Comments on: "Mr. Yen" Advocates Much Stronger Yen http://www.nakedcapitalism.com/2008/11/mr-yen-advocates-much-stronger-yen.html Sun, 22 Nov 2009 04:39:16 -0500 http://wordpress.org/?v=2.8.4 hourly 1 By: DD http://www.nakedcapitalism.com/2008/11/mr-yen-advocates-much-stronger-yen.html#comment-24658 DD Fri, 07 Nov 2008 13:32:00 +0000 http://www.nakedcapitalism.com/2008/11/mr-yen-advocates-much-stronger-yen/#comment-24658 Mr. Yen states, "Japan will benefit from a strong yen because it will hold down prices for raw materials"...<br/><br/>This doesn't make much sense. The fall in the price of raw materials is what's making the yen appreciate. So, if the yen is strong, the prices of raw materials will already be held down...and it is NOT because of a strong yen.<br/><br/>Secondly, when he states, "On the balance sheet, a high yen will cut into their profits but as far as competitiveness is concerned, they are competing quite well with Ford or General Motors"...<br/><br/>What kind of nonsense is that? "Profits are nil, but we are competetive!" Tell that to Toyota.<br/><br/>And he's taking solace in being competetive with Ford and GM, no less. Last I checked, Acme Horse & Buggy is thinking about making a comeback---because it, too, believes it will be competetive with Ford and GM.<br/><br/>Mr. Yen strikes me as an irrelevant former official trying to achieve relevance by getting quoted on Bloomberg. Mr. Yen states, "Japan will benefit from a strong yen because it will hold down prices for raw materials"…

This doesn't make much sense. The fall in the price of raw materials is what's making the yen appreciate. So, if the yen is strong, the prices of raw materials will already be held down…and it is NOT because of a strong yen.

Secondly, when he states, "On the balance sheet, a high yen will cut into their profits but as far as competitiveness is concerned, they are competing quite well with Ford or General Motors"…

What kind of nonsense is that? "Profits are nil, but we are competetive!" Tell that to Toyota.

And he's taking solace in being competetive with Ford and GM, no less. Last I checked, Acme Horse & Buggy is thinking about making a comeback—because it, too, believes it will be competetive with Ford and GM.

Mr. Yen strikes me as an irrelevant former official trying to achieve relevance by getting quoted on Bloomberg.

]]> By: fresno dan http://www.nakedcapitalism.com/2008/11/mr-yen-advocates-much-stronger-yen.html#comment-24648 fresno dan Fri, 07 Nov 2008 11:36:00 +0000 http://www.nakedcapitalism.com/2008/11/mr-yen-advocates-much-stronger-yen/#comment-24648 like most things in economics, exchange rates are a two edged sword. The idea that keeping your currency low so that you can export ignores the fact imports are expensive and leads to all sorts of mal-invesment. Patton said your duty isn't to die for your country... its to make the other poor dumb sonofabitch die for his. To paraphrase, the duty of a currency isn't to prop up exports, but to price goods and services accurately. And everybody would be better off if this were the case...but thats the same as saying we would all be better off if everyone was nice. like most things in economics, exchange rates are a two edged sword. The idea that keeping your currency low so that you can export ignores the fact imports are expensive and leads to all sorts of mal-invesment. Patton said your duty isn’t to die for your country… its to make the other poor dumb sonofabitch die for his. To paraphrase, the duty of a currency isn’t to prop up exports, but to price goods and services accurately. And everybody would be better off if this were the case…but thats the same as saying we would all be better off if everyone was nice.

]]> By: Richard Kline http://www.nakedcapitalism.com/2008/11/mr-yen-advocates-much-stronger-yen.html#comment-24642 Richard Kline Fri, 07 Nov 2008 09:27:00 +0000 http://www.nakedcapitalism.com/2008/11/mr-yen-advocates-much-stronger-yen/#comment-24642 The Japanese see the need to get to a loose coupling to the dollar and the US market rather than the tight coupling they have had since the 70s. That entails living with and positioning themselves for a higher yen, by definition. I do not think that they have a strategy for how to get to that position and maintain themselves there, however. The conceptualization may have happened but the actualization is not evident. <br/><br/>Their major alternatives would involve growing new markets to real size and/or growing their domestic consumption. Are there major initiatives to either end in prospect? I don't see them. Have the Japanese quietly ramped up investment in China?? <br/><br/>The Japanese may be sanguine, but that's because they see themselves as too big to be Korea. They may well be proven wrong unless they lay some policy rubber on the road to tomorrow. The Japanese see the need to get to a loose coupling to the dollar and the US market rather than the tight coupling they have had since the 70s. That entails living with and positioning themselves for a higher yen, by definition. I do not think that they have a strategy for how to get to that position and maintain themselves there, however. The conceptualization may have happened but the actualization is not evident.

Their major alternatives would involve growing new markets to real size and/or growing their domestic consumption. Are there major initiatives to either end in prospect? I don’t see them. Have the Japanese quietly ramped up investment in China??

The Japanese may be sanguine, but that’s because they see themselves as too big to be Korea. They may well be proven wrong unless they lay some policy rubber on the road to tomorrow.

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