A Wall Street Journal article, “Japan Worries It Faces the Return of Deflation,” contained an argument I found unconvincing: In the U.S., some economists say deflation may occur if market conditions deteriorate much further and job losses proliferate. But Teizo Taya, an adviser for Daiwa Institute of Research and a former policy board member of […]
Read more...The Japanese officialdom signaled an interest in a cheaper yen when the Nikkei breached 25 year lows. But the concern was not the level of the yen per se, but trying to use a weaker yen (it had run up to over 92 to the dollar) as to a desperate effort to shore up the […]
Read more...This Times Online story is frustratingly vague about the exact nature of these complicated and risky foreign exchange products sold to Japanese retail investors. While the size of the problem ($90 billion) may seem not all that bad in comparison, say, to subprime exposures, recall that these trades are likely to be unwound in a […]
Read more...The Japanese stock market was in positive territory for a while, then bobbled between up and down versus the Friday close, and has now taken a nosedive, down over 6%. Most other Asia-Pacific markets showed large losses save Australia, which was down a comparatively modest 1.5%ish. The yen is now (3:00 AM) just above 93 […]
Read more...The Nikkei was down as low as 600 below the previous day’s close. It is now down a bit over 400 points. Other reports from the region via Bloomberg: Asian stocks fell for a third day after Sony Corp. slashed its earnings forecast and South Korea’s economic growth weakened, deepening concern a global slowdown is […]
Read more...Hedge funds continue to create considerable dislocation as they dump positions to meet redemption requirements. For instnace, a major downdraft in gold this week occurred in a very short time frame and is almost certain to have resulted from an investor selling some large holdings. With even larger redemptions expected this quarter, all sorts of […]
Read more...The revised terms are similar to those discussed last night, with the Japanese bank investing the same amount but receiving an increased ownership stake (21%) and receiving more in preferred stock. Note confusion in the Journal article: the news alert, says, “MUFG Closes Morgan Stanley Investment With Revised Terms” when the story itself says both […]
Read more...Note: variants of the word “protect” as regards the US Treasury’s stance towards the pending $9 billion Mitsubishi UFJ investment in Morgan Stanley, appeared in the headline and first paragraph of the New York Times discussing the state of the deal. But the text of the article suggests the Treasury may be engaging in a […]
Read more...Boy, there have been bigger bad investments (TPG putting $7 billion into WaMu comes to mind) but seldom has one come cropper as quickly as Mitsubishi UFJ’s $9 billion interest in Morgan Stanley. The bank took a cool $500 million one-day loss. From Bloomberg: Mitsubishi UFJ Financial Group Inc. took a $506 million paper loss […]
Read more...It has been conventional wisdom that China, Japan, and other countries that run trade surpluses with the US, which means they fund our overconsumption by buying assets like US Treauries, would never restrict the flow of credit to us because it would lower their exports and hurt their growth. We’ve long been leery of the […]
Read more...I had wondered when the Japanese would step to the fore. Japanese banks and trading companies are cash rich and undamaged by the financial crisis, having for the most part steered clear of of subprime assets. Note that the Mitsubishi group has long been close to Morgan Stanley. Indeed, it was a surprise to many […]
Read more...Two stories on Bloomberg discussed how the world’s export powerhouses, China and Japan, are feeling the effects of the global slowdown. First on China, which seems inclined to weaken the yuan to defend growth. That’s a mixed blessing for the US. A stronger dollar hurts the export sector, the one sunny area of the economy, […]
Read more...Although one robin does not make a spring, the increased reluctance of Japanese retail and institutional investors to hold GSE debt is worrisome. Bloomberg reports that Japanese retail and institutional investors are unloading foreign debt due to currency volatility and are particularly leery of Fannie and Freddie securities. Admittedly, as Brad Setser has pointed out […]
Read more...Blomberg columnist William Pesek plays out a line of thought that may have occurred to some readers: what if the resolution of the credit crisis and global imbalances isn’t a nasty recession or punishing inflation but Japan-like protracted low growth, with stagnant to deteriorating living standards? This idea may not be as much of a […]
Read more...Many foreign observers of Japan don’t get past the “lost decade/deflation” headline. They miss the fact that Japan has a robust export sector and continues to run high trade surpluses, despite the supposed difficulty of advanced economies competing with emerging markets. But how has this outcome been achieved? As Michiyo Nakamoto tells us in a […]
Read more...