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Peak Hypocrisy: Europe Threatens Japanese FX Intervention Would Not Be "Welcome"
In an apparent example of peak hypocrisy, a Eurozone official told Reuters today that "Forex intervention by Japanese authorities would not be welcome in Europe." Of course, when it was the Swiss National Bank and the BoE (confirmed) intervening, and the ECB (alleged) doing all they can to lower the value of their currencies it is all good, and Europe doesn't care that the JPY will appreciate. However, when others do the same, it's "not welcome." At least the Eurozone hypocrites qualified their statement by saying: "I doubt any sort of coordinated intervention will ever fly" - we will be sure to remind Hildebrand and Trichet of this, the next time they are trying to kill their respective currencies.
From Reuters:
The official is familiar with euro zone official thinking on the issue, but is not a central banker and not among those who would decide directly on any intervention.
The yen hit 15-year highs versus the dollar on Wednesday, and speculation is rising that Japan could intervene on currency markets to stem the rise.
Japan's authorities haven't intervened since March 2004, when they ended a 15-month-long yen selling spree.
"Yen appreciation over the last month and a half versus the dollar has been too rapid," the official said.
"Although partly a reflection of changes in growth outlook in the U.S. and the normalisation of the debt situation in Europe, it could threaten ongoing recovery in Europe."
Whether this appreciation is excessive is a matter for the Japanese authorities to judge, and if necessary intervene, the official said.
Nonetheless, "European policymakers wouldn't do anything about it and would not welcome any move by others."
European officials may fear that intervention to curb yen strength could lead to a rise in the euro which would penalise euro zone exports.
The European Central Bank often warns about the risks of currency volatility but has not intervened on markets since 2000, when it acted to stem euro depreciation.
In a world in which war is fought with ones and zeros on the global marketplace, Europe has just issued it official warning to Japan (and implicitly to the US) to not do as it itself has done... or else.
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"not be welcome in Europe"
What the hell does that even mean? If Japan starts selling the Yen Europe will counteract by buying the Yen? Did anyone learn anything from the losses the SNB suffered? OR are we going to start seeing some good old fashioned trade wars?
what will do to follow thru the threat ?
quit buying Toyota cars ?
the ones that are being given a clean sheet by the NHTSA ?
A race to the bottom is still a race.
"The official is familiar with euro zone official thinking on the issue"
Described as being stark raving mad, and having his most lucid thoughts while having tea with his large collection toe nail clippings, this official, when not contemplating official euro zone matters, rents himself out as a test subject for the pharmeceutical industry.
Ever smell your toe-nail clippings? Hours of fun! :)
Everybody's kung fu fighting.
So much for the Gold will decline like other assets theory.
Well don't be fooled. Coordinated intervention pushed up USD today. The goal was preventing a rush to gold and commodities which were all perched on the brink of a giant run up. Not only was $200 billion of new QE announced, but the trade deficit came in this AM far worse than predicted. USD would normally have tanked on the back of that news. But that would have exposed the depths of the folly of Fed policy: capable of generating both a post-bubble deflation and inflation simultaneously in a toxic brew that will crush consumers and small business.
What are the Euros going to do to Japan if they don't listen? Drop tons of old croissants, defective BMWs past their warranty, and half-used wine bottles over Hiroshima?
Boy, the Japanese folks are surely scared..
Ah, Mr. Sparkle...we are not afraid. Do try some of our all you can eat Yen carry trade.
"Join me or die, you can do no less!"
Think Cleavon Little in Blazing Saddles making threats.
Michael Pettis reports that China's central bank
may be buying the yen, Tokyo having supported
the U.S's efforts to pressure China to let its currency
appreciate...
I think I am turning Japanese, I think I am turning Japanese....I really think so!
DOW/SP500 daily charts are now bearish.
So the downtrend I first mentioned in early May this year, can now resume.
http://stockmarket618.wordpress.com
I was in Germany in 2008 (twice on in March, and once around September). I believe it was in March, but I was talking to a fairly intelligent businessman, and all he wanted to do was talk about the Yen-Euro carry trade. This seemed to be where the German (European?) mindset was at that time. I wonder if it is related to this.
Not directly related, but I was in Germany when Bear Stearns went down. Here is what I said on www.siv0.com :
March 17, 2008, AM EuropeWith the announcement of a $2/share Bear Stearns buyout by JP Morgan (at roughly $0.10 to the $1), suported by the Fed, Asian and European stocks have started the day by dropping significantly. I do not know how far the US stock market will drop at opening. Bear Stearns was a major derivatives player with trillions of dollars in notional value of contracts. No one can predict immediately how far this will spread. The Fed is basically continuing to inflate the financial system to avert a meltdown, and the immediacy of the problem just jumped from elevated to high (using the homeland security system as an analogy). Some would say it just became severe.
I do not intend this to be an advice website, but, depending on what the US stock market does this morning, now may be a good time to stock up on some basic household commodities: dried foods (rice, beans, powdered milk, etc.). Also, this is a good time to keep all your car's gas tanks full. I am not suggesting anyone panic, but certainly it would be wise to take a few precautions.
Where IS that reset button?
I know it's around here somewhere? :-)
Peak hypocrisy? If only! Unlike oil, there seems to be an unlimited supply of hypocrisy.
Zero Hedge?
http://www.missingaircrew.com/images/kidzero2.jpg
Pot? Let me introduce you to Kettle.
Our currency agent is: Odd Job!