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The Scariest 50 Hours

Bruce Krasting's picture




 

 

There was a four year stretch where I was responsible for big currency spec positions. I was regularly over a billion dollars long short in either USDJPY or USDDM (this was before the Euro). This happened many years ago. I don't things are any different today, there are plenty of folks making mega-billion dollar currency bets in April 2013.

The numbers back then were surreal. Daily P/L changes were regularly $5m. It was not unusual to make or lose $25 million in a week. There were a number of us involved in this effort - trading at this level requires a 24/7 effort. We all had a percentage due to us based on the annual results. Of course we tracked what our share of the daily gains and losses were. At one point someone started to measure the personal results in cars, not money. It was either dark comedy, or a way of obfuscating the big numbers we were confronted with on a daily basis. I can understand how some readers will find this repugnant, it's the way of fast money.

 

How'd I do today?.....You lost a 7 series BMW.

What was your weekly nut?.....Three Corvettes.

 

I did if for four years, it wore me down more than you can imagine. I had to give it up. The FX market doesn't owe me a thing, but I still have the tire tracks on my back. The money was one thing, the stress was a different story.

The markets were very liquid. To buy or sell $1b was a few phone calls; it took only a minute or two. From 6pm Sunday in NY, to around 4 on Friday there is an active FX market someplace on the globe. If you had to turn-and-run on a position, you could do it. But after 4 PM on Friday, you were dead in the water. For the next 50 hours you were stuck with what you had. And of course, these are the hours when big things happen.

To be "square" on Friday night meant you could sleep through the weekend. But you didn't make money that way. We were paid to take big risks. I sweated through dozens of those weekends.

 

I bring this up as I was reminded of those times with the 4:30 pm Friday release of information by Treasury Secretary Lew (Link):

 

Screen Shot 2013-04-13 at 8.48.46 AM

 

There are two potentially market moving sections in the report. The Treasury Department planted a "dirty bomb" at the Bank of Japan, and tossed a grenade at the Swiss National Bank. I'm thinking of all the folks who are big long USDJPY. They are going to have to sweat the next 50 hours. They have to hold their cards and wait. I suspect that quite a few FX players will have their weekends ruined.

 

The key words on Japan:

We will continue to press Japan to adhere to the commitments agreed to in the G7 and G 20, to remain oriented towards meeting respective domestic objectives using domestic instruments and to refrain from competitive devaluation and targeting its exchange rate for competitive purposes.
 
A more subtle approach was taken by Treasury with regard to Switzerland and its currency peg. In prior reports, the Treasury has said that Switzerland should return to a true floating rate, but only when "Conditions in Europe have been stabilized". The latest report omits this language. The clear suggestion is that Switzerland should normalize its exchange controls sooner versus later.
 
 
The 4:30 PM timing of the Treasury announcement was done to minimize the market consequences in the US. It does set up for an interesting opening in Asia Sunday night. Having been in this situation a few times, I'll hazard a guess on how this turns out. In the early hours Sunday night, when it's just Australia that's awake, the USDJPN will set a low of about 98.00. By the time the Tokyo, Hong Kong and Singapore markets are up and running, USDJPN, will be closer to 99.
 
I think the "lasting" market effect of Mr. Lew's statements will be measured in hours. I don't think the Bank Of Japan will stop printing money, in fact I think they will make an affirmative statement that will weaken the Yen. Nor do I think that the Swiss National Bank will pay any attention to what Lew has said.Some headlines will come that will read something like:
 
 
BOJ not targeting any level for USDJPY.
BOJ not attempting devaluation of YEN in FX markets
BOJ committed to QE policy set forth on 3/14/13.
BOJ to maintain target of 2% inflation.
BOJ policy is not inconsistent with G20 or G7.
 
SNB says 1.20 peg will be maintained.
SNB reaffirms it will intervene in unlimited quantities to maintain Peg.
SNB says USA is manipulating global markets more than Switzerland.
SNB say US Treasury Secretary does not understand FX markets.
 
 
We have an interesting setup developing. Japan has gotten a warning from its biggest trading partner (and military ally). And Japan is going to completely ignore it. When the rebuke to Jack Lew comes (it will) it will be the clearest sign you could get that the door is open for another big up move in USDJPY. Japan Inc. is going to thumb its nose at Jack Lew. And there is not a damn thing that Jack Lew can do about it.
 
 
In my forecasts for 2013 (December 2012, well before Lew was nominated) I said:
 
- Jack Lew will replace Geithner as Treasury Secretary. This choice will be driven by Lew’s knowledge and experience with budget matters. But Lew knows nothing of the capital markets and this will be a problem when a non-budget crisis emerges. Lew will say something about the currency markets that causes a big flap. There will be calls for his resignation as a result.
 
 
I think we just had the Jack Lew moment that I was anticipating. I believe that Jackie Boy has made a mistake. He picked a public fight with Japan that he can't win. Having picked the fight, he can't back off. When the BOJ and the markets make him look silly (USDJPY = 110+) there is going to be pressure on him. Jackie has set himself up for a fall.
 
In all my years of watching (and participating) in the FX markets I have never once seen a situation where "talk" accomplished a damn thing. In fact, idle talk often creates the opposite reaction to what was intended. So for those who are having sphincter problems this weekend over a long USDJPY book, and the 50 hours you have to wait to find out what happens, I say relax. By the opening in NY on Monday, you will be okay again. In a few weeks you'll be buying hot cars and houses.
 
Jack Lew, on the other hand, is in for a jolt. He probably thought he could talk, and markets would obey him. Some egg is going to hit Jack in the face. The "rule" in these matters is that you don't pick a public fight that you can't win, and that is exactly what Lew has done.
 
 
 
Oshitz
 
1206135970_f
 
 

 

 

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Sun, 04/14/2013 - 19:50 | 3447825 Herdee
Herdee's picture

But,we still come back to whether or not the Japanese can raise interest rates.My guess is that they can't and the inflation card is a ticket to wiping themselves out.They're like the U.S. Government.How can a government afford even more explosive uncontrolled debt on the deficit when interest rates rise and the tax base doesn't support you because of demographic changes?It's old fashioned economics,it's basic stuff.The answer is that you can't raise interest rates.It's a lie.Both of them are what I call "cellar-boxed".The banking empire has got both of them locked in tight so to speak @ .0001 Bruce should also understand this very important point which is key to the scam funding of Japan:The whole Japanese Bond Market is structured around a deflationary process.And in the U.S.,the microsecond that the FED removes even the slightest hint of QE,the wash-out of world bad debt will begin,backed by the biggest OTC derivative scam in history.The next leg of the deflationary spiral downward will be the big drop coming in oil.That will help with a little breathing room only.They're both dreaming of their inflationary days because inflation is easier to control if you handle it early.Neither Japan or the U.S. has been able to understand the deflationary process this time around because it is a totally different beast on a different level from the depression era example.

Sun, 04/14/2013 - 19:40 | 3447807 The Second Rule
The Second Rule's picture

Ugh. I would say "Oh God" but I don't like taking the name of an unknown God in vain.

On January 25, 1995, Boris Yeltsin was shaken from his alcoholic stuporic sleep and summoned to the war room. Yeltsin, still violently hung over,and seeing the room spinning was presented with the "suitcase." The nuclear codes. Obama has one too. Anyway. back to the story... The Norwegians had just launched a rocket, and even though the wegies had notified the Ruskies of the rocket launch, somehow it had gotten lost in a bureaucratic maze of paperwork. Go figure. Russian efficiency and all that. Anyway, back to the story...So the wedgies launch this missile. For atmospheric testing or who knows what some such shit. And the Ruskies pick it up on radar. And think..well, what would you think if you saw a missle coming at you? Lost in the paperwork. So they go gets the Yelts, pull him out of bed, put a a pot of coffee in him, and throw the suitcase down in front of him, and if the rumors are true, and I suspect the are, the Yelt's generals are all saying "Mr. President, you MUST push the button. Mother Russia is under attack!" The Yelts hesitates and they repeat their entreaties. For whatever God known reason Yeltsin did not push the button. He closed the case and said "Nyet!" And that is the ONLY reason we are here today to talk about it.

http://en.wikipedia.org/wiki/Norwegian_rocket_incident

Sun, 04/14/2013 - 14:06 | 3446725 knukles
knukles's picture

Jack Lew for all intents and purposes is another "Fix it Again Timmah" with all the gravitas in the international financial markets of Paul Krugman
Another Wonder of Leadership

BTW, Bruce, we used to measure our stuff in AMU's

Aston Martin Units

Not that we could afford the things but it was sure fun to talk like the big swingers.

Sun, 04/14/2013 - 09:46 | 3446306 Abrick
Abrick's picture

There are plenty of us who have sweated throught the weekend, doing real work, just to make a mortgage payment, kids birthday/christmas present... The disconnect in what constitutes burnout is the key. Hey real economy, learn how to read and write!

Sun, 04/14/2013 - 10:17 | 3446345 cifo
cifo's picture

I know what both of you mean.

Sun, 04/14/2013 - 08:25 | 3446241 Mr. Hudson
Mr. Hudson's picture

Jack Lew will order North Korea to nuke Japan.

Sun, 04/14/2013 - 12:04 | 3446595 the grateful un...
the grateful unemployed's picture

this is a joke right, how can they tell?

Sun, 04/14/2013 - 09:31 | 3446298 Hurdy Gurdy Man
Hurdy Gurdy Man's picture

Nah - Japan is going to false-flag attack Fukushima in order to shift blame from that point forward to North Korea, Kim Jong-un gets the glory and galvanizes his people to endure more suffering while China, Japan, S. Korea and US know he didn't actually do it so they just retalliate lightly/superficially, then forget it.  Then they can all martially take control over Fukushima, which is how it should be, because those fuckups at Tepco can't manage shit for dick, and they basically start scooping all that shit out and drop it in containers into an induction plate beneath the sea where it gets subsumed into the earths deeper layers.

Sun, 04/14/2013 - 11:57 | 3446569 screw face
screw face's picture

+1

correct about tepco.

your premiss, makes a lot of sense, touche.

you been talking to somebody, very important about this.

time will tell, Jah Bless us all.

humanity, technology, black mold, machines.

rense repeat.

rosta

Sun, 04/14/2013 - 08:08 | 3446223 OneTinSoldier66
OneTinSoldier66's picture

Great and interesting read. Thank you Bruce.

Sat, 04/13/2013 - 22:25 | 3445781 mechawreck2
mechawreck2's picture

The question is who leaked this to whom and caused gold to be unloaded in size...from early Yen reaction (not much), may not be a big money maker.  Of course covering the short will somehow only recoup 20% of the price decline...

Sun, 04/14/2013 - 06:01 | 3446149 Fish Gone Bad
Fish Gone Bad's picture

Hey Bruce:

I fixed this

Japan ... remain oriented

Japan to remain oriental

for you.

Yeah, my comment is really stupid and childish and I am thinking a lot of you out there saw this because of your dyspepsia/dyslexia.

Fish Gone Bad

Sat, 04/13/2013 - 21:52 | 3445726 Pandorable
Pandorable's picture

If it's REALLY bad news, the markets will shoot higher Monday...as all bad news is good news these days.

Sun, 04/14/2013 - 00:32 | 3445986 The Heart
The Heart's picture

Don't forget that the babylonians love Mondays to execute bankster/govt false flag operations on.

Sat, 04/13/2013 - 20:19 | 3445464 lakecity55
lakecity55's picture

I thought Lew was a fellow traveler like Skeeter.

Those Reds are big on central planning and 5-year plans.

It would figure Lew is there to further sabotage the US, per Cloward-Piven.

But, I tend to see black and white: commies= bad, Adam Smith=good.

Sat, 04/13/2013 - 20:46 | 3445573 covert
covert's picture

never throw good money after bad.

http://covert.nl.ae/

Sat, 04/13/2013 - 19:35 | 3445367 steve from virginia
steve from virginia's picture

 

 

 

Scary 50 hours? Gimme a break! The human race is going to face a very tough next 1,000 years. Right now there is a good chance that the hairless monkeys will become extinct by their own hands.

 

@Krasting opines:

 

"I think we just had the Jack Lew moment that I was anticipating. I believe that Jackie Boy has made a mistake. He picked a public fight with Japan that he can't win. Having picked the fight, he can't back off. When the BOJ and the markets make him look silly (USDJPY = 110+) there is going to be pressure on him. Jackie has set himself up for a fall.

 

In all my years of watching (and participating) in the FX markets I have never once seen a situation where "talk" accomplished a damn thing. In fact, idle talk often creates the opposite reaction to what was intended. So for those who are having sphincter problems this weekend over a long USDJPY book, and the 50 hours you have to wait to find out what happens, I say relax. By the opening in NY on Monday, you will be okay again. In a few weeks you'll be buying hot cars and houses."

 

Maybe yes, maybe no. Lew doesn't act by himself, he has a fleet of 'associates' at the big banks pulling his strings. If he makes a mistake they lose and they don't like to lose = they pull the strings as needed.

 

Meanwhile, the fundamentals are ignored: Japan -- like all the other countries in the world -- has no independent monetary policy. This is because the cost of money is set at gasoline stations around the world by millions of motorists every single day. If gas prices are too high, drivers buy less and economies decline: think of the old-fashioned 'gold standard' except there is only one way to 'go off' petroleum ... get rid of the goddamned cars.

 

The blowup in Japan is part of the de-carring process which is underway right now. Get over it Krasting and kiss that fucking junker Ferrari goodbye.

 

Because Japan is nothing more or less than a car factory with radioactive beaches it cannot gain anything by depreciating its currency. Its export prices are determined entirely by what it pays for imports ... including fuel! The only effect of current so-called monetary 'policy'is steal funds from workers and shift them to (Japanese) plutocrats. Everything else remains the same.

 

The only question is how soon the Bank of Japan will fail and what form the failure will take. Holders of yen and yen-denominated bonds will reduce their 'exposure' and dump their bonds (as noted by @Krasting). There will be less credit available in the greater world rather than more. Prices for fuel will decline but this won't do any good for the Japanese because customers for Japanese cars will have less access to credit.

 

As credit shrinks the price of crude will decline below the cost of extraction. There will be physical shortages that will cut credit further which will shut in more crude in a vicious cycle. At that point -- which will occur no later than the end of next year -- there will be a return to recession with no way to end it.

 

Lew is probably going to be right and have nothing to do with the outcome at the same time.

 

 

Sun, 04/14/2013 - 11:14 | 3446478 Dealyer Turdin
Dealyer Turdin's picture

The blowup in Japan is part of the de-carring process which is underway right now. Get over it Krasting and kiss that fucking junker Ferrari goodbye.

 

Because Japan is nothing more or less than a car factory with radioactive beaches it cannot gain anything by depreciating its currency.Its export prices are determined entirely by what it pays for imports ... including fuel! The only effect of current so-called monetary 'policy'is steal funds from workers and shift them to (Japanese) plutocrats. Everything else remains the same. 

 

WOW !

Sat, 04/13/2013 - 21:30 | 3445691 MrSteve
MrSteve's picture

shorter posts are always more effective, tho it is tough to write short...try it next time!

Sat, 04/13/2013 - 17:40 | 3445232 eddiebe
eddiebe's picture

I'm sure especially Japan does exactly what is expected of them by the USA, and so does Switzerland. The USA is running a protection racket around the world, so personally I have a hard time believing that Japan is acting unilaterally in their currency manipulation. Ditto for Europe including Switzerland.

Sat, 04/13/2013 - 20:37 | 3445547 otto skorzeny
otto skorzeny's picture

the US loses clout by the day- that fucking horse has been out of the barn since Lehman debacle.

Sat, 04/13/2013 - 17:38 | 3445231 Milestones
Milestones's picture

kevine---well written annd thought out post---ya gotta be able to read in between the line and thought to understand.      Milestones

Sat, 04/13/2013 - 17:31 | 3445213 Silver Alert
Silver Alert's picture

Bruce,

What would be the best way for non-FX traders to take advantage of a falling Yen, rising USD/JPY?  There is the YCS - Ultrashort YEN ETF.

Sun, 04/14/2013 - 09:59 | 3446323 jvetter713
jvetter713's picture

Silver Alert....I'm not familar with that ETF but if it is a 2x or 3 x never ever buy them or calls on them.  Always short the inverse.  If you want the Bear etf, short (or buy puts) on the Bull etf.  Just my 2 cents.

Sun, 04/14/2013 - 08:21 | 3446236 Bruce Krasting
Bruce Krasting's picture

There is nothing in FX that is a "buy and hold". It is a trade - you have to buy smart, and then you have to sell smart. I think most small investors can't do this well (It's hard!).

 

Want to play in this sandbox? There are several places that allow simulation trades with no real money involved. Do this first before putting bucks on the line. If you do well on paper, and get comfortable with with the process, then go ahead and take a flyer. Options on FX are probably the way to go for a novice.

 

When I was in the game I would tell people:

 

Before taking a position in FX, first hold your breath for two minutes.

 

No one can hold their breath that long, so what I was really saying was, "stay away".

Sun, 04/14/2013 - 08:53 | 3446260 SmallerGovNow2
SmallerGovNow2's picture

Good post Bruce.  Thank for sharing your experience and insight into the FX markets...

Sat, 04/13/2013 - 17:08 | 3445161 WhiteNight123129
WhiteNight123129's picture

Bruce: You are not going to see.

SNB says USA is manipulating global markets more than Switzerland. SNB say US Treasury Secretary does not understand FX markets. But SNB is committed --like the Fed is to its own domestic economy-- to help growth and employment within Switzerland (meaning yeah right and what are you guys doing? ) We welcome constructive collaboration with Mr. Lew. (Meaning Fuck off)
Sun, 04/14/2013 - 08:27 | 3446243 Bruce Krasting
Bruce Krasting's picture

Okay - I like your version better. It sounds more "politically correct" - and the Swiss are very correct.

Whatever the words chosen, they will have the same meaning - exactly as you have suggested:

 

SNB to Treasury: Fuck off!

Sat, 04/13/2013 - 17:06 | 3445154 Clowns on Acid
Clowns on Acid's picture

Bruce - great post as semi -usual...hehe.

If you recall - in 1987 Us Traesury Sec Baker called on the Buba (Bundesbank...to you beanie baby kids) to lower rates as Baker et al wanted to lower yields on the Brady bonds (Latin America was acting up again...), and for lower artes in the US to boost GDP.

The Buba was passive aggresive with their public response, but in fact raised interest rates 1/4 %. The next day began the crash of 1987. Gold was dumped and bonds were purchased. It was a time of rising real interest rates. The Buba was the responsible adult in the room. It's certainly different today - real rates are negative or at zero, fiat is being printed just below the the speed of light. PMs will ,have to be the way to go eventually. Short term as western CBs attempt to crush PM price leaves soft commodities the only market where they are not present (yet?). I am long those ...just recently. If the CBs intervene with the price of food...shortages will develop. They had better not be that stupid...but I cannot guararntee that they are not.

Yes I was at my 1st FX trading job then.... and was my first exposue to crazy, "irrational" markets. Broker squawk boxes were booming, P& L swings of multi millions were be recalculated (Xcel spreadsheets and fortran programs requiring manual FX rate updates).... the CEO was standing in the trading room ...visibly sweating., receiving P+L updates from the Treasurer (who was receiving them from messengers from the Head of the different Desks) ....ahhh...the good old days.

My salient point is....ahem.... that when you demand that another CB reprice its money, they do not take it well. This will be the turning point in this Alice In Wonderland ponzi brought to us by incredibly naive politicians in US and Euroland. 

 

Sun, 04/14/2013 - 11:04 | 3446453 therover
therover's picture

FORTRAN programs and punched cards.....brings back memories.

As an IT professional back in the 80's, my friends and I weren't making money measured in cars... we were measuring it in ounces of coke. 

 

Sat, 04/13/2013 - 17:02 | 3445148 kevinearick
kevinearick's picture

 

Don't Get Me Wrong

I see... Of all the places I have been and all the people I have been around, it is the population of black homeless MEN in San Francisco that have afforded me the greatest respect and leeway to do what I have to do. And those little old ladies all dressed up with perfect make-up to match, I know they spent a lifetime going uphill against the current to put themselves together, stringing together one day at a time. And I see the guys who have no idea where they will be sleeping one night to the next, getting up at 5am to seek work everyday. And I see real homosexuals minding their own business, seeking companionship with which to share their lives. I see everyone who gets up everyday and makes the world just a little bit better than it was yesterday, because that is all that may be reasonably expected. Most of all, I see those who, by no fault of their own, are dealt the worst hand in the deck and make something out of what little God has given them in the form of common sense. The Warren Buffets, Gavin Newsoms, and Jean Quans are actors, on a treadmill to nowhere, to be replaced by the next vacant souls, on the same treadmill.

My job is not to topple the empire, which will simply be replaced by the next mob and the next mayor that wants to get out in front of the parade. And it is not to pull back the curtain, so everyone can admonish everyone else for participating. My job is push back on the darkness that is the shadow of the empire, to make it just a little bit easier for everyday folks to get on with their day, so that the economy can regenerate, so kids can be kids. The majority does not raise family. The minority does. And it is from the bottom that they must climb to do so. Yes, many choose to forget where they came from, along with all of those who made their climb possible. I am not one of them.

If you want to do something useful, keep pushing on the new currencies. Of course the JPMs of the world will lie, cheat, steal and kill to maintain their positions. Unless you want to do so better than they, let it go. I told you that the bear market in gold was coming. It didn't take rocket science to look at the data objectively. Until legacy family banking law is dismantled, the global economy will continue to implode. When it is dismantled, labor will inject the necessary technology. The new currencies prevailing at the time will be the beneficiaries. Always have a three currency set, with associated bond to stock distribution, one legacy currency, PM, and one new currency to trade through, with your own unique algorithm so that the robot algorithms can't see it, and don't spend any more than 10% of your much more valuable time on this empire market stupidity. Get on with your life. That is the point, and it is that which the empire does not want you to see. The Chinese Railroad Company is not going anywhere, except to vacant cities filled with vacant souls.

Until you change that first diaper, and realize that you are responsible to God for the life of another, you have no f-ing idea what life is about, and neither does the majority surrounding you. Until that time you just have to have faith in yourself. I don't know what else to tell you. There is something your community requires that only you can deliver. Figure it out. I am a laborer and I know my function. What is yours?

If you are a kid, don't come to my elevator and tell me you want a job. Tell me what your function is and I will take you to your floor. I don't need a female that can f-. They are everywhere. I need a grown woman who can carry her share of the load with grace and dignity. And if you “think” you can build better economic kernels than I can, come out here in the real world and show me, with something more than a mouthful of best business practice marbles placed there by empire propagandists. I'm old, I'm tired, I have scarce patience for b-lsh-, and you will find that my kind are all alike, which is why we serve you a double at 5am, to see if you can stand on your own two feet, before we load you up for the journey. If you want a known destination before you begin, a plan for your life, go work for corporate – public, private or non-profit, it doesn't matter, and neither will you.

It's how you spend your time, not how you make your money. It's your priorities that determine your outcomes. Only an empire fool thinks it takes money to make money, in pointless enterprise. Love is distilled forward; everything else is a sunk cost. Don't waste your time on make-work in a make-believe empire world and expect anything other than to get recycled yourself. Kids don't need Mr Buffet's financial advice. They need parents. And, sooner or later, you are going to need them. Pension promises are pension promises, nothing more, to be inflated away at the discretion of capital. The majority always learns the hard way, when it's too late. This time will be no different than any other time, and the majority will cry, like every other time, that they never saw it coming.

The train to the future waits for no one, but it is always at you station if you build it. Get off the ground, or expect to part of the short.

Sat, 04/13/2013 - 18:36 | 3445303 kevinearick
kevinearick's picture

 

SS is already bankrupt. That money is coming from people currently earning it, who are rapidly learning how to escape the system with acceleration;

The kid in NK has figured out, although not entirely, that if he installs a random algorithm, the anti-missile guidance systems will do his work for him to deliver the warhead;

and, not only, but also,

just after the security guy escalates the electronic warfare game by demonstrating an app to take over flights through the autopilot program, a brand spanking new Boeing 737 goes in the drink.

 

It's looking more and more like an asymmetric WWIII everyday, where you too can participate, on your own side. Crack me the f- up.

Sat, 04/13/2013 - 20:14 | 3445473 lakecity55
lakecity55's picture

What? An aircraft takeover app?

I got 20 hour's of flying coming up.

Yet, it's not bad here in central asia. Maybe I will stay. It's a long ride over the steppe to the internet cafe, and my pony is tired. Besides, I found a GOLD map in the bazaar.

Sat, 04/13/2013 - 16:15 | 3445078 onlooker
onlooker's picture

Bruce----  Not having the time or interest to read books that contain this type history and information, this is a great snap shot of the World that many of us know little of, and will never see. Your story is one that is worth sharing and the delivery vehicle of your web site (under his name readers) and ZH is ideal for mid-class me. Short story, short read good education.

 

Ironic that N. Korea said this week that Japan would be the first target they will blow up and the USA launches an economic/currency attack. If either of these threats against Japan is really serious, the observation that this guy is an idiot is correct.

 

However, it seems that this is in keeping with most of the Obama administration policy and track record. Incompetent is an inaccurate description.

 

Yesterday the head of the ICE members organization stated on National TV that they were unable to be involved, give input, talk to ANONE, regarding the 1000 ++ page Immigration Bill. They wrote to the Obama and the committee. Tuesday the bill is finished. Finally they got a reply that there would be a phone conversation by Tuesday.

In that these guys are on the border trying to implement the regulations of illegal entry into the USA, and yes they get shot at and some are killed (think Fast and Furious) it would seem a given that they would be a large input into the Bill.

 

But like Doctors were excluded in the Obama Care Bill, this is in keeping with the policy of letting the large money players control the safety and health and economy and to hell with the Nation and the citizens.

Sat, 04/13/2013 - 16:11 | 3445069 tom
tom's picture

Interesting piece, but I read Lew differently. Here is the part of his statement that I would highlight:


"We will continue to press Japan to ... remain oriented towards ... using domestic instruments ..."

 

As I read this, Lew is saying he will continue to press Japan not to buy FX, and between the lines, he's taking credit for persuading Abe and Kuroda not to include purchases of FX in Kuroda's first BoJ meeting. There's nothing in this statement indicating he disapproves of the BoJ buying JGBs in large quantities, so long as it doesn't buy FX or target an FX rate.

 

Sat, 04/13/2013 - 17:54 | 3445250 lewy14
lewy14's picture

Exactly.

I don't think any FX trader is going to lose any sleep over Lew's statements.

As to the parts that Bruce highlighted - what the hell was he going to say - "Pudintu, Beechu!" I mean really. It's boilerplate, it's meaningless.

Sat, 04/13/2013 - 16:05 | 3445058 q99x2
q99x2's picture

Jack Lew wrote a letter to show the world that he is responsible. That sucker knows what is going to happen.

Sat, 04/13/2013 - 16:17 | 3445076 Pure Evil
Pure Evil's picture

Personally, I think Lew was trying to throw his weight around like a school yard bully.

But, what he failed to realize is that the US Treasury is just Benankes bitch.

And, nobody gives a Jack Lew Shit about what the US Treasury has to say.

Take a page out Little Timmah's book of rules, keep your mouth shut and fetch your masters slippers when Bernank gives the command.

Sat, 04/13/2013 - 15:35 | 3445006 IamtheREALmario
IamtheREALmario's picture

Is there any value that currency traders (gamblers) bring to the world or is it just a selfish parasitic gambling exercise? My guess is that with the swings you mention, price is not really related to any kind of fundamental supply and demand.

Sat, 04/13/2013 - 16:38 | 3445109 Bruce Krasting
Bruce Krasting's picture

My life in FX was "made" in August of 1971 when Nixon suspended gold convertability and allowed the dollar to float according to the market. I didn't invent the game - I just played it.

 

To a very significant extent, FX is a zero sum game. If I won, someone else lost. There are no widows and orphans in this biz, only pros. So I think the selfish parasitic thing is not correct.

 

Sun, 04/14/2013 - 06:30 | 3446172 falak pema
falak pema's picture

Like gunslingers in Dodge. As long as they kill each other...they are not parasites; so goes the logic.

But...if those who pull the strings behind the curtain; those WHO INVENT the game, in your own words, then make this casino fiat experiment the BIGGEST game in town, it kills the other games, the ones that feed the "we the people meme"; as this zero sum game only truly feeds the MARGIN makers on the side. All casinos make money not on betting but on the "zero" margin spread of wheel spinning, its mathematics stupid... as the croupier would say! 

When this perversion of capitalism becomes what it has become, its time to ask yourself what the game is all about and what a parasite really is : isn't it the guy sitting at the table as ACTIVE participant in a rotten game that has now eaten its healthy host? 

By becoming a spear carrier in a rotten, corrupt legion you lose the empire and worse; civilization! 

Big stakes on FX plays if it kills capitalism along wth all the other derivative plays; now globally propagated deadly viruses.

We are not heading towards more and better but less and worse. 

 

 

 

Sat, 04/13/2013 - 17:28 | 3445202 ChanceIs
ChanceIs's picture

Jack Lew is speaking at the Washington DC campus (SAIS) of Johns Hopkins University on Wednesday.  (Note:  SAIS is also where Timmah went.  (Note Again:  I went to a graduate seminar there once and the presenter had to apologize for writing a differential equation.)) Timmah spoke at the AEI a few years ago.  I could have gone but I knew that my temper would have landed me in Secret Service custody - or in a dumpster with buckwheats.  I don't think I can go see Lew for the same reasons.  He probably won't do Q&A anyhow.  Things would start to go south when my lips started moving and i said....'Just when the f&^k are you bimbos going to start throwing some drug smuggling banksters in jail?  And OBTW - I am selling paper and taking possessiuon of physical and everybody else in this room should be doing the same.

Live feed here:

U.S. Treasury Secretary Jacob J. Lew to Speak at JHU SAIS

 

Jacob J. Lew, U.S. Secretary of the Treasury, will speak at the Johns Hopkins University Paul H. Nitze School of Advanced International Studies (SAIS) on Wednesday, April 17 at 4 p.m.

 

Ahead of the spring meetings of the International Monetary Fund and the World Bank, Lew will speak about “The State of the Global Economy.”

 

David Wessel, economics editor of The Wall Street Journal, will moderate the session.

 

The lecture is open to the members of the SAIS community and invited guests only. However, the event is open to the media for coverage.

 

SAIS also will host a live Webcast of the event accessible at http://bit.ly/10K5FIW.

 

The event will be held in Kenney Auditorium located on the first floor of the school’s Nitze Building, 1740 Massachusetts Ave., N.W., Washington, D.C.

 

Members of the media who plan to cover the event should respond to Felisa Neuringer Klubes at the SAIS Communications Office at 202.663.5626 or fklubes@jhu.edu.

 

Felisa Neuringer Klubes

Director of Communications & Marketing

Paul H. Nitze School of Advanced International Studies (SAIS)

Johns Hopkins University

1740 Massachusetts Ave., N.W.

Washington, D.C. 20036

 

fklubes@jhu.edu

202.663.5626

202.663.5647 (fax)

www.sais-jhu.edu

 

 

Sat, 04/13/2013 - 20:46 | 3445574 Jendrzejczyk
Jendrzejczyk's picture

Hmmmm.

Felisa has ties with Homeland Security

http://pdfind.com/docs/31/48c9ac58d6e5d/c48c9ac58d6e5d-000001.png

Sat, 04/13/2013 - 17:04 | 3445151 orez65
orez65's picture

Fiat currency is plain and simple FRAUD.

It's Counterfeited currency.

If you gamble with counterfeited currency then you are a criminal.

But a "legalized" criminal.

Sat, 04/13/2013 - 14:03 | 3444822 TooBearish
TooBearish's picture

Respectfully Bruce - I think you might give JL a tad more credit as he is politcally connected and a very adjroit, sophisticated player.  His call is disinformation cover.

As BOJ depreciates, they are back to buying USTs, as well as all the crap in the EZ.  Jack is simpling giving covering fire to the MOF/BOJ as Japan will be slammed in the next G20 meeting.

Just my 2 cents as Japan is about to fall into the abyss and the US would like nothing more than to put China back on its heels with a (former)local powerhouse back in the game....

Sun, 04/14/2013 - 09:53 | 3446318 Ned Zeppelin
Ned Zeppelin's picture

Interesting take on this.

Sat, 04/13/2013 - 16:31 | 3445101 Clowns on Acid
Clowns on Acid's picture

Respectfully TooBearish - you commenst are based on MSM reports on JL. The MSM is probably at its height in terms of delivering the Obama Admin disinformation. People are staring to believe that Obama is everything that some people warned that he would be. The MSM can only bs for so long. I mean the happy faces and cheerful talk concerning the US equity index parabolic rise is testiment to my premise.

JL is not respected or indeed has accomplished anything other than being a political operative with great cover via the MSM.

His commenst showe that he is internationally clueless and has no relationship with the foreign banks / power cliques. They will respond in kind. Paqssive aggressively,andlet the markets show their response. UST's will be sold, sure the Fed can tr to mop them up, but hedge funds worldwide will jump on the shorts as well.

Scary enough that the Fed and Treasury (led by JL) are clueless and arrogant enough to begin to outright support the equity market....but thaqtbwill be the beginning of the end.

To think that JL has any competency after his commemts is to be terribly naive and to place an Alice In Wonderland premium o the insight provided by MSM. The MSM is absolutely clueless yet arrogant. The same as JL. It;s a circle jerk that has served the Obama Admin thus far. It will not continue, and this is most probably where history unfolds.  

Sat, 04/13/2013 - 15:52 | 3445038 smartstrike
smartstrike's picture

Agreed, this is completely wrong analysis.

Sat, 04/13/2013 - 14:59 | 3444958 Bruce Krasting
Bruce Krasting's picture

Equally respectfully - JL is out his league when it comes to global capital markets.

Sat, 04/13/2013 - 21:52 | 3445725 MrSteve
MrSteve's picture

Most folks with a micro-smidgen of sense would double down on Krasting, in spades! These FX central banks operations play out maybe twice in a lifetime, so if you have an eyewitness to guide you down the path, you follow him and not the self-promoting goof with a really spiffy googlemap he bot on the Net. Experience pays, in spades! That's why the old farts have so much money.... Not that Bruce is an old fart, he just has the cash as if he were an O.F....  a kinda back-handed compliment, I reckon?

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