By Heather Stewart
The Observer, London
Sunday, December 5, 2004
http://observer.guardian.co.uk/business/story/0,6903,1366578,00.html [1]
TOKYO -- Japan is warning the White House that
there will be "enormous capital flight" from the dollar
if the Bush administration maintains its laissez-faire
approach to the mounting currency crisis. Tokyo fears
that Japan's strongest economic recovery in a decade
could be derailed by the sudden appreciation in the
yen against the greenback.
The criticism of President Bush's inaction, by a senior
member of the ruling Liberal Democratic Party, will be
taken as a veiled threat that Japan could start to sell
off its multi-billion-dollar holdings of US Treasuries.
"The Japanese government is going to ask for a
strong dollar policy; if it continues to fall, there
would be enormous capital flight from the dollar," said
Kaoru Yosano, chairman of the LDP's policy council,
adding that Japan would be calling on its fellow G7
governments to demand the US deal with the massive
fiscal deficit that has helped to prompt the dollar's
decline.
Yosano's remarks echoed a warning from a senior
Japanese Ministry of Finance official that if the US
does not push up interest rates to make the dollar
more attractive, "the one-way sentiment on the dollar
will have a negative impact on the flow of capital into
the US." He added that Japan is urging its European
counterparts to join a campaign of coordinated
currency-market intervention, saying: "If the dollar
is depreciating, we should have coordinated action.
That has already been communicated to my European
counterparts.'
Like Japan, the eurozone fears that its tentative
recovery could be choked off by the fall in the dollar,
which European Central Bank president Jean-Claude
Trichet has called "brutal." However, the ECB has so
far dismissed the idea of intervening.
Japan is taking a double hit from the decline in the
dollar because the Chinese renminbi is pegged to the
US currency, so Japanese exports are simultaneously
becoming sharply dearer in both their major markets.
Takeo Fukui, the chairman of Honda, admits, for
example, that an appreciation of 1 yen against the
dollar, if it lasts for more than three months,
knocks 10 billion yen off the carmaker's profits.
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http://www.howestreet.com [22]
http://www.depression2.tv [23]
http://www.moneyfiles.org/ [24]
http://www.howestreet.com [22]
http://www.minersmanual.com/minernews.html [25]
http://www.a1-guide-to-gold-investments.com/euro-vs-dollar.html [26]
http://www.goldcolony.com [27]
http://www.miningstocks.com [28]
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http://www.freemarketnews.com [30]
http://www.SilverSeek.com [32]
http://www.investmentrarities.com [33]
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(Korelin Business Report -- audio)
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Eagle Ranch discussion site:
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Ted Butler silver commentary archive:
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----------------------------------------------------
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