Japan Reserves on Edge of Collapse

PRESS RELEASE
Citizens for Corporate Accountability

- Japan does not have several months foreign reserve holdings left for US assets, as previously thought, because $650 billion in holdings--almost the entire amount--is already used up.
- Since Japan has run out of holdings, it is borrowing against itself using US bonds.


(SEATTLE) 02/17/04 - Figures outlined in a foreign news release concerning Japan's foreign exchange situation paint a picture that is far worse than headlines suggest. The news release, from the AFP--which apparently wasn't broadcast widely in the US news--has since been deleted from the web, but is dated January 2004(1). Specifically, the release shows that Japan has already exhausted its resources to buy US dollar assets.

Japan has been buying US dollar assets to offset currency effects due to problems in the US economy, at a rate never before seen. This has been holding up US credit markets, and keeping US interest rates low, in a new and unusual way. This action is said to be unsustainable, because it represents a significant portion of Japan's total gross domestic product ("GDP").

In the release, the Japan Finance Ministry announced a "deal to sell US bonds to the Bank of Japan" to raise an amount of 100 billion dollars US. However, the release says the Finance Ministry has to buy the same back after three months. This short-term action is apparently necessary, because the release indicates almost all of Japan's foreign exchange reserves are already in foreign currencies--leaving none left to invest in US assets ("foreign currencies accounted for 652.8 billion dollars"--out of 673.5 billion total.)

At the most recent rate, the additional 100 billion dollars would last a few months, at best. And there is a question as to whether the 100 billion dollars in US bonds might be unexpectedly sold. The news is significant because it suggests serious US credit problems are closer than previously thought, and the US Federal Reserve may no longer have the ability to keep US interest rates low.

###

Footnotes:

(1) "Japan's Foreign Reserves Hit Record", AFP, Friday January 9, 11:59, Yahoo!: Error 404 The requested URL could not be found.

[Mr.Green93]

1. good story

do you have a link?

3. The January AFP story is deleted, but you can find a cache copy

Do a search by that title, and then hit

"cached"

2. Executive version "for dummies"

Japan has been dumping its savings into the US economy in order to prop itself, its currency, and the US up.

This has led to a housing bubble, and stock market bubble.

The Japan money ran out in January. They can't keep it up so they are borrowing against themselves. at a rate which is impossible to hold up.

The bubble only keeps on going so long as the Japan self-borrowing does.

But in a month or less, they could sell US bonds! That would make the whole thing come down fast.

Shortened version:
"OH shit"

4. HALLIBURTON is on my website!!!

The Liberty Whistle
Who's On Your Site?
Detail Domain Name Last Page View Page
Views Visit Length
1
rogers.com Feb 17 2004 12:53:25 pm 1 0:00
http://www.libertywhistle.us/
2
208.12.13.# 12:50:06 pm 1 0:00
http://www,.libertywhistle.us/
3
halliburton.com 12:48:17 pm 1 0:00
http://www.libertywhistle.us/
4
208.12.13.# 12:47:30 pm 1 0:00
http://www.libertywhistle.us/

5. UPDATED VERSION

"In recent testimony, the Federal Reserve acknowledged near-term risks related to the deficit, without specifically acknowledging multiple levels of credit dependency in the economy, or the unsustainable rate of Japanese fund consumption."

Japan Reserves On Edge of Collapse

PRESS RELEASE
Citizens for Corporate Accountability

- Japan does not have several months foreign reserve holdings left for US assets, as previously thought, because $650 billion in holdings--almost the entire amount--is already used up.
- Since Japan has run out of holdings, it is borrowing against itself using US bonds.
- In recent testimony, the Fed alluded to this risk.
(UPDATE 1)

(SEATTLE) 02/17/04 - Figures outlined in a foreign news release concerning Japan's foreign exchange situation paint a picture that is far worse than headlines suggest. The news release, from the AFP--which apparently wasn't broadcast widely in the US news--has since been deleted from the web, but is dated January 2004(1). Specifically, the release shows that Japan has already exhausted its resources to buy US dollar assets.

Japan has been buying US dollar assets to offset currency effects due to problems in the US economy, at a rate never before seen. This has been holding up US credit, deficit, housing, and stock markets, and keeping US interest rates low, in a new and unusual way. This action is said to be unsustainable, because it represents a significant portion of Japan's total gross domestic product ("GDP").

In the release, the Japan Finance Ministry announced a "deal to sell US bonds to the Bank of Japan" to raise an amount of 100 billion dollars US. However, the release says the Finance Ministry has to buy the same back after three months. This short-term action is apparently necessary, because the release indicates almost all of Japan's foreign exchange reserves are already in foreign currencies--leaving none left to invest in US assets ("foreign currencies accounted for 652.8 billion dollars"--out of 673.5 billion total).

At the most recent rate, the additional 100 billion dollars would last a few months, at best. And there is a question as to whether the 100 billion dollars in US bonds might be unexpectedly sold. The news is significant because it suggests serious US credit problems are closer than previously thought, and the US Federal Reserve may no longer have the ability to keep US interest rates low, when foreign flows are reduced or reversed.

In recent testimony, the Federal Reserve acknowledged near-term risks related to the deficit, without specifically acknowledging multiple levels of credit dependency in the economy, or the unsustainable rate of Japanese fund consumption.

###

Footnotes:

(1) "Japan's Foreign Reserves Hit Record", AFP, Friday January 9, 11:59, Yahoo!: Error 404 The requested URL could not be found.