different currencies in itself implies inequality and with current tek its practically impossible to track everything. The only 'real' currency as such is in fact 'energy'. One global measurement for this would clarify things a lot, see : a guy needs a car, this costs that much yen in japan, this much dollars in us, and that much euros in europe. But the thing is : the cost in energy is the same everywhere. This system of economics has long been outdated and the fact the old world clings to it this hard is what you see now : they grasp so hard the new wolrd gets choked before its born
Dog at Jul. 25, 2012 - 10:21PM JST
Thomas AndersonJul. 25, 2012 - 03:35PM JST
I was thinking the same.......
ubikwit at Jul. 26, 2012 - 12:12AM JST
@mrmalice
that is an interesting point about energy, which I suppose leads to a discussion of oil and commodities in general.
what bothers me about the present scenario is that transnational finance entities are basically parasitical on the nation state system. they are siphoning off wealth and causing real economies everywhere to deteriorate, and there would appear to be not countervailing positive contribution by such entities to offset that at all.
i don't think that having different currencies is bad, as it does relate to political and social issues that are connected to economic culture and performance, let's say, and people don't want to part with their currencies without good reason, as in the case of the euro being brought about in connection with the formation of the EU.
on the other hand, i don't understand the workings of the finance system, so don't have any insight into possible regulatory fixes aimed at preventing epiphenomena like currency speculation from having an adverse impact on the regular economy.
and since that is the case, it may very well be that switzerland has already pointed to the only possible countermeasure that a country has against such speculation, i don't know.
but that does raise an interesting question as to what type of reactions happen in the global currency trading should japan implement something similar.
i don't think that japan can continue to afford letting its companies be battered and be forced to move production facilities overseas because of hedge funds, in particular, and other "institutional investors" with no real stake in the economy, anywhere.
kchoze at Jul. 26, 2012 - 12:44AM JST
Dog
In a "beggar they neighbor" world, you must either beggar they neighbor or be beggared by him. You are asking for Japan to unilaterally give in to China's currency manipulations and let its industry vanish (BTW, the balance of trade of Japan is already negative, the current accounts is positive only because Japanese investors are selling overseas assets and repatriating money to benefit from the strength of the currency, but that will also go negative someday).
Furthermore, the "free trade" ideal already forces countries into "beggar they neighbor" dynamics. You know all that talk about being "competitive" by deregulating, cutting taxes and lowering wages? That is pure "beggar they neighbor" policies, that are forced upon all countries by the free trade deals. Once upon a time, countries could just hike tariffs to protect themselves from such attempts, but currently that is ever harder to do, and will become almost impossible if more "trade deals" are signed.
This is a race to the bottom, and it is destroying the world's ability to generate growth, because it is destroying the base conditions for the generation of growth, namely well-paid consumers who can consume the new production of the growing economy without resorting to debt and good distribution of capital to allow for more economic initiatives from a variety of sources.
As to your other points, you disregard manufacturing at your own risk. Manufacturing may not seem big in the entire economy, but most of what is traded in the world is manufactured goods, not services, and manufacturing has strong impacts on the rest of the economy. A lot of service jobs depend directly on the presence of factories in the neighborhood. In the US, when a town built around a factory saw the factory close, not only the factory workers lost their jobs, but a lot of people in shops and the like lost theirs because these people lived off of the wages of their customers, the factory workers.
ubikwit at Jul. 26, 2012 - 01:16AM JST
kchoze
another interesting post.
but do you think it's fair to single out china? is it really the case that their sovereign wealth funds or central bank are targetting japan? didn't they just sign a deal with korea and japan on mutual currency swaps or something like that?
i think that the post by
Tiger-In-The-Hermitage
is right about hedge funds, generally speaking. These are transnational parasites with no stake in the nation state system aside from not killing of the host.
kchoze at Jul. 26, 2012 - 01:41AM JST
ubikwit, I agree. I was talking of China because that's what Dog was talking about, but hedge funds and speculators are the major culprits in the rise of the Yen. China mostly manipulate its own currency to keep it lower, but I don't think that it aims to make the Yen more expensive versus the US dollar. It doesn't care much for that.
I also replied about China to mention how the focus on "international competitiveness" is largely a "beggar they neighbor" policy like Dog was decrying. It's not a policy that seeks to foster the conditions for growth: innovation, well-paid workforce, increasing productivity, etc... It's simply a policy to attract investments from other countries, to basically "steal" their growth, even as those policies reduce the available investments and economic opportunities.
globalwatcher at Jul. 26, 2012 - 11:06AM JST
The gobal bubble is bursting. Financial hawks are just moving to Japan to park their money. China is doing a massive buying of Japanese yen while US FED will come up with QE3 within 4 to 6 weeks.. You have not seen anything yet. Probably yen may be pushed up to 60 yen level within a couple years.
Seiharinokaze at Jul. 26, 2012 - 11:37AM JST
In the last quarter of last year, the Finance Ministry raised 10 trillion yen by issuing short term government securities and spent it on forex market intervention. The amount is as much as will be gained by 5% sales tax increase. It's as if they add to national debts so that they may keep 220% debt to GDP ratio as a good excuse for implementing a tax hike.
Or rather, seeing as the head of IMF says the same thing recently about the yen being overvalued, does the Finance Minister Azumi as another spokesman mean to say to the investors that they will not suffer loses if they borrow the yen and invest it in the US dollar? The US may want to absorb money from the world again so that they can reproduce a spending spree of buying cars (in place of houses this time) without down payment on deferred credit. They are suggesting carry trade.