Yes, it is true. Last week, Japan started setting currency prices for all major currencies. Please read (a letter to a friend): ______________________________________________ I suppose you are right, glad we cleared that up. But your being right is not new. What is new, and pardon me if I am wrong here, you would know much better than me since you have been trading fx longer (much longer) than I have... This USD/JPY deal... kind of a newish type concept, specifically, when I got into the thing I expected the spike to reach maybe its highest level of, mm... high 106, OK? Then tank within an extended period of... 2 to 3 days! Contrarily, something else happened, which is not that unusual for the currency markets (something unusual happening) it is just the thing that is unusual ... that is unusual. Granted, based on thin air, the USD had a rally of 800 points - ok, acceptable - it should now reverse since the rally was and is still meritless. What is new here is this: Japan has suddenly decided to (and is capable of) rule the entire globe of all major currencies by setting the price of the USD and ALL OTHER MAJOR CURRENCIES exactly where THEY want them to be. Or, is this something they do ongoing whenever they want to? Pls don't say it is not happening, it IS happening right now. I thought.... that the fx marketplace with its 1.5 to 3 trillion dollars A DAY in exchange was OUT OF THE REACH of price manipulation either by an individual, a bank, or a country! Was I mistaken? Was this misrepresented? Because it sure seems that the Japanese are now ruling the globe by setting the USD price AND the yen price and all other prices exactly to their whim target. If it was not so, I would have already been out of this trade with huge profit. WTF? Sam
From Bloomberg: Asian Banks "Central banks outside the U.S., including those of Japan and China, are the largest foreign holders of U.S. government debt. Japan's holdings of Treasuries last year soared 44 percent to $545.2 billion from $378.1 billion. They are up 72 percent from the Dec. 2001 level of $317.9 billion." The key to Japan manipulating and setting global currency prices is in the amount of US debt they hold. What is supposed to be a free market place of floating currencies is now being 100% controlled by Japan. This makes the yen the most powerful currency in the world. Sam
From Bloomberg: Yen May Rise "The only economy pumping out regular surprisingly good news is Japan,'' said Robert Rennie, currency strategist in Sydney at Westpac Banking Corp. "The market is being manipulated by Japan. It's driving the whole currency market.'' http://quote.bloomberg.com/apps/news?pid=10000101&sid=a0f1gE6X.Ork&refer=japan
Geez. I can't believe you still don't get this. If Japan controlls currencies, why the hell would you BUY the yen. They want the yen weak! Always have, always will. This is basic econ 101 for export economies. Weaker yen relative to the buck for example, increases exports, and also values those billions held in US debt much higher. Every time they intervene, its to weaken the yen. A stronger yen hurts Japan in a serious fashion. It may keep rising significantly due to fundamental factors, but it will be doing opposite of what Japan wants. Jay
Jay, Frankly, I believe that you are both making similar points. I believe that he agrees with you (as do I) that currency intervention by a world central bank is just a temporary measure. This is the reason that he is pointing out and advocating long Yen positions. I can feel his frustration in being long the Yen and not getting any satisfaction (in fact having it go in your face after massive manipulation). I personally have a huge long Yen trade on and I am suffering the pain of the BOJ/MOF. I think this is a big winner nonetheless as your point about intervention being only a temporary measure is well taken. The question is, how long and how deep do we have to wait for the BOJ to stop intervening and allow the $/Yen to move via natural market forces alone.
Comedy of manipulation: A central bank doesn't decide ALONE, the central Banks all over the world are controlled and coordinated by the mother of all central banks: The BIS (Bank of Internal Settlement) in Switzerland. http://edwardjayepstein.com/archived/moneyclub.htm Ten times a yearâ once a mouth except in August and Octoberâ a small elite of well dressed men arrives in Basel, Switzerland. Carrying overnight bags and attache cases, they discreetly check into the Euler Hotel, across from the railroad station. They have come to this sleepy city from places as disparate as Tokyo, London, and Washington, D.C., for the regular meeting of the most exclusive, secretive, and powerful supranational club in the world. Each of the dozen or so visiting members has his own office at the club, with secure telephone lines to his home country. The members are fully serviced by a permanent staff of about 300, including chauffeurs, chefs, guards, messengers, translators, stenographers, secretaries, and researchers. Also at their disposal are a brilliant research unit and an ultramodern computer, as well as a secluded country club with tennis courts and a swimming pool, a few kilometers outside Basel. The membership of this club is restricted to a handful of powerful men who determine daily the interest rate, the availability of credit, and the money supply of the banks in their own countries. They include the governors of the U.S. Federal Reserve, the Bank of England, the Bank of Japan, the Swiss National Bank, and the German Bundesbank. The club controls a bank with a $40 billion kitty in cash, government securities, and gold that constitutes about one tenth of the world's available foreign exchange. The profits earned just from renting out its hoard of gold (second only to that of Fort Knox in value) are more than sufficient to pay for the expenses of the entire organization. And the unabashed purpose of its elite monthly meetings is to coordinate and, if possible, to control all monetary activities in the industrialized world. The place where this club meets in Basel is a unique financial institution called the Bank for International Settlements-or more simply, and appropriately, the BIS (pronounced "biz" in German). THE BIS was originally established in May 1930 by bankers and diplomats of Europe and the United States to collect and disburse Germany's World War I reparation payments (hence its name). It was truly an extraordinary arrangement. Although the BIS was organized as a commercial bank with publicly held shares, its immunity from government interference, and even taxation, in both peace and war was guaranteed by an international treaty signed in The Hague in 1930. Although all its depositors are central banks, the BIS has made a profit on every transaction. And because it has been highly profitable, it has required no subsidy or aid from any government. Since it also provided, in Basel, a safe and convenient repository for the gold holdings of the European central banks, it quickly evolved into the bank for central banks. As the world depression deepened in the Thirties and- financial panics flared up in Austria, Hungary, Yugoslavia, and Germany, the governors in charge of the key central banks feared that the entire global financial system would collapse unless they could closely coordinate their rescue efforts. The obvious meeting spot for this desperately needed coordination was the BIS, where they regularly went anyway to arrange gold swaps and war-damage settlements. Even though an isolationist Congress officially refused to allow the U.S. Federal Reserve to participate in the BIS, or to accept shares in it (which were instead held in trust by the First National City Bank), the chairman of the Fed quietly slipped over to Basel for important meetings. World monetary policy was evidently too important to leave to national politicians. During World War 11, when the nations, if not their central banks, were belligerents, the BIS continued operating in Basel, though the monthly meetings were temporarily suspended. In 1944, following Czech accusations that the BIS was laundering gold that the Nazis had stolen from occupied Europe, the American government backed a resolution at the Bretton Woods Conference calling for the liquidation of the BIS. The naive idea was that the settlement and monetary-clearing functions it provided could be taken over by the new International Monetary Fund. What could not be replaced, however, was what existed behind the mask of an international clearing house: a supranational organization for setting and implementing global monetary strategy, which could not be accomplished by a democratic, United Nations-like international agency. The central bankers, not about to let their club be taken from them, quietly snuffed out the American resolution. ... Occasionally there is an extraordinary situation, such as the decision to sell gold for the Soviet Union, which requires a decision from the "governors," as the BIS staff calls the central bankers. But most of the banking is routine, computerized, and riskless. Indeed, the BIS is prohibited by its statutes from making anything but short-term loans. Most are for thirty days or less that are government guaranteed or backed with gold deposited at the BIS. The profits the BIS receives for essentially turning over the billions of dollars deposited by the central banks amounted to $162 million last year. As skilled as the BIS may be at all this, the central banks themselves have highly competent staffs capable of investing their deposits. The German Bundesbank, for example, has a superb international trading department and 15,000 employeesâ at least twenty times as many as the BIS staff. Why then do the Bundesbank and the other central banks transfer some $40 billion of deposits to the BIS and thereby permit it to make such a profit?
So If the Japan central bank has decided to do so, it means that they all agree to do so ... for their very own profits for you are naive if you think that patries count for them : they are globalist they don't care about each country for moral or economical reason. They made US prosperate on the back on III world countries now they are logically pumping the profit out of US haha ! In exchange as usual you will get more bonds - so the take off of stock market - more bonds mean more public debts and so taxes for the future for the end of this generation and for the next one. The stock market bubble is just due to this bonds-debts being deversed, it's not due to fundamentally sound economy. This is nothing new since John Keyne's "New Economy" concept which is as old as John Law Missipi Bubble Economy that has collapsed after a few dozen years ruining all fake riches except those who knew the reality of fundamentals and manage to convert their money offshore (but the game can be more and more risky as they are putting global surveillance so your money won't be able to escape or rather they will let you escape and then change the law. Already they have begun to change the law : offshore trusts are not secure anymore so they switch to fundations but this is a comedy as they can change the law again then everybody with an offshore account will be out of law).