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U.S. tells Japan to stick to currency rules as G7 meets

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To U.S.

Shut up. Do you realize your money supply growth since the Lehman shock and what the exchange rate at that time?

1 ( +17 / -16 )

Me and Globalwatcher, plus a few other informed posters, were warning that Abe's eikaiwa economics would spark off a global currency war and the first rounds of that war have just begun.

Utter madness of Japan to think it could return to the halcyon days of 2001-2007, were it was allowed to weaken its currency and use the export advantage of a manipulated currency to sustain it's declining inefficent domestic economy.

The world was a different place before Lehman's. Abenomics, apart from being a hair brained certainty to domestic stagflation with the increase in domestic prices of imported goods and actual wage deflation as companies try to offset price increases with cutting salaries, is so symptomatic of Japan inability to interact properly on the world stage.

Whether its economics, history or territorial disputes, the Japanese try to totally control the narrative, unwilling to accept there might be some validity in a narrative other than their own. This Japanese economic narrative that 'our economy sucks because of the high value of the Yen', not becasue of demographics and structural economic faults, has always stood on very thin ice. Someone should point out to economic bigwigs in Kasumigeseki that Japan's share of global world trade continued it's decline, even when Japan was allowed to manipulate their currency to Y130 to the dollar in the early years of the 21st Century.

4 ( +18 / -14 )

Utter madness of Japan to think it could return to the halcyon days of 2001-2007, were it was allowed to weaken its currency and use the export advantage of a manipulated currency to sustain it's declining inefficent domestic economy.

Not this crap again. Dog's often repeated yet still unsubstantiated "Japan was allowed to weaken it's currency" BS.

-1 ( +13 / -14 )

@Dog: you learned that on some Korean website??? It's probably hard to say that wage deflect and increase of domestic prices without stomping even once on Japnese land...

-3 ( +6 / -9 )

nigelboyMay. 11, 2013 - 07:45AM JST

Not this crap again. Dog's often repeated yet still unsubstantiated "Japan was allowed to weaken it's currency" BS.

ShankunMay. 11, 2013 - 07:48AM JST

@Dog: you learned that on some Korean website???

Nope, lived it and saw it in operation from the inside of MOF.

Even then, the men with the brains, but not the power, knew that Japan's economic ailments were more due to a distorted developed economy (inefficient domestic economy v efficent export economy/ lack of Japan developing any real service economy that operated on the international stage/ declining population/ economic structural faults with the political clout of the agricultural sector), but the mercantilists of the BOJ and LDP were allowed to have their day

For Nigelboy, I know they're not the Shukan Post, or whatever other venacular source you normally source for your ideas, but they do suffice

http://www.fordschool.umich.edu/rsie/Conferences/CGP/Oct2004Papers/Ito.pdf

http://www.econ.puc-rio.br/pdf/seminario/2005/Hillebrand_Schnabl_2004.pdf

3 ( +13 / -10 )

As to my first post, Aso basically said something similar in that Lehman ( a U.S. Corporation under regulation under U.S. regulation) caused a lot of problems from Japan and that Japan kept their mouth shut while U.S. Fed was monetizing anything they could get their hands on. This was about a month ago during the G20.

2 ( +12 / -10 )

What about the Chinese? Are they sticking to the currency rules?

10 ( +12 / -2 )

SerranoMay. 11, 2013 - 08:39AM JST

What about the Chinese? Are they sticking to the currency rules?

That's like saying Stalin was OK because he wasn't Genghis Khan. This isn't about China, that's apples and oranges, just as Japanese monetary easing has nothing in common with European, US or UK monetary easing.

China wants to avoid the Plaza debacle and ease into a currency that finds its natural place in the world FX. The USA, UK and Europe implemented monetary easing to ensure there was liquidity in their markets.

The Japanese were drowning in liquidity long before Kuroda and Abe came along and they have had 30 years to allow their currency to adjust to a natural order, determined by markets and economic variables, on the world FX.

The present Japanese monetary easing is the old mercantilist mindset of they'll live off the wage packets and jobs of others, by flooding the world market with artificially cheap Japanese products and they'll curtail anyone else living off the salaries and jobs of any Japanese worker, even if he is a 70 year old farmer who should be resting in the winter days of his life, by making the prices of imported goods prohibitively expensive.

Japan is practicing good old currency manipulation and protectionism, no matter what it says to the contrary, and the days are fast coming, as predicted by me and others, when her economic partners are saying, 'no way, Jose, that model is long gone. You sort out your domestic structural problems of population decline and a restrictive highly regulated and inefficient domestic economy, like Koizumi promised to the G7, so he could get a free pass on the currency manipulation of BOJ governor Sakakibara in early part of this century.

6 ( +13 / -7 )

Japan is free to do what it chooses as long as its in Japan's best interest, but I can't understand the international "We aren't intentionally deflating things" while domestically they say the opposite. Just tell other nations to lay off and that it's none of their business (well, to be fair, it affects them, but still).

Dog: nigelboy uses 2Channel more than Shukan Weekly to get his information. That and white-washed textbooks. I agree with you 100% on the reasons for the monetary easing, and while, as I said, it's entirely up to Japan (the government), it's not going to work in the end. They are essentially putting a bandaid on a body that's been sawed in half, so to speak.

8 ( +15 / -7 )

Last time I checked Japan was a sovereign free country, so this were watching you attitude can take a hike.

-5 ( +6 / -11 )

For Japan own sake, further Yen weakening will trigger currency war, with other nations. Also further weakening of Yen will cause inflation that will crush the JGB market that run the risk of bankrupting the nation from high interest payments.

Yen between 90 to 100 against the US dollar is enough.

Abenomics carry to extreme will be very bad for Japan. For examples the restarting of aging Nuclear stations near earthquake prone areas, the further cutting of corporate taxes when there is huge budget deficits and the need to raise sales taxes. Exporting companies now are doing fine with current exchange rates, no need to pamper them further. There is danger in getting more money from citizens and giving them to firms, in a declining and rapidly aging demographic economy.

4 ( +6 / -2 )

Very weak Yen will cause other Asian nations also to weaken there currencies, huge asset inflation in cities, etc. This was the scenario just prior to the 1997-98 Asian Crisis.

Japan's BOJ and Abe's team must be moderate in its measure. Things can go wrong very quickly.

High Nikkei and property prices in Tokyo & Osaka, etc are not sustainable with a declining and aging population, and will burst dramatically. Fast boom-bust is sure to come with Abenomics. The sufferings will be great after the current Party is over. Unlike 1990 when the then Party burst, Japan debts now are much higher in 2013 than in 1990, also average age of population now much older than 1990.

4 ( +5 / -1 )

For Nigelboy, I know they're not the Shukan Post, or whatever other venacular source you normally source for your ideas, but they do suffice

http://www.fordschool.umich.edu/rsie/Conferences/CGP/Oct2004Papers/Ito.pdf

http://www.econ.puc-rio.br/pdf/seminario/2005/HillebrandSchnabl2004.pdf

Do what suffice Dog? Why don't you refer me to the exerpts that are linked above to prove your "(Japan)was allowed to weaken its currency and use the export advantage of a manipulated currency to sustain it's declining inefficent domestic economy."

Your argument and links are no better than what Japan did during the Lehman crisis that "Japan allowed U.S. To weaken it's currency to avoid recession".

And smith. Please stop bringing textbook issue for it's not only off topic but you still have yet to prove to everyone else here that you have read one.

-6 ( +6 / -12 )

Very weak Yen will cause other Asian nations also to weaken there currencies, huge asset inflation in cities, etc. This was the scenario just prior to the 1997-98 Asian Crisis.

We're talking about BOJ. There is no way in hell that other Asian nations have the capacity to even put a dent.

-3 ( +7 / -10 )

The US is just upset, because just like with most everything else, the Japanese are better are doing this than the US.

-5 ( +3 / -8 )

G7, IMF and Japan's BOJ itself should stop further Yen weakening before other nations react to very weak Yen. Why Australia, Vietnam, Korea, Taiwan are cutting interest rates? Soon they will be intervening in currencies if Yen weaken further.

0 ( +1 / -1 )

Readers, please stop bickering.

0 ( +0 / -0 )

Japan has publicly dumped money into the market and even told people the world before they did it.

2 ( +3 / -1 )

subyyaki: "The US is just upset, because just like with most everything else, the Japanese are better are doing this than the US."

Yes and no. They're upset, as are many other nations, because while Aso and Abe (the moron twins) say the deflation is not intentional and what not, then brag about it at home, it affects other economies and will indeed in the near future trigger a currency war (at which point Japan will play the victim, as usual). As for 'being better', they are DEFINITELY better at screwing the people here (I mean seriously, what's the interest rate on a general savings account? 0.07% per year while it's 6% or so in other nations, but at the same time interest on a loan is 6 - 18%? of COURSE the banks and postal accounts didn't suffer from the "Lehman shock"). Better at bid-rigging, better at pulling the obvious wool over the eyes of the nation's people, etc. You're right about the US being better at complaining, as well, though I would rephrase it to be 'voicing their opinion on something that directly affects them'. But the US is no 'better' at complaining than Japan -- just look at nigelboy blaming everything on the 'Lehman shock' or whatever other excuses people use.

6 ( +9 / -3 )

Dog. Your link is nothing new. You could look this up on wiki to find the reasoning behind the move which includes the capital flight due to 9/11 and the massive yen buying due to Iraq situation. What I and many others have been asking is your statement as recently stated

"Koizumi promised to the G7, so he could get a free pass on the currency manipulation of BOJ governor Sakakibara in early part of this century."

to substantiate this among many other so-called favors that the G-7 has given as some kind of an "IOU"

-5 ( +4 / -9 )

nigelboyMay. 11, 2013 - 11:15AM JST

to substantiate this among many other so-called favors that the G-7 has given as some kind of an "IOU"

I don't have to substantiate anything, why else do think the G7 where giving Japan an export break and allowing it to weaken its currency.

Besides at the time, 2002 and 2003, it was all the news in The Economist, WSJ and The FT. All agreed the Faustien deal was for Japan to economicly restructure its economy with the breathing space give. The Economist disagreed with the policy, saying Japan would just do more of the same and they were proven right. The FT and WSJ wanted to give Japan the benfit of the doubt.

Abe and the LDP are not trying to create a new Japanese economic model, they are trying to regain an old Japanese model of the 60's and 70's based on an export driven economy fueled with a weak yen. For this I source you to Noriko Hama 2013

0 ( +6 / -6 )

better', they are DEFINITELY better at screwing the people here (I mean seriously, what's the interest rate on a general savings account? 0.07% per year while it's 6% or so in other nations, but at the same time interest on a loan is 6 - 18%? of COURSE the banks and postal accounts didn't suffer from the "Lehman shock"). Better

Stop it smith. Please stick to what you know whatever that is. The spread between the deposit rate and the lending ratel with matching terms are pretty much in line.

-7 ( +3 / -10 )

I don't have to substantiate anything, why else do think the G7 where giving Japan an export break and allowing it to weaken its currency.

When push comes to shove, you cave in. Like I said, G7 weren't concerned about anything but themselves so they gad their own monetary policy which caused the yen to rise. Japan simply responded especially the Mizoguchi-Taylor intervention. This current policy has nothing to do buying excessive foreign debt like the predecessors.

-6 ( +3 / -9 )

Abe and the LDP are not trying to create a new Japanese economic model, they are trying to regain an old Japanese model of the 60's and 70's based on an export driven economy fueled with a weak yen. For this I source you to Noriko Hama 2013

Ok. Now you're just doing me a favor because she the one who predicted the yen would appreciate to 50 yen/dollar.

-4 ( +4 / -8 )

U.S. Treasury Secretary Jack Lew is really a hypocrite here. US and several other nations had also done this and still been doing it now, yet he singled out Japan. Like The pot calling the kettle black.

What WTH is Lew thinking telling Japan what and what not to do? They are "warning" Japan, a sovereign nation? Idiot.

2 ( +5 / -3 )

bit like going into a gun battle with a knife, now Japan has a gun also the US is complaining!!??. the word "hypocrites" is to mild a word to describe these morons, they should just STFU

0 ( +4 / -4 )

Any country can print money as a last resort to hopefully kick start its economy but there is a moral untold rule on excessive currency printing which other trading nations view it as whether it will affect their exchange rates. Currently the Yen is well over 100 yen to US dollars which it is also well over other international currencies exchange rates. Many of the foreign investors including US and if I may asoi predict the Japanese investors will be looking at this issue and deciding whether they should start moving out to other countries. G7 countries had been encouraging Japan to lift its economy and that is exactly what Japan did but they now have reservation as to whether this currency printing is a tard too excessive that might affect their exchange rates. In particular most Fund and Institutions and Investor would be selling Japan Treasury Bonds and move Yen internationally and invest in other International Treasury Bonds for a better return, if this continue would upset many G7 countries.

3 ( +3 / -0 )

@dog

"Nope, lived it and saw it in operation from the inside of MOF."

When did you work for MOF ? I'm curious since you also claimed to have worked for Sharp in the past.

1 ( +3 / -2 )

U.S. tells Japan to stick to currency rules as G7 meets

can Japan say NO to U.S.?

3 ( +3 / -0 )

Any country can print money as a last resort to hopefully kick start its economy.

Greece can't.

3 ( +5 / -2 )

Dog: "**Abe and the LDP are not trying to create a new Japanese economic model, they are trying to regain an old Japanese model of the 60's and 70's based on an export driven economy fueled with a weak yen."

Exactly. Which is why it will once again fail, but this time it will fail much, much more badly because in the past the economies in Europe and so forth were a lot stronger and there was more balance.

nigelboy: "Stop it smith. Please stick to what you know whatever that is."

Wrong side of the bed this morning? Anyway, they are not in line whatsoever, and certainly not 'pretty much'. And anyway, what do you claim they're in line with? The trend of screwing the people here since the '90s?

2 ( +5 / -3 )

Nobody complained in 2005 when the yen was 112 to 1. Considering inflation, this present exchange is not a problem. Japan needs to establish itself and do what it believes is correct for currency. China is a higher priority.

0 ( +2 / -2 )

interest on a loan is 6 - 18%

Card loans, yes. My real estate loan for my condo is 1.8%, flat rate.

3 ( +5 / -2 )

mrkobayashi: And how much interest do you yourself gain on your savings in a year? If you've had the account for ten years or more and barely touched the money, did it move up from 0.07% to the whopping 0.08%?

I am glad to hear the rate of interest on your personal (condo) loan is not that high -- I know of course there are lower rates than those I stated. Credit cards are generally 18-20% interest, in my experience, with some variation on how you use them (ie. cashing vs. purchases). In any case, there's still the fact that the banks and economy survived relatively unscathed in Japan because most Japanese put their money directly in accounts rather than investing, and the banks and post office loan the money out at rates that FAR exceed anything they would give in return for the money simply being there. This has helped the economy here, but not the people. Hence my post.

2 ( +4 / -2 )

Where is all the hype for increasing tourism? Where are the free tickets to Japan? Tourists want a good exchange rate. It must be 100 yen to 1 USD to attract USA tourists. It used to be there, and it needs to be there now.

-2 ( +0 / -2 )

Deal with it.

0 ( +0 / -0 )

Treasury Secretary Jack Lew... why pick on Japan? No other country complained except you and USA. WTF. You cannot even touched China regarding their currency situation. CHICKEN ?

0 ( +1 / -1 )

Silly people. Doesn't Mr. Lew have to say this to placate S Korea, Europe, and most of all American corporations in abject fear over what companies like Toyota will be able to inflict on them with their record stash. Mr. Lew was actually ambivalent and offered no such rebuke the likes that China gets. Me thinks the smart money is still being bet on an ever weaker yen.

0 ( +0 / -0 )

Aso is a nice guy. I still remember when I got a gift from him of 100 dollars from the prefecture. They also managed to solve the problem with missing retirement plan doing this...

-1 ( +0 / -1 )

@ Jeff Lee

The reason Greece can' tis because Greece is in the mercy of the Euro Block largely dictated by the major partner Germany which insists on austerity action. Printing Currency of cause is a no no.

1 ( +1 / -0 )

I see some people complain so aggressively about recent Japan's move, and they present such negative views (or positive views) with their own theory. But what are they? I have often seen any reputed economists or analysts would inevitably fail in the end and had to correct their view in regard with future economy. Economic policy execution is always experiment and nothing else. No human being could predict future event and condition. So stay calm, please.

-1 ( +0 / -1 )

The yen hit a four-year low against the dollar on Friday, beyond the psychologically important 100 yen mark. It also trades at a three-year low against the euro. The moves were driven in part by Japanese investors shifting into foreign bonds, a move that had been expected since the Bank of Japan unveiled a massive stimulus plan.

From this text, people may think the Japanese investors push the yen above 100yen, which is unlikely. It happend afternoon NY time (very early morning on Japan time), and it was said that was done by the attempt of some institutional investors outside of Japan. Remember the sudden fall of yen last year was said to be triggered by powerful investors like George soros; yes, they were ready to do that. If you have looked at the USD/JPY chart, you would easily know yen's depreciation was due. It had been far, far appreciated already. so selling yen was inevitable. Abe had just ridden on the wave, imo. Japan don't need to manipulate to sell yen. Provided the world economy, especially the USA's would be getting better, the US or any country or even Japan can't stop this move if they could interfere to any degree. I would rather think Japan should start the plan about how to control the speed of the depreciation as currency rate movement tends to go overboard and that becomes risky for Japan as well.

4 ( +5 / -1 )

I would rather think Japan should start the plan about how to control the speed of the depreciation as currency rate movement tends to go overboard and that becomes risky for Japan as well.

exactly, this is what the headline means. U.S has best interest at heart for Japan a close ally !

1 ( +1 / -0 )

stable 105 - 115 yen to the dollar works for me much better than below 100.

2 ( +3 / -1 )

Last time I checked Japan was a sovereign free country, so this were watching you attitude can take a hike.

Japan used their sovereignty and signed agreements with other countries.

0 ( +0 / -0 )

Wrong side of the bed this morning? Anyway, they are not in line whatsoever, and certainly not 'pretty much'. And anyway, what do you claim they're in line with? The trend of screwing the people here since the '90s?

Smith. As mrkobayashi stated, the low mortgage rate is tied to the low yield on other long term financial instruments. What you are quoting is an unsecured loan rate which is virtually irrelevant in relation to deposit rates but varies greatly on the individual's ability to pay. Like I said, stick to what you know whatever that is.

0 ( +2 / -2 )

Seiryuu_Dan: U.S. Treasury Secretary Jack Lew is really a hypocrite here. US and several other nations had also done this and still been doing it now, yet he singled out Japan. Like The pot calling the kettle black.

Everyone is calling out Japan. Not sure why you think one article is evidence that just one country is doing it.

People are upset with Japan because their currency is being manipulated with the specific purpose of lowering the yen to help their industries. Other countries (yes, other countries do exist) object to this. Stimulus money has a proper place and time to help economies, but it shouldn't be crafted as a plan to take more from other countries.

1 ( +1 / -0 )

Treasury Secretary Jack Lew said Japan had “growth issues” that needed to be dealt with but that its attempts to stimulate its economy needed to stay within the bounds of international agreements to avoid competitive devaluations.

. Is he talking about USA - almost bankrupting USA?

0 ( +0 / -0 )

The US brought the world economy to the very brink, we stared deep into the abyss, THEN they essentially nationalzied their banking system and THEy say, 'paly by the rules'? Get out of here!

1 ( +2 / -1 )

Oh, and their car industry.

0 ( +1 / -1 )

The pot calling the kettle black! The US has been printing money as fast as it can!

3 ( +4 / -1 )

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