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Will JPY Devaluation Disrupt Global Growth?

Tyler Durden's picture




 

Seemingly hidden from the mainstream media's attention, we note that the last six weeks has seen the second largest devaluation in the JPY since Sakakibara's days in the mid-90s. As Sean Corrigan (of Diapason Commodities) notes, this has to be putting pressure on Japan's Asian neighbors - not least the engine of the world China. Furthermore, JPY on a trade-weighted basis has cracked through all the major moving averages and sits critically at its post-crisis up-trendline. As we noted last night, perhaps Japan really is toppling over the Keynesian endpoint event horizon. JPY weakness and the carry trade may not be quite as hand in hand if rates start to reflect any behavioral biases, inflation (or more critically hyperinflation) concerns any time soon.

The six-week devaluation in JPY (spike up) is the second largest since the mid 1990s...

 

And JPY on a trade-weighted basis is at a critically important trendline...

 

Charts: Bloomberg

 

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Wed, 03/14/2012 - 12:40 | 2254685 camaro68ss
camaro68ss's picture

Inflations a Bitch

Wed, 03/14/2012 - 12:47 | 2254726 SheepRevolution
SheepRevolution's picture

30 years of low interest rates and printing money, and these people still don't get it.

Wed, 03/14/2012 - 13:15 | 2254896 Augustus
Augustus's picture

It is really impossible to know if they do "get it" or not.  They are so far down the pipe now that it is like asking the meth head to quit the drug when there is free meth available in the bag.  The addict knows that either choice is death for them.

Wed, 03/14/2012 - 13:16 | 2254907 JPM Hater001
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See that hard downward part on the far left?

That's when that Bastard Nixon took us off the gold standard.

ZeroHedge - Where you learn more in a day here by accident then elsewhere by design.

Wed, 03/14/2012 - 13:27 | 2254977 Thamesford
Thamesford's picture

Land of the surprising run?

Wed, 03/14/2012 - 15:21 | 2255423 Popo
Popo's picture

A better question than "Will JPY Devaluation Disrupt Global Growth" is,  "Will JPY Devaluation Work This Time After Failing Every Other Time?"

If the BOJ was able to keep the Yen down, they would have done so years ago.  They have tried countless times.  They can't.  And just like every other time over the past 2 decades, this won't work.

 

Wed, 03/14/2012 - 16:59 | 2255780 VanceEva1
VanceEva1's picture

my classmate's sister makes $82 hourly on the internet. She has been out of work for 10 months but last month her income was $17192 just working on the internet for a few hours. Read more on this site ....  http://qr.net/h7eu

Wed, 03/14/2012 - 17:43 | 2255914 Iwanttoknow
Iwanttoknow's picture

Advised by the bastard Milton friedman.

Wed, 03/14/2012 - 12:47 | 2254727 Yardfarmer
Yardfarmer's picture

Japan buys $10.3 billion in Chinese Government Bonds. http://www.chinadaily.com.cn/world/2012-03/14/content_14827485.htm

Wed, 03/14/2012 - 13:48 | 2255055 LowProfile
LowProfile's picture

Exchanging their curreny while the Yen is still worth something?

They should have taken a lesson from Hanzo and got some gold:

Razor 3: Who's Got the Gold? (1974) More at IMDbPro »Goyôkiba: Oni no Hanzô yawahada koban (original title)

Follow the money. In a time of economic disaster for wage earners, Hanzo discovers a conspiracy among high officials to "borrow" gold from the shogunate's treasury and loan it out to the destitute, including impecunious samurai - exacting either interest payments or family heirlooms from the debtors. Along the way, Hanzo extracts a confession from a ghost using his assaulting methods, foils thieves, connects with Heisuke Takei a friend from his youth, offers protection to a forward-thinking physician Genan Sugino who has defamed his ruler, discovers a pleasure ring of young wives and a blind music teacher, and cuckolds a corrupt official under his very nose.

http://www.imdb.com/title/tt0174708/plotsummary

Wed, 03/14/2012 - 12:51 | 2254747 Quinvarius
Quinvarius's picture

It isn't a devaluation.  It is a crash.  The island is radioactive.  It was hit by a tidal wave.  It was hit by an earthquake.  The economy stinks.  The demographics stink.  The debt is outrageous.  The Yen is going to go down in a ball of flames when the CBs stop doing Japan a favor by propping it.

Wed, 03/14/2012 - 12:52 | 2254768 Carbon Skidmark
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Don't forget about Godzilla...he may show up again...and Mothra too!

Wed, 03/14/2012 - 12:58 | 2254804 VulpisVulpis
VulpisVulpis's picture

If you watch Godzilla backwards it's about a giant lizard who helps rebuild a city of rubble and moonwalks back into the ocean.

Wed, 03/14/2012 - 13:17 | 2254908 bnbdnb
bnbdnb's picture

Dont forget he also sucks fire!

Wed, 03/14/2012 - 13:31 | 2254997 Thamesford
Thamesford's picture

and it reveals the secret that he says "Paul McCartney is dead" just before submerging.

Wed, 03/14/2012 - 15:09 | 2255362 SemperFord
SemperFord's picture

The "fire" is a metaphor for the radioactivity he is sucking in!!!

Wed, 03/14/2012 - 13:28 | 2254982 saoldric
saoldric's picture

LOL, you guys just made my day.

Wed, 03/14/2012 - 12:54 | 2254783 Theta_Burn
Theta_Burn's picture

Jap gov has been trying for yrs to devalue, maybe this time its different?

Wed, 03/14/2012 - 13:12 | 2254887 Matt
Matt's picture

Paradox of devaluation: If everyone devalues at once, no one succeeds in devaluing, only in creating inflation.

Wed, 03/14/2012 - 13:01 | 2254817 Vampyroteuthis ...
Vampyroteuthis infernalis's picture

There is a point where printing money in the traditional manner (borrowing through Ponzi schemes) will not be enough. The Japs face two scenarios:

1) Turn on the printing press without sterilization

2) Let debt defaults take hold

We are seeing the end game for the first CB led madness in the modern world.

Wed, 03/14/2012 - 13:11 | 2254874 Piranhanoia
Piranhanoia's picture

Japan has the hot potato(e) and it burns.  They may be the first to have to embrace reality to save what is left to them.

Wed, 03/14/2012 - 13:20 | 2254934 JPM Hater001
JPM Hater001's picture

Another week of this and I can buy that tiki hut is SAGA Japan I've always had my eye on...home of the true innovators in gaming.

Wed, 03/14/2012 - 14:05 | 2255125 JohnKozac
JohnKozac's picture

"It's only a tiny leak...." the gubberment there told its people.....March, 2011.

Now not only Hawaii is aglow, but the Cali Coastline lights up at  night....cool!

Wed, 03/14/2012 - 15:29 | 2255456 Popo
Popo's picture

Huh?   Did you even read the post?    This is a desperate *effort* to devalue the yen.

The BoJ is utterly desperate to bring the yen down because the high yen is raping Japanese exporters.     

An actual hands-off "collapse" would be the best possible thing to happen to Japanese exporters.   The BoJ would *love* to see a natural, market-led devaluation of the yen.   This isn't one.

All of your points are valid -- but they have nothing to do with the descent of the yen (And if they did, the yen would have plunged before now).

 

 

 

Wed, 03/14/2012 - 13:05 | 2254839 EmileLargo
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The Dollar is going up against everything today. That may also be a factor.

Wed, 03/14/2012 - 13:09 | 2254862 Bam_Man
Bam_Man's picture

Everything except AAPL.

Wed, 03/14/2012 - 13:21 | 2254939 JPM Hater001
JPM Hater001's picture

And Hope

Clearly hope

Wed, 03/14/2012 - 13:10 | 2254868 BigInJapan
BigInJapan's picture

I'm pulling the chute, mofos!

Wed, 03/14/2012 - 13:11 | 2254881 GoldenGal
GoldenGal's picture

time to sell gold for fiat?

Wed, 03/14/2012 - 13:18 | 2254918 sitenine
sitenine's picture

Right, wait for gold to 'correct' down, and then sell.  Brilliant suggestion you've got there... /sigh

What part of BTFD do you not understand?

Wed, 03/14/2012 - 13:25 | 2254968 GoldenGal
GoldenGal's picture

what isbtfd?

Wed, 03/14/2012 - 13:29 | 2254984 sitenine
sitenine's picture

buy the fucking dip

Wed, 03/14/2012 - 13:29 | 2254988 GoldenGal
GoldenGal's picture

oh...  I get it now buy the fiat dip!...So when gold goes up then I should buy more dollars...thanks!

Wed, 03/14/2012 - 13:31 | 2254998 GoldenGal
GoldenGal's picture

Yes, I'll be stacking Bens.....Ben franklins that is!

Wed, 03/14/2012 - 13:33 | 2255002 sitenine
sitenine's picture

Respectfully, you are a lost cause.  Good luck with your fiat.

Maybe you can hook up with Mr Hope and trade FOREX for a living.

Wed, 03/14/2012 - 13:41 | 2255032 GoldenGal
GoldenGal's picture

Respectfully, I was being sarcastic...had my blonde wig on today

Wed, 03/14/2012 - 13:44 | 2255044 sitenine
sitenine's picture

My apologies then - I tend to be an asshole when I perceive stupidity.

Wed, 03/14/2012 - 13:57 | 2255097 spooncutter
spooncutter's picture

you are truly the master of baiting

Wed, 03/14/2012 - 13:35 | 2255010 Thamesford
Thamesford's picture

Isn't the "Fiat Dip" the new car from Chrysler for the recession? Is it any wonder thay can't import "Alfa's" in this environment!

Wed, 03/14/2012 - 15:32 | 2255473 Sunshine n Lollipops
Sunshine n Lollipops's picture

Punsters everywhere, wherever Yugo.

Wed, 03/14/2012 - 13:12 | 2254882 Bam_Man
Bam_Man's picture

If indeed this is the beginning of the "endgame" for Japan's 20-year Keynesian experiment, I hope that Ben Shalom is paying close attention. It looks like our bond market sure is.

Wed, 03/14/2012 - 13:30 | 2254990 forrestdweller
forrestdweller's picture

the endgame has been beginning for quite some time now.

 

Wed, 03/14/2012 - 13:12 | 2254883 Flakmeister
Flakmeister's picture

He who crashes first, crashes best....

Seriously, the last man standing in this game will have the biggest falll....

Wed, 03/14/2012 - 13:35 | 2255009 forrestdweller
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the game goes on till everybody has fallen, and there is no stepping out of the game of giving up.

 

Wed, 03/14/2012 - 13:12 | 2254886 bugs_
bugs_'s picture

Fukushima ][?

Wed, 03/14/2012 - 13:17 | 2254910 Augustus
Augustus's picture

TBT is finally making a move.  If it is fairly continuous the double leverage short treasury should make for a very large payday.

Wed, 03/14/2012 - 13:17 | 2254911 bobola
bobola's picture

Amazing how Japan can keep their Ponzi engine chugging along with no apparent end in sight ...

Any bets as to how high their debt to GDP can go..??

As I recall that number is now at 230... 

Wed, 03/14/2012 - 13:22 | 2254948 JPM Hater001
JPM Hater001's picture

"Any bets as to how high their debt to GDP can go..??"

Yes- Stratosphere

Thu, 03/15/2012 - 10:20 | 2257612 Kobe Beef
Kobe Beef's picture

If you stacked one quadrillion Yen (estimated total Japanese debt) in 1 Yen coins (~1mm thick), you would have six stacks reaching to the sun.

 

Wed, 03/14/2012 - 13:18 | 2254919 CvlDobd
CvlDobd's picture

Oh look technical analysis.

Wed, 03/14/2012 - 13:35 | 2255011 SDRII
SDRII's picture

Treasury opposes Yen unilateral intervention (backed it when quake hit and desks had to clear)

US launches sanctions on Iran oil

Japan says yes, then not so fast

Yen intervention begins and Yen backs up

Japan agrees to reduce Iran oil imports

Correlation, causation?

Aside: Japan leading parties have support in the 20s

Wed, 03/14/2012 - 13:36 | 2255014 Snakeeyes
Snakeeyes's picture

Compare Japan with Greece. DEMOLITION DERBY! And the US is getting crazy budget decisions.

http://confoundedinterest.wordpress.com/2012/03/14/the-great-japanese-devaluation-comparing-greece-with-japan/

Wed, 03/14/2012 - 14:07 | 2255128 Vint Slugs
Vint Slugs's picture

The yen is reversing its entire post-WWII bull market against the USD.

These guys got it right, they were just a few months too early:  http://eideticresearch.com/uploads/2/8/3/4/2834543/jyen_5-27-2011.pdf

Wed, 03/14/2012 - 14:27 | 2255143 michael_engineer
michael_engineer's picture

Global growth disruption may be structurally caused by resource depletions as the real underlying and root cause of most of this stuff (austerity, high unemployment, bailouts, defaults).   Natural disasters are detrimental too, but their root cause is not tied to resource depletions.  However being able to recover from them well is affected by resource depletions.  Disaster capitalism doesn't work well without surplus resources.  Fixing austerity and high unemployment and defaults doesn't work well without surplus resources either.  The fact that most of these financial crises are trying to be solved with austerity measurers might be indicative in a way.  If there were surplus resources available to try to fix economies that are in crises, putting those resources into play would probably work better then trying to roll over the paper and shift the entity on the hook for the paper debts, and pretty much demanding more layoffs and higher unemployment.  So what would that tend to indicate about surplus resource availability?

Wed, 03/14/2012 - 16:32 | 2255682 jimmyjames
jimmyjames's picture

 If there were surplus resources available to try to fix economies that are in crises, putting those resources into play would probably work better then trying to roll over the paper and shift the entity on the hook for the paper debts, and pretty much demanding more layoffs and higher unemployment.  So what would that tend to indicate about surplus resource availability?

***********

i don't understand what you mean by fixing economies with surplus resources-unless you mean lower prices would "help" a struggling economy ie: consumer prices-

Resources are subject to supply and demand-the demand must come from a need for them in the economy-

If there is less demand because of weak economic conditions then more resources supply would not do much to help-

There has to be an economic driver-like some kind of new bubble to blow and there are no bubbles to blow at the moment-

There are drivers sitting on the sidelines..nuclear/nat gas auto conversion etc. but that could be a ways off yet-

Wed, 03/14/2012 - 18:11 | 2255978 michael_engineer
michael_engineer's picture

New jobs require additional or "surplus" resources for the extra work. Money would not seem to be the problem with all the QE CBs have done recently. The FED even lent 15 trillion out the back door on the hush and yet that didn't fix a weak world economy. So the weakness must be due to something else. Resource depletion affects are the likely candidate.

Wed, 03/14/2012 - 19:32 | 2256229 jimmyjames
jimmyjames's picture

New jobs require additional or "surplus" resources for the extra work. Money would not seem to be the problem with all the QE CBs have done recently. The FED even lent 15 trillion out the back door on the hush and yet that didn't fix a weak world economy. So the weakness must be due to something else. Resource depletion affects are the likely candidate.

***********

Yes if the economy was expanding (new jobs) then it would require more resources and if we could not provide the resources-certainly it would be a problem that even money could not fix-

My point was more towards the fact that commodity demand is down because of a sluggish world economy-China is at this point quite high on the demand side-but when the credit bubble pops there-it will be no different than here and i think commodities (barring essentials) will fall- jmo-

The problem is-there is really nothing to drive the economies of the world-unemployment is high and could go higher because the CB's unleashed 60 trillion in basically free money (credit) to the world and it sucked all future demand into yesterday-

We have surpluses everywhere--housing/autos/shopping malls/gizmos etc.

Those surpluses will have to be used up and flushed before resource demand will pick up-

http://bit.ly/xPywev

 

 

Wed, 03/14/2012 - 19:49 | 2256279 michael_engineer
michael_engineer's picture

You might rethink about which is the chicken and which is the egg.

Especially with respect to the master resource which dominates all other inputs in its contribution to GDP.

Wed, 03/14/2012 - 20:53 | 2256402 jimmyjames
jimmyjames's picture

You might rethink about which is the chicken and which is the egg.

********

You might want to think about what is the engine and what does it pull-

An abundance of Oil does not "drive" economies-it furnishes them-that's all-or with your scenario--we would have never have had recessions when Oil was abundant-but we had lots of recessions--

 

Wed, 03/14/2012 - 21:27 | 2256460 michael_engineer
michael_engineer's picture

Try pushing your car up a mountain pass or digging a 100 yard trench by hand.

Wed, 03/14/2012 - 23:16 | 2256656 jimmyjames
jimmyjames's picture

Try pushing your car up a mountain pass or digging a 100 yard trench by hand.

************

Long before oil or cars-there was a market ie: an economy-

Thu, 03/15/2012 - 03:00 | 2256918 michael_engineer
michael_engineer's picture

And growth was very small without oil supported virtual energy slaves.

 

This article on the concept of virtual energy slaves is educational and thought provoking.  http://www.energybulletin.net/stories/2011-05-09/you-and-your-slaves    

Wed, 03/14/2012 - 14:23 | 2255179 sablya
sablya's picture

An earthquake just rattled Tokyo!

Wed, 03/14/2012 - 16:40 | 2255707 Payable on Death
Payable on Death's picture

Does anybody have anything on Tres Knippa? Does his trade make sense? Is he trustworthy?

www.shortjapandebt.com

Wed, 03/14/2012 - 20:41 | 2256377 Paracelsus
Paracelsus's picture

I still remember the '87 crash at which the japanese traders were tearing their hair out in bunches.  Must've drank some Saki that night!  Apparently they were misinformed that after a 5% slide or so that the USG would step in and fix things (the Dow).

First Venezuala repatriates their gold last year,and now the Europeans. Someone,somewheres is gonna be sweating bullets if that stuff isn't in its' crate. 

 Odd how people remember Nixon for Watergate and the Plumbers,when I always think of him scrapping the Bretton-Woods agreement and the gold peg,making all the currencies float (sink). I think the 1% are getting nervous about now...

 

Thu, 03/15/2012 - 04:23 | 2256977 cnhedge
Fri, 08/24/2012 - 08:12 | 2733153 JJSF
JJSF's picture

Devaluation? About time.. JPY needs some juice..

http://mlatrader.com/?p=9

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