Apparently the recent events in Japan were just the sort of ‘excuse’ Ben Bernake, et al have been waiting for.
“The combined impact of the Middle-East crisis and the earthquake will increase the home bias, the tendency to invest close to home, as cash becomes king, and Japan is by far the biggest capital exporter over the last decade, despite all the talks of China,” Jakobsen noted. Eventually the yen could trade at 65 to the dollar, which would raise the cost of capital as “global recycling short-circuits,” he said. “We are also entering financial year end for corporate Japan, which can only add to the volatility. Despite all this, there is fair chance that this is merely a correction,” Jakobsen said. “There is political will and demand for further stimulus.” The earthquake and situation in the Middle East will provide an excuse for the Federal Reserve to buy more bonds (QE3) and for the European Central Bank and the Bank of England not to raise interest rates, he added.
Can someone illuminate me as to how the yen would get strengthened 25% from a meltdown etc? Wouldn’t the BOJ would go through with QE as well?
/Hick who is not a currency trader
Japan is on sale, let’s buy the whole island.
In other news, UBS sucks:
http://dealbook.nytimes.com/2011/03/15/ubs-says-it-is-being-investigated-over-possible-manipulation-of-the-libor/
In other news, UBS sucks:
http://dealbook.nytimes.com/2011/03/15/ubs-says-it-is-being-investigated-over-possible-manipulation-of-the-libor/
I get the impression the the fed follows the financial guidelines of hope and pray. 150 billion clean-up in Japan (just a closet figure) is not going to help the fed in any way. Savings in Japan are going to be liquidated to rebuild. Were are some of those savings at this moment? you got it sparky: Treasuries. Maybe we could become a province of China.
Because George Soros is long the yen?
–Guy who thinks George Soros is behind all this
Actually Japan is an archipelago of 6852 islands
Capital Flows…look what happened to the Yen after the 1995 quake. Institutions/Gov have to repatriate capital back to the home markets
Someone tell Raj to quit stomping all over Japan. Just leave them alone.
Insurance companies probably. But the BOJ needs to print like nothing else. The yen at 65 would annihilate Japan.
Wrong – must be phrased as a question.
Excuses for quantitative easing are very easy to find. Before the Japan earthquake, it was the Middle East violence. Prior to that, it was Irish debt. Every week or so there is something newsworthy enough for central bankers to put a spin on to argue in favor of their policy.