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Moody's cuts ratings on 5 Japanese banks

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I suppose this is related to the fact that these banks are among the main holders of Japan's debt? In fact, their holdings of Japanese debt are their largest asset besides deposits, but the latter isn't far greater than the former.

5 ( +6 / -1 )

Loving it! Yen's going to 150 per USA dollar!

-4 ( +3 / -7 )

Tell me clearly what it means I have kept my money in those bank.

-1 ( +0 / -1 )

The banks' shareholders and subordinated debt holders may eventually be exposed to a loss.

1 ( +1 / -0 )

Moody's thinks your money would be safer if held in another currency, in another bank, in another country. For example, dollars in banks in places such as Singapore, Australia, New Zealand. (That's both amazing, and damning on the Japanese government, considering the relative size of Japan's economy.)

But for what it is worth, Moody's still thinks your money in Japan is pretty safe.

That's them. Personally, I think Moody's is behind the curve, and they and other ratings agencies will cut Japan's sovereign rating again, before they raise it.

4 ( +4 / -0 )

I mean, Moody' was so spot on with their foresight of the sub-prime crash in 2008, weren't they?

4 ( +6 / -2 )

Tell me clearly what it means I have kept my money in those bank.

It means that since these banks hold so many JGB's that if there is a default, and the bonds lose their value, the banks lose a large part of their assets. The Japanese "mega-banks" are categorized as the largest in the world, because most Japanese put their money in these banks, but much of this money has been "invested" in JGB's. If the bonds lose their value, and cannot be redeemed, or sold, then the depositors whose money was used to buy these bonds rosks losing their deposits.

This is unlikely to happen. Before this occurs, the government will print money hand over fist to service their debts, but this may cause the yen to drop in value to the tune of 200 or more to the dollar. You may be able to get your money out of the bank, but it will have lost half or so of it's value.

I mean, Moody' was so spot on with their foresight of the sub-prime crash in 2008, weren't they?

Lightning seldom strikes twice in the same place, Moody's, et al, got their backsides put to the fire after 2008, I don't doubt they are a little more careful with their ratings nowadays. The economists who were working there prior to 2008 seem now to be working in government positions, telling their bosses what their bosses want to hear, with as much inaccuracy as before.

0 ( +2 / -2 )

Japan is so hopeless. Laughable. I too am looking forward to the 150 plus yen to the dollar exchange rate to come soon. Money to be made! Thank God that no foreigner in Japan keeps any savings in the totally worthless "currency" yen.

-3 ( +2 / -5 )

Too many young-lings in here... there was a time when USD 1 = JPY 210.... by the way, could you tell me what happen to the Euro and the Dollar in 2008?... I think they sunk so deep some people said that the USD and the Euro were useless pieces of paper....

History is repeats itself ... economics is a swinger

0 ( +2 / -2 )

I too am looking forward to the 150 plus yen to the dollar exchange rate to come soon. Money to be made

So you will sell your dollars into yen again?

2 ( +2 / -0 )

Wrong.

Some of us get our pensions in JPY.

2 ( +2 / -0 )

Too many young-lings in here... there was a time when USD 1 = JPY 210.... by the way, could you tell me what happen to the Euro and the Dollar in 2008?... I think they sunk so deep some people said that the USD and the Euro were useless pieces of paper....

I remember when the rate was over 300 yen to the dollar. There was no euro in those days, the world was dominated by the dollar and the pound, the yen was a second-class currency, the value of which was manipulated at will by Japan, to keep the cost of it's goods low.

But back then China's economy was smaller than California's, no one had ever heard of words like Samsung, Hyundai, or Kia. Japanese goods were made entirely in Japan, and Levis, Nike, and New Balance were made in the USA, not in Vietnam.

A weak yen cannot benefit Japan as much as it did in the past. When currency weakens in a growing economy, wages can keep up with the devaluation. But Japan's economy is not growing, it is not possible for it to grow. With the population falling, the domestic economy is shrinking, and with so much competition from other parts of Asia, the export market is shrinking as well. People are seeing prices go up, without seeing an increase in their pay.

For myself, I get paid in dollars. I have bet against the yen, and have won by doing so. Some economists are predicting the yen to fall to more than 200 to the dollar, and worse. I don't trust other economists in most cases, but this time, it seems they are more likely to be right.

Funny to see the markets rise again today when the yen hit 119.42. In a few hours, my dollar savings increased in value as yen deposits would earn in interest in one year. And yet there are still people who think nothing serious is going on. Over the past months, my savings have increased in value by more than 10%, since 2011 they have gone up by more than 40%. The dollar will only become stronger as the American economy grows over the next few years. The yen can only weaken as Japan's economy continues to shrink, and the government has to print more yen to replace decreasing tax revenues.

1 ( +7 / -6 )

John GaltDec.

I mean, Moody' was so spot on with their foresight of the sub-prime crash in 2008, weren't they?

haha! These rating companies are just a cancer to our world economy.

1 ( +3 / -2 )

I'm sorry but you can't talk unless you came here in '08 when AUD$1 was fetching... wait for it... 49 yen. It nearly drove me out of the country!

1 ( +2 / -1 )

And we should care because? Not!

-1 ( +1 / -2 )

@sangetsu

Excellent points. It seems Kyle Bass wasnt so wrong after all. I dont know if his yen prediction will reach the numbers he forecast, but its certainly looking that way. Its interesting; I was reading an older book by Alex Kerr Dogs and Demons and he had almost the same analysis of Japans economy that we are seeing today. Seems nothing has changed that much.

0 ( +1 / -1 )

The Japanese people finance their own debt. Japan is a creditor, not a debtor nation. It must grow its way out of debt. A lower yen is good for exports, that will help Japsnese industrial competitiveness。

-1 ( +2 / -3 )

"Moody's, et al, got their backsides put to the fire after 2008, I don't doubt they are a little more careful with their ratings nowadays. The economists who were working there prior to 2008 seem now to be working in government positions, telling their bosses what their bosses want to hear, with as much inaccuracy as before."

Sounds rather contradictory, doesn't it.

0 ( +0 / -0 )

Another sign that Abenomics is falling.

-1 ( +0 / -1 )

For myself, I get paid in dollars

Sangesu, you have posted that you own a company in Japan. Who pays you in dollars and why?

Over the past months, my savings have increased in value by more than 10%

Only if you plan to exchange your money back into yen.

4 ( +4 / -0 )

"For myself, I get paid in dollars. I have bet against the yen, and have won by doing so."

I recall you were here when the dollar hit the record low in 2011 and 2012. So during that period, you lost by "betting against the yen."

You win some, you lose some. That's life.

0 ( +0 / -0 )

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