G7 Yen Intervention: Let's Just Blame Seculators

I hate to think how many prop desks blew up. And it's specifically on USD/JPY pair.

From AP (3/18/2011):

TOKYO (AP) -- The yen fell from historic highs Friday after the Group of Seven major industrialized nations promised coordinated intervention in currency markets to support Japan's recovery from a catastrophic earthquake and tsunami.

The G-7 pledge came after the yen hit an all-time high against the dollar Thursday, possibly threatening Japan's exports and hampering its economic recovery from the Mar. 11 quake that triggered an unfolding nuclear crisis.

After the announcement the dollar rose to 81.26 yen fro 79.45 yen, but it was unclear whether that was due to government intervention or to traders reacting to the news. The dollar briefly slumped to 76.53 yen on Thursday -- an all time low for the U.S currency and a record high for the yen.

Japan's Finance Minister Yoshihiko Noda said the government would intervene in the Tokyo market once morning trading opened Friday. But ministry spokespeople declined later to confirm whether that happened.

Noda said the planned intervention was meant to calm "volatility" and G-7 governments had no target exchange rate.

And the Finance Minister of Japan thinks it is still the "market" - an exchange of goods/information - when all that's been propping it up is the government's pledge and will to buy up anything to keep it going.

Japanese newspapers specifically blame "speculators" for the violent move of yen since the earthquake, rather than more or less normal and rational "risk-off" trades such as carry-trade unwind and repatriation of foreign currency back to Japanese yen by the Japanese companies that operate worldwide.

Even the newspaper that should know a little bit better about financial markets, Nikkei Shinbun (in Japanese, 3/18/2011), blames "speculators", and praises the move by G7:

One week after the earthquake and tsunami hit Japan, G7 took a resolute move against currency speculators who disrupt the market...

Sad it is that they are going to use the earthquake/tsunami disaster as the financial market "put".

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Czech President to UN: Stay out of Economics and Science

Czech President Vaclav Klaus, speaking like an Austrian (economist, that is). I would go one step further and not leave the solutions to the member governments either; the solutions are to be found in free market capitalism. But I'm sure Professor Klaus knows that, as he is after all a follower of Friedrich Hayek.

From Reuters:

"UNITED NATIONS, Sept 25 (Reuters) - Czech President Vaclav Klaus on Saturday criticized U.N. calls for increased "global governance" of the world's economy, saying the world body should leave that role to national governments.

"The solution to dealing with the global economic crisis, Klaus told the U.N. General Assembly, did not lie in "creating new governmental and supranational agencies, or in aiming at global governance of the world economy."

""On the contrary, this is the time for international organizations, including the United Nations, to reduce their expenditures, make their administrations thinner, and leave the solutions to the governments of member states," he said.

""The anti-crisis measures that have been proposed and already partly implemented follow from the assumption that the crisis was a failure of markets and that the right way out is more regulation of markets," he said.

"Klaus said that was a "mistaken assumption" and it was impossible to prevent future crises through regulatory interventions and similar actions by governments.

"That will only "destroy the markets and together with them the chances for economic growth and prosperity in both developed and developing countries," he said.

"The Czech president, a vocal skeptic of global warming, said the United Nations should also keep out of science, including climate change. U.N. Secretary-General Ban Ki-moon has made fighting climate change one of his top priorities."

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Tyranny in Your Front Yard

from Lewrockwell.com blog.

Tyrrany in Your Front Yard (Butler Shaffer, 9/1/09 LRC Blog)

"A news report advises that federal agents are beginning to swoop down on neighborhood yard sales, allegedly for the purpose of discovering whether federally-banned products are being resold by unsuspecting homeowners. This comes in the wake of local governments arresting and fining children who operate unlicensed lemonade stands. What next? Will federal SWAT teams descend on children’s birthday parties to inspect gifts to see if any violate product safety standards for toys? “And as long as we’re there, bring along some government nurses to vaccinate the little brats.”"

Yard sales, kids' "unlicensed" lemonade stands. The government doesn't know where and when to stop, does it?

For news of federal agents descending on yard sales which is yet to happen, click here. (The operation has a code name of course, and it is "Resale Roundup" (I wonder if it was named after the herbicide developed by Monsanto. Kill off those weeds like yard sales, unless we extract some tax out of the sales.)

For news of local governments arresting and fining children for unlicensed operation of selling lemonade, click here and here.

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Traders Have No Doubts About Manipulation By Government

Good to see Steve Liesman (many people spell Steve LIESman) getting outnumbered in green shooting CNBC.

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AXA CEO Complains Of Unfair Competition

These days, we get to hear criticisms of ever-increasing government intervention from unlikely (if I may say so) places.

About two weeks ago it was a Russian (Russia was a former Communist country, remember?) appalled at the ease with which Americans seem to accept the "new" way of life (my post here).

Today I ran into this article on Nikkei (May 31 Sunday their time). A French businessman, graduated from The École Nationale d'Administration (one of the elite grandes écoles) and a former government bureaucrat, criticizes the government intervention as distorting the market competition. The following is the rough translation from Japanese.

"Henri de Castries, CEO of AXA, a French global insurance companies group, criticized AIG and other insurance companies who have received public fund that "it is highly inappropriate that these companies are lowering the price to maintain their customers", and that the government intervention is distorting the market, according to the interview he gave to Japan's Nihon Keizai Shinbun (Nikkei newspaper).

"Among the four largest insurance groups in the world, AIG (US), Allianz (Germany) and ING (Netherlands) have all received public fund.

"Mr. de Castries also said, "AXA hasn't asked for any support from the government. The institutions that have received public assistance should undergo comprehensive restructuring, and should not be allowed to use the public fund they received to expand their business.""

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