The Yen Surge Continues In Collapse of EU/US Systems

File:Nikkei 225(1970-).svg – Wikipedia, the free encyclopedia

The above graph clearly illustrates how evil bubbles can be.  Japan has been mired in this Great Depression for the last 23 years and it has no end, no end at all.  Since 1994, Japan has tried to fix this huge bubble via zero interest rate loans.  All this did was flood the world with cheap yen.  This didn’t harm Japan’s exporters at all, at first, due to virtually no central banks holding yen in their FOREX accounts.  But China began holding yen since 2007 in retaliation for Japan joining the US in demanding the yuan be raised against the dollar.  Since then, the yen has grown stronger against both the dollar and the yuan to the great rage of Japanese exporters.


2011/10/15 デモ行進 OCCUPY TOKYO & フジテレビ抗議デモ(Demonstration Parade)



Japan has depended entirely on two things to fix this credit bubble from the 1980’s: weaken the yen and lend cheap yen to exporters.  This, in turn, was supposed to create jobs in Japan.  But to keep the ZIRP system going, the cheap loans had to ride on a basis of no inflation.  No inflation means cutting the wages of workers as much as humanly possible.


So working conditions for Japanese families collapsed into this deep, dark hole where today, 40% of Japan now works part time, there is near zero job security, wages have fallen for 15 years straight and even with all this, jobs are vanishing ever more rapidly as exporters exploit much cheaper foreign labor.  Eventually, all of Japan will die off, literally.  The dynamics driving Japan off the evolutionary cliff are exactly the same dynamics destroying the US and parts of the EU.


I have focused for years on Japan’s dilemma due to this country being the leading indicator of what goes wrong when a country focuses only on exports.  The entire point towards trying to understand systems is so we can avoid obvious mistakes and if there is any model for ‘how to run an economy’ which is a complete and total catastrophe, that model is Japan, Inc.  The exporters who control the government which can’t maintain a leader for more than six months at a time, have utterly destroyed Japan internally and externally and are now frantic to utterly wreck what little is left.


Here is a sad screenshot from that illustrates Japan’s many problems:

Japan just this week unilaterally, without permission or input from any other nation, staged a huge central bank intervention designed to make the yen as worthless as possible.  To make ‘nice’ while doing this actively hostile action, Japan reflexively reduced its many barriers to the importation of food, int his case, US and Canadian beef.


What is particularly hilarious is, these import restrictions were supposed to keep out ‘dangerous’ beef raised by foreign devils!  Meanwhile, the government says, cows that are radioactive in Japan are perfectly safe to eat.  Japan has a long history of making it nearly impossible to import much of anything except commodity materials.  The US put up with this due to a desire to keep Japan strong as a ballast against Russia and China.


But this destroyed the US internally as Japan (and Taiwan and South Korea) flooded the US with imports.  Since WWII, Japan has focused like a laser on keeping out even beef from the US as well as cars, refrigerators, electronics, anything, while exporting like mad to the US.  This, in turn, has wrecked our own economy which now runs on tons of debt, not production or capital.


Japan launched a currency war some time ago.  During the years the US has forced Japan to raise the value of the yen against the dollar, Japan retaliated by dumping trade dollars into their FOREX holdings which gradually made the dollar stronger again and the one way trade would then resume even more than before revaluation efforts by the US.  Today, this doesn’t work anymore, as I shall explain:  Japan unlikely to win currency ‘war of nerves’: Analysts


Japan on Monday launched its fourth yen-selling intervention in just over a a year as it looks to weaken a unit whose recent strength has threatened the nation’s recovery from the impact of the March 11 earthquake and tsunami.


The unilateral action came days before this week’s meeting of leaders of the Group of 20 industrialised and emerging economies in France and underlined the lack of a coordinated global economic policy, said analysts.


The fact that this is ‘unilateral’ means Japan didn’t get permission from the other countries.  This, in turn, makes the Japanese move a hostile move.  We are in the middle of a raging trade war that is, due to free trade and the floating fiat currency system, being waged in the FX markets.  That is, all the giants in currency trades, that is, central banks run by governments, are seeking to weaken their own home currencies for trade advantages.


Japan imagines, if only they flood the world with 10 trillion yen, the yen would become sufficiently worthless, they could then export like crazy again.  The problem with this goofy plan that worked so nicely 20 years ago is…other central banks will simply suck up these extra yen and park them alongside all the trillions in extra US dollars.


China launched this back in 2007.  This was done for hostile reasons.  Japan joined the US in condemning China for having a big FOREX reserve while Japan’s was nearly exactly the same size, back then!  China warned Japan that they would apply the FOREX solution to the yen and Japan continued to attack China in the G20 meetings, always siding with the US.  So China began hoarding yen.


Since then, the yen has only gone up and up.  The Chinese FOREX accounts are by far and away, the biggest on earth.  Japan can’t compete at all.  The more Japan is forced to offshore their businesses (often to China!) to make greater profits due to the yen being too strong for  them, the less money Japan’s central bank has access to in its foreign currency accounts.  So, the ability to manipulate world currency markets falls for Japan but rises for China.


Initial post-intervention dollar gains were quickly eroded by profit taking and as Japanese exporters looked to repatriate overseas earnings at the newly improved rates ahead of monthly book closing, said dealers…Tokyo faces domestic pressure to act as the strong unit erodes exporters’ repatriated profits and makes domestically produced goods less competitive, prompting fears of job losses if more firms shift production overseas.


The entire system in Japan has been set to benefit mainly and nearly only, the big export wealth families.  These families are now relocating all activity overseas because it makes them richer.  To hell with the Japanese people.  It is the Japanese wealthy exporters themselves who are moving money in and out of accounts so as to make the yen stronger.  That is, instead of circulating these yen, they are changing it rapidly into other accounts (mainly CHINESE) and when it enters the Chinese system, it is then sucked into the central bank’s FOREX accounts in order to make the yuan weaker vis a vis Japan!


This is like the White Queen in Alice in the Looking Glass who has to run faster and faster in order to stay in the same place.  China has zero reasons to help Japan right now since Japan, even after the tsunami/earthquake/Fukushima catastrophes, still insisted on unilaterally claiming territorial rights right offshore of China, using US nuclear military power.  This is EXTREMELY significant.


I can’t emphasize this enough.  The bizarre war games played by the US/Japan/South Korean forces this last year has moved China into aggressively curbing economic powers in Asia of these rival powers.  The plan is to drain them all of economic power and one of many tools being used by China is their immense FOREX holdings.


This is NOT mere economic warfare like the sort Japan has waged successfully against the US since WWII, this is the basis for curbing US military power which the Pentagon has announced, they plan to expand greatly in Asia in the next decade!  There is no way in any hell that China will allow this and if the Chinese have to pretty much decapitate Japan’s economy in order to stop this aggression, they shall.  And, frankly, they must.


The Japanese exporters who colonized the US have set up some factories here so they still ship over 50% of their auto/truck output to the US but the handful of factories in the deep south need many key parts from Asia in order to manufacture vehicles.  The catastrophes that hit eastern Japan screwed up this business and now, floods in Thailand are doing the same:  Honda to Cut Production at Some U.S., Canadian Plants Due to Thai Floods – Bloomberg


Floods in Thailand covered more than 80 percent of the country since July. Automakers will produce 300,000 fewer vehicles than expected this year in Thailand, according to the nation’s automobile industry group. Honda today abandoned full- year profit forecasts because it can’t yet assess the financial impact of the floods.

Last year, 87 percent of the Honda and Acura vehicles sold in the U.S. were produced in Honda’s North American factories with parts and materials sourced in the region.


The reason why exporters from Japan are moving factories to Thailand, for example, is so they can export stuff from there to the US.  This way, the strength of the yen matters less and less.  But of course, this weakens Japan fatally since people there are increasingly without jobs and are being slowly eliminated which is why there is so little concern at the top, about the Fukushima disaster.  The rich simply have moved out, out of Tokyo, out of Japan.


Honda Chief Financial Officer: ‘To Put It Bluntly, We’re In A Really Tough Spot’


Honda, the only automaker in Thailand with a flooded factory, builds about 5 percent of its cars there, with more than a third of the vehicles bound for export...Japanese automakers have also been drowning in currency-related losses with the dollar well below their assumptions of an 80 yen average this business year..Net profit, which includes earnings made in China, fell 55.5 percent to 60.43 billion yen, also hammered by an 8-yen drop in the dollar from the year before. Second-quarter revenues fell 16 percent to 1.9 trillion yen.


The Japanese are pissed off that the floating fiat currency system is finally doing what it is supposed to do: countries that successfully export have stronger currencies!  Of course, the more Japan moves industries to other Asian countries, the more these countries benefit from increased jobs and increased exports.  Eventually, Japan will export nothing and all the exporters will be totally located in other countries.  This dynamic is unstoppable.  The desire for greater profits will inevitably drive away all exporters just as we see here in the US.


Now, on to ‘money’.  Here is an amusing story from this week illustrating that the raw cost of gold doesn’t hold a candle to the value of gold when it becomes an iconic item of interest:  Chinese Panda 1-kilo gold coin tops bidding in Scotsman sale | CoinWorld


A Chinese 1997 Panda 1-kilo gold 2,000-yuan coin, graded Proof 67 Ultra Cameo by Numismatic Guaranty Corp., sold for $110,400 during an Oct. 21 auction in St. Louis by Scotsman Auction Co.


Back in 1997, the Chinese issued these few coins as a gesture, a hint, an endorsement of the value of gold coins.  The value is high due to there being very few of these Chinese coins.  This reminds us that the value of  money is always inverse to its availability.  The fewer ‘money’ icons, the more valuable they are, whatever they are made of.  Infinite money is worthless.  This is the ‘infinity/zero’ paradox.  Everyone wants more money but if there is more money, it becomes worthless faster than people can accumulate it.


With the floating fiat currency system, if no one holds any money, we have hyperinflation in all currencies whereas, if someone hoards money, it rises in value as the Japanese are seeing, to their great horror.  The Japanese hoard US dollars and China hoards yen.  The more Japan hoards dollars, the less China has to do this so the excess free trade funny money printed by the US to pay for our trade deficit flows into the Bank of Japan while China sucks down all the extra trade yen Japan prints in order to weaken the yen.


This is due to China now being Japan’s biggest trade partner!  It is IMPOSSIBLE for Japan to print enough money to weaken the yen against the dollar so long as the yen/yuan/dollar game grows in Chinese/Japanese trade.  The Japanese industrialists all use China as a labor base and then export from China to the US.  Much of China’s trade surplus with the US is due to Japanese and US corporations importing stuff from China!  But—and this is an immense ‘but’—the trade surplus makes the Bank of China much, much stronger.  Each day, stronger than the Federal Reserve or the Bank of Japan.


Both of these can only print more and more money.  China then holds much of this which makes China a greater and greater creditor nation.  As both Japan and the US refuse to tax their wealthiest people,  both run very, very deep in the red.  The #1 national debt nation is the US and the #2 is Japan.  Both cannot do this infinitely.  Both are deep in trouble due to government debt.  Both need weak currencies to balance trade with someone and both are madly printing money to manipulate trade and both desperately need ZIRP lending to keep governments running on red ink instead of taxes collected from trade tariffs or the rich!


Rich people need zero interest rate loans for their own governments because this prevents governments from taxing them!  Period!  This is done via suppressing inflation via reducing pay to workers and moving all currencies printed by central banks into someone else’s FOREX accounts!  But…this makes the yen stronger which the Japanese exporters hate.  They are, to be blunt, caught in a classic bind: the very actions that are making them richer are destroying Japan and the cures for this makes everything worse since the status quo stinks in the first place.


Let’s go to England, the other dead in the water economy which has a big overhang of super rich or aristocrats who are rapidly wrecking the country:  100 leading economists tell George Osborne: we must turn to Plan B | Politics | The Observer


It is now clear that plan A isn’t working. Wave after wave of economic figures from HM Treasury, national and international economic institutions such as the OECD, the IFS and the IMF have all concluded that the British economy is faltering. The UK jobless total is now at its highest for more than 17 years, while growth has all but stalled.


We urge the government to adopt emergency and commonsense measures for a Plan B that can quickly save jobs and create new ones. A recovery plan could include reversing cuts to protect jobs in the public sector, directing quantitative easing to a green new deal to create thousands of new jobs, increasing benefits to put money into the pockets of those on lower and middle incomes and thus increase aggregate demand.


This could in part be paid for by the introduction of a financial transactions tax.


HAHAHA…poor Greece has to tighten the noose.   The Irish have to do without.  Spain, Portugal and Italy must cut costs!  But England should spend even more money.  True, the Keynesians want to pay for this not with more government debt but more taxes on the bankers and investment houses.  But of course, these rich people will never, ever allow this to happen any more than the rich exporter families of Japan are going to allow pay raises or more jobs for fellow Japanese.


Unlike England, Japan has not been wracked by young people revolting against this disgusting system set up by the international Bilderberg bankers.  Even as ‘Occupy Wall Street’ spreads into almost all other countries, it hasn’t taken off in Japan.  This sad state of affairs is due to the Japanese ceasing to reproduce themselves.  There just isn’t enough young people who are scared enough to demand change…so far.

Occupy Wall Street: Tokyo HIbiya Park Version – YouTube

A leader with microphone was a foreigner and there were some foereign media such as Reuters. An Italian journailist was also there and Japanese mass media were also there. The rally was well targeted as an extension of for the sake of media coverage but it was only to expose its weakness, for instance, the rally carried Occupy Tokyo banners written in English language which is only a foreign language in this country of rising sun and show lack of sensitivities.


The lack of rage is obvious in this video from You Tube.  The inability to deliver a rousing speech is part of the alienation, the collapse of energy deep within the Japanese people.  They have given up.  Here is a more energetic demonstration in the heart of ‘young Japan’: Shinjuku ward.

I remember the Japanese demonstrators of the 1960’s: they were far more energetic.  There was much greater anger and a better understanding about international politics.  The youth of Japan have been nearly totally sidelined.  And it is fatal for them to allow this.  They have to fight back or be annihilated.


Here is a Wall Street editorial about spending money on citizens:  Allan H. Meltzer: Four Reasons Keynesians Keep Getting It Wrong –


Second, most of the government spending programs redistribute income from workers to the unemployed. This, Keynesians argue, increases the welfare of many hurt by the recession. What their models ignore, however, is the reduced productivity that follows a shift of resources toward redistribution and away from productive investment. Keynesian theory argues that each dollar of government spending has a larger effect on output than a dollar of tax reduction. But in reality the reverse has proven true. Permanent tax reduction generates more expansion than increased government spending of the same dollars. I believe that the resulting difference in productivity is a main reason for the difference in results.


HAHAHA…when the unemployed have no money, they are desperate for work (as are illegal alien workers!!!!!) so they drive down wages as employers churn workers always seeking cheaper labor (aka: productivity goes up as workers get less pay and work longer hours!!!!).  So, of course, the Zionists who own and run the WSJ want to convince workers that if there is no unemployment insurance, they will be richer.  HAHAHA, again.


Tax reductions did exactly one thing: it gave the rich more money which they then offshored.  They moved it overseas because the dollar was ‘strong’ relative to other currencies and therefore, bought more goods overseas!  Now that the dollar is weaker, the reparation of funds as flowed to say, Japan, instead.


The fact is, NONE of this money is flowing into the hands of either Japanese or American workers!  This is our united front, everyone.  Tax reduction has only done one thing: increased government debt in  both the US and Japan as well as the UK.  These three countries overwhelmingly are the deepest in government debt.  By far and away.  The PIIGS nations have trivial debts in comparison to the Big Three.


US productivity has risen as workers are suppressed, lose wage hikes and benefits are cut, profits go up and the reward is more jobs being offshored or more laws passed that weakens unions and strengthens the hands of the rich.  The rich then, in return for all of this, get even more grasping and greedy and offshore even faster!


The former governor of NJ who was a Goldman Sachs gnome has run a Ponzi scheme in the derivatives markets which now crashed due to the latest squeeze in finances as all central banks cut back on government spending:  Corzine Races to Rescue MF Global which just declared bankruptcy because the Corzine-Led Firm Is Said to Be Eyed on Missing Money


The recognition that money was missing scuttled at the 11th hour an agreement to sell a major part of MF Global to a rival brokerage firm. MF Global had staked its survival on completing the deal. Instead, the New York-based firm filed for bankruptcy on Monday.


Regulators are examining whether MF Global diverted some customer funds to support its own trades as the firm teetered on the brink of collapse.


This is called a ‘Beezle’.  That is, money that everyone thought was ‘there’ isn’t really ‘there’ at all, it was stolen by the bankers or investment houses.  Once this money has to be accounted for, due to bankruptcy, everyone discovers, it didn’t exist.  It was spent, long ago.  And the organization simply pretended they still had it.


This sort of ‘beezle’ runs in all systems when they are expanding.  No one looks at the books very closely until a credit bubble pops.  So, in this case, it is typical and identical to the years following the Great Crash of 1929.  The collapse of the beezle system inside the banks and investment houses didn’t happen when the stock market crashed.  It happened in the following three years!  EXACTLY like today:  CME Suspends MF Global As Uncertainty Persists | Fox Business


(CME) suspended MF Global Holdings Ltd. (MF) as a clearing member late Monday, ending a day of efforts by global exchanges to clamp down on the collapsed U.S. broker’s ability to trade.

.Chicago-based CME, the world’s largest derivatives exchange by volume, was among the last of its peers in the U.S. and Europe to serve notice that MF Global and its clients were barred from new business and limited to liquidation orders that closed out their positions.



The CME is terrified of these sorts of events which is why it allowed MF Global to continue trading way too long.  As the rich rushed to exit this criminal organization, they needed some saps to buy increasingly worthless papers.  This hot potato derivative scheme is now pulling down many other investment houses exactly like we saw in the Great Depression Part II when Lehman collapsed suddenly.  .


The Derivatives Beast will turn all of this into worthless shreds of paper blowing down Wall Street.sunset borger

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Filed under .money matters, Free Trade

13 responses to “The Yen Surge Continues In Collapse of EU/US Systems

  1. Urban Roman

    The derivatives monster will be the first beneficiary of the jubilee.

    If you have a mortgage, that will be the last beneficiary.

  2. MikeM

    Japanese society has never ceased to amaze me. I don’t think they’ve yet successfully transitioned to a modern hi-tech functional society after rapidly transitioning from a highly structured feudal state in the 19th century.

    Anyways…here’s an interesting piece of insanity:


    ELAINE: I just got back from reading that story in the Japanese news today! Yikes!

  3. csurge

    It’s a big ask of the Japanese youth to rise against their elders. And yes I say ALL the stupid elders, not just the corporate oligarchs. Japan is such a socially repressive society. It’s not like the US where we see how easily the young and old get together against a common enemy during the OWS protests. No, the Japanese youth would be rebelling against the social fabric itself… and this MUCH harder to pull off in a society that drills conformity and unquestioning obedience to authoritative figures from day one.

    No…..Japan is dead or dying rapidly, as Elaine has pointed out over and over again. The youth there will have to immigrate and learn new languages while leaving the old to their fate.


    ELAINE: I fixed your typo. Sorry about not having the ability to edit yourselves.

    And yes, this is certainly true. The kids there are so well behaved, in general. But sometimes, you need to have them rock the boat.

  4. melponeme_k

    In Japan, we are witnessing the very death and extinction of an entire culture. I never thought I would be alive to witness such a horrible event.

    The reason why there is no race to help with Fukushima is due to the worst war desires of our elites. They want to contaminate all of China with fall out. They really don’t care if it poisons the rest of the world as well. That is how insane they are now.

  5. ‘Floods in Thailand covered more than 80 percent of the country since July.’
    Is this part of GW? Climate Change or normal?

  6. payAttention

    Greek creditors took a 50% loss last week, so a hundred billion or so of capital disappeared. In the George Costanza fit of ‘opposite’ cleverness, the market went up 5% in the next two days. Where did the money come from and who got the nudge nudge to ramp the market so Corzine could try to clear his positions?

  7. payAttention


  8. Alex Yam

    The morons in Japan are now claiming every little piece of rock in the pacific their “Exclusive Economic Zone”. Which is just yet another pointless gestures made before the inevitable – the total collapse of Japan economy.

    In 10-20 years all they have left will be prostitute and maid exports, their so called Japanese pride held by the post WWII generations will be forgotten, their products will be synonymous with radiation poisoning, their best tourist attractions will be closed down, half their kids will have to learn Chinese/Russians/Koreans to get a job and the other half will slowly fade out of existence with deformation by radiation.

    With the old WW2 generation gone, the new “radiation generation” will be forced to loosen their immigration policy to combat extinction, and that is when we will do what we do best — integration. We’ll flood them with Chinese women marrying their men in every sector of their society, the only sector that refuse will be their so called royal bloodline, which will be regularly deviled as being the Asian version of Hitler, using their history of invasion to both China and Korea.

    We’ll then make sure Chinese become their most popular second language. We will beat the Russians and Koreans easily in this regard because their core culture was orientated from ancient China and half their language is already written in Chinese.

    In the end Japan will be regarded by the world as the little cousin of China.

    The only way they can stop us is to destroy us by military means, and they have to do it soon as the window of opportunity is rapidly collapsing, we have been anticipating this and we are looking forward to it, we’ve been waiting far too long all it takes now is one idiot to throw the first punch and our entire population will become soldiers and weapon manufactures overnight, there won’t be any voting, anti-war movements or any delusional fairy tales holding us back, one billion will fight as one and die as one.

    We need a war to officially enter the China century and we can all see it coming.

  9. emsnews

    The original Japanese were invaders from Manchuria/Central Korea. The natives of Japan had beards and now are confined mainly to the northernmost islands.

    The reason why Japan is so ‘Chinese’ in the first place is, they had periodic contact with China over the centuries due to being basically the same, so when there were innovations in China these migrated to Japan as well as Korea pretty easily.

    And yes, this is going to happen, the assimilation is actually overdue. The Japanese tried to overrun China and massacre everyone but that failed! Now, the Chinese simply have to move in and assimilate the Japanese. I hope there are no massacres.

  10. kenogami

    From Jesse american cafe:

    “I fully expect a strong effort will be made to hush this one up and sweep it under the rug. The $700 million was merely misplaced, left it in the other coat pocket, never missing, simple accounting error, completely safe. They will just juggle the books and shift the equity around, increasing the leverage on positions. You don’t go to prison for carrying excessive leverage. The US financial system is a pyramid of lies.

    I obviously do not know if the cover up will succeed. But as the system totters, more naked greed and corruption will be exposed.”

  11. ‘Chinese simply have to move in and assimilate the Japanese. ‘
    The land of China is ruined…dry, mostly tree less…..needing to import food.
    What they have is business savvy..and lots of resource hungry people.

  12. emsnews

    Yes, this is how we choose leaders: who is dumb or dumber?

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