Heading for ¥75 to $1 US Dollar

Everyday, first thing I do when I wake up is to turn on my computer and check the stock market and the yen vs. dollar rate. 


For this last week or so, the yen has been hovering around ¥76.8 yen to $1 US dollar. Every time the yen has gotten strong, until now, the Japanese government has thrown massive amounts of money away in vain attempts at intervening to stop the yen's rise. And every time they've done this they have failed, yet they keep doing it over and over.


 I wrote in "Japanese Government: These People Are Just Plain Nuts":

They intervened in the yen at ¥76.9, spending some $50 billion dollars. The yen rose to over ¥80 to the US dollar. Now, today, exactly one week later, we're right back where we started. The yen today, as of 4:11 am August 11, 2011 Japan time, is at ¥76.81... 

Now they are considering doing this again!? What is wrong with these stupid people?

Since, at that time, the Japan Central Bank (JCB) claimed it was "watching the market and would act accordingly" I have been expecting to see the yen jump back to ¥80 to $1 US Dollar over this past week or so.

It hasn't happened.

Now, Bloomberg says that some clown nick named, "Mr. Yen" (a former finance minister says the yen could hit ¥75 to $1 US Dollar soon.

From Japan's Mr. Yen Says Currency May Exceed 75 Per Dollar on US Weakness 

Japan’s currency may strengthen to a postwar high against the dollar because of the weakness of the U.S. economy, said former Finance Ministry official Eisuke Sakakibara, who’s known as “Mr. Yen.”

“The yen may appreciate further, beyond 75,” Sakakibara said in an interview from Tokyo on Bloomberg Television today. “I would expect the U.S. economy to be fairly weak for a long period of time.”

The yen declined today after Finance Minister Yoshihiko Noda warned that he’s ready to intervene again to stem gains that pose a risk to exports. On Aug. 4, the government sold the currency to stem gains that threaten exporters’ profits. The yen has since returned to its pre-intervention level and is approaching its all-time high of 76.25, underscoring the difficulty authorities are having in halting its advance.

“Intervention, in order to be effective, needs to be persistent and continuous and needs to have the understanding” of other authorities, said Sakakibara, who earned the nickname because of his efforts when an official to influence the yen rate through verbal and actual intervention in currency markets. “Multilateral intervention does work but I don’t think at the moment the U.S. is willing to intervene. It will be very difficult to have a coordinated intervention.”

He says, “Intervention, in order to be effective, needs to be persistent and continuous and needs to have the understanding” of other authorities...!? Now do you understand why I call this guy a clown? When has intervention ever been effective for more than a few weeks?

I've written many times about how these fools never learn.

OK, mister high and mighty "Mr. Yen" let's look at what your yen interventions have done since 1996 to today. They say a picture speaks a thousand words, so I'll just show a graph:

CLICK ON IMAGE FOR LARGER VIEW

In 1996, the average yen to dollar rate was about 106 yen to $1 USD.

Today it is ¥76.82 per $1 USD - about a 30% increase in the yen. I suppose this says volumes about how effective these interventions to weaken the yen have been.

I'm sure we will hit ¥75 to $1 US Dollar... The question is how many more interventions and wasted tax monies do the Japanese public have to suffer  before that happens?

Insanity: Japanese Government

The Japanese government must be totally out of their minds. Which is worst the US government of the Japanese? Hmmm. Good question:

MISTER ROGERS - YOU CAN NEVER GO DOWN THE DRAIN

On August 4th, I wrote a short blog post entitled the Japanese Central Bank Throws Away a Billion Dollars Again. It was another protest over the Japanese government repeating past mistakes by using tax monies to buy dollars to support the yen. I wrote:


This morning when I woke up I checked the financial markets, gold, silver and, of course, the dollar yen rate.

I was somewhat surprised to see the yen at ¥76.9-something to the US dollar. A hour or two later, the yen had dropped to its current ¥78.9 per US dollar. Obviously the Japanese Central Bank intervened and bought a bunch of dollars.

Fools. When will they ever learn? They keep throwing our hard earned tax money down the drain to stop the yen's rise, but it is all in vain as the yen's appreciation continues.


I would later learn that it wasn't a "billion dollars" (of course not!) but $56 billion dollars. I wrote that history would repeat itself and that these types of market interventions never work. Japan has tried this sort of thing over and over and the results are always the same; they may halt, temporarily, the rise of the yen, but they cannot stop the yen from rising as interventions do nothing to change market fundamentals.


Remember, less than one year ago, for the first time in 15 years, in Sept. of 2010 when Japan intervened to stop the yen's rise?


From Bloomberg: 

Japan intervened in the foreign-exchange market for the first time since 2004 after a surge in the yen to the strongest against the dollar in 15 years threatened to stunt the nation’s economic recovery.

Finance Minister Yoshihiko Noda confirmed the intervention, speaking to reporters today in Tokyo. He said Japan contacted other nations about the step, without specifying that today’s measure was taken unilaterally. Chief Cabinet Secretary Yoshito Sengoku said the ministry considers 82 per dollar to be the line of defense, after it reached a high of 82.88 earlier today.

Japan hadn’t intervened to sell yen in the foreign-exchange market since 2004, when the yen was around 109 per dollar. The Bank of Japan, acting on behest of the Ministry of Finance, sold 14.8 trillion yen in the first three months of 2004, after record sales of 20.4 trillion yen in 2003. Noda didn’t say how much was used in today’s action, while that figure will be released at a later date.

Japan is now slipping down a very dangerous slope and I fear that the slide is increasing in velocity. This makes for at least three publicly announced interventions in less than one year.


As I wrote, interventions never work. Mish Shedlock sensei! back me up on this one, will you? 


Japan Announces Currency and Stock Market Interventions: 

Countries are now playing a game of "Top This" to see who can do the dumbest things.... If stocks are ready to go up they will. If not they won't. Intervention will accomplish nothing other than create an environment of suspicion that stocks need to be propped up or they would fall. When intervention starts, investors are deprived of normal market signals and will not know if share prices have really bottomed or not. This silliness by Japan is going to create massive mistrust, and massive mistrust is never good for the markets.

I write over and over until my fingers are bleeding that the government is run by idiots. For over twenty years, the clowns "at the helm" of the Japanese government have been creating debt and trying to manipulate the markets. We have the current situation to show for it: Massive public debt and an economy mired in the mud.

Last year's currency intervention was to stop the yen when it was at about ¥82 to the US dollar. The Japanese Central Bank threw $63 billion dollars at the problem then. 

FIVE DAYS ago, the yen and dollar rate was ¥76.9 yen to one US dollar. The Japanese government threw $56 billion dollars at that. They were patting themselves on the back because the yen quickly shot past ¥80 to the US dollar. That was on August 4, 2011.

As of 6:38 am Aug. 9, 2011

Now, today, it is August 9, 2011 and the yen - dollar rate sits at ¥77.77 to one US dollar. The intervention, after a short five days is shown to be a total failure.

The most laughable part of this is the Japanese Finance Minister Yoda, Noda, whatever his name is actually said:

"It's better to wait for a little while before judging the impact of intervention," he told a news conference.




That's like the big race at the horse track. The results have been made official, the winning horse has already been claimed winner and is already in the winner's circle and Noda is holding a losing ticket. Yet he says, "We'd better wait awhile. There might be a claim!"

Ha! Ha! Ha!

The Dow Jones stock market crashed today 5.55% (-634.76). The Nikkei will follow suit. The yen is almost back to where it was a week ago.

What's the Japanese government solution to the problem?

Intervene to support the yen! Reuters reports "Japan signals readiness to intervene again":

Economics Minister Kaoru Yosano warned markets on Friday that they should not assume that Tokyo is done with stepping into the market, while stressing again the need for Japan, Europe and the United States to adopt common policies to contain the pessimism about the global economy. 

Insanity: Doing the same thing over and over again and expecting different results... - Albert Einstein

Bank of Japan and Japanese Government Becomes a Laughing Stock. The People Pay...

Friday, the yen hit a 15-year high to the chagrin of the Bank of Japan and the fools who "govern" this country. This, just three weeks after massive Bank of Japan currency intervention on Sept. 15.

As Reuters reported:

The U.S. dollar slid to a 15-year low versus the yen on Friday after a weak U.S. jobs report while Wall Street edged up on speculation of more Federal Reserve economic stimulus as policymakers in Washington seek to avoid a currency war.

Just up to a few days ago, the Bank of Japan was patting itself on the back that they went to the G7 and, since no one complained about the big currency intervention on Sept. 15, that Japan was ready to do it again.

The Market Watch reports:

"I explained to the G-7 that Japan's previous intervention was aimed at curbing excessive appreciation in the yen that could hurt the Japanese economy," Yoshihiko Noda said at his first press conference since returning from a meeting of finance ministers and central bank officials of the Group of Seven industrialized nations.

......Japan’s Finance Minister Yoshihiko Noda said at his first press conference since returning from the weekend’s Group of Seven nations’ meeting of finance ministers and central bank officials that Japan would take “decisive” action if necessary, including currency market intervention, to stem the yen’s rise.

Now he should say, "Since the currency intervention was a miserable failure, I look like a total buffoon, with the rest of these morons in power. But I don't care since we are spending other people's money..." But, alas, he won't. 


Noda and the rest of these idiots don't realize what the average guy on the street understands: Currency intervention doesn't work - especially if it's just one country doing it (see here) and the reason why no one complained about it at the G7 meeting was that the other participants thought it (and the Bank of Japan) are a big joke.

You'd think that these morons in the government would learn their lesson and stop repeating the same asinine mistakes or, at least, keep their mouths shut. But no... 

ABC News reports: 

Noda's reiteration of Japan's currency stance highlighted the risk of another round of intervention to weaken the yen after Japan weathered a flurry of weekend Group of Seven and IMF meetings with no overt criticism of last month's yen selling -- its first in six years. 

Now why in the world would this idiot finance minister Yoshiko Noda telegraph Japan's next moves again when they just complained that China bought billion of dollars of Japanese bonds yet Japan is unable to buy Chinese Bonds or currency? 

In spite of being a totally incompetent and typical run-of-the-mill old-school politician himself with no new answers to anything, former Prime Minister Taro Aso was right about one thing: The DJP is run by a bunch of in-experienced incompetents who will run Japan into the ground.


Some of my regular readers might think I am being too harsh (again) but I do not exaggerate when I say this has become a such a disgusting farce and that the entire world thinks the Japanese government and Bank of Japan are a complete and totally clueless group of morons.


Rick Ackerman can back me up on what money commentators on the other side of the Pacific Ocean think about this:


 "...That was the day the Bank of Japan intervened in the currency markets for the first time in six years, prompted by concerns that the yen’s steep rise would hurt Japan’s export-based economy, and by the fact that the yen had recently spiked to a 15-year high versus the dollar. 


The intervention obviously failed, since the yen quickly recouped the loss and is now trading significantly higher than before the intervention.  Because we have heard little from the Japanese since, however, we can only infer that they know enough to shut up rather than pretend they can bully speculators. Repeat a threat often enough, and eventually you become a laughing stock."

The only thing Ackerman gets wrong is that he doesn't realize just how really out of touch with reality and messed up the Japanese government is... Heck, I guess I don't blame him. You'd have to live here and be here everyday to see it with your own eyes to believe it.


Hell, I've lived here for almost 30 years and I find this hard to believe.


The farce gets even wilder by the day as it is learned that China bought yen and might be "playing" with Japan and her economy.

As the Wall Street Journal reports:

Diplomatic tensions rose this past week after a Chinese fishing vessel bumped into Japanese patrol boats near East China Sea Islands claimed by both.

Mr Noda pledged to bring to the Chinese leadership his frustration over China's heavily managed capital account, which restricts foreign buying of local-currency securities.

“While China can buy Japanese bonds, Japan can't buy Chinese government bonds using its foreign reserves. I feel that's unnatural,” Mr Noda said.

Incredibly, even with screw-up after screw-up the Japanese government repeats the same mistakes...

Mr Noda's more strident rhetoric did little to convince investors that Japan has the firepower to stop the yen's ascent.

“The market is fed up with warnings,” said Yoshinori Nagano, a senior strategist at Daiwa Asset Management.

It is written that the Albert Einstein said that the definition of insanity is: 


"...doing the same thing over and over again and expecting different results. "


Like I blogged before.... With the same old tried and true failed methods being tried again and again, expect Japan to keep slipping down the slope to head towards an economy that will look like the Philippines.  I wrote about that here in "Japanese Government Continues to Destroy the Economy" and here in "Twenty Lost Years About to Become Thirty"... 


I suppose we shouldn't expect anything but incompetency from the Japanese government though... LDP or DJP... But what do these politicians care? They don't have to pay. It is the average Japanese who has to pay the piper for decades of mismanagement.


We can see the results of these policies everyday with just a walk into town. Does this really anger me? Yes. It should make every person every person living in this country who is not in dementia furious.