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blow by blow event during the yen carry trade winding down in July


The US Treasury - Tokyo Connection

In today's brave new world of global investing, the PPT leans heavily on Tokyo's financial warlords, to help manage the "yen carry" trade. The sharp unwinding of "yen carry" trades from July 19th thru August 16th, highlighted by the US dollar's slide from 123.50-yen to as low as 112.10-yen, contributed significantly to the downfall of the Dow Jones Industrials from the 14,000 level to as low as 12,500. It could also be argued, that the DJI-30 slide triggered unwinding of "yen carry" trades, which in turn, made the stock market plunge more violent.

Between the Fed's $12 billion repo injection last Thursday afternoon, and the discount rate cut on Friday morning, at 12:30 am EST, Japan's new FX chief, Naoyuki Shinohara, made his first public comment since taking up the job, "As always we are watching currency markers carefully." Currency traders understand the code words "watching carefully" as a threat of intervention in the market.

At 9:14 am on Friday morning, just minutes before the opening of the NYSE, Japan's Kyodo news agency reported, without quoting sources, that the Bank of Japan would likely to hold off from raising interest rates at its policy board meeting on August 23rd. The Kyodo report lifted the US dollar by 1-yen to 114.30-yen. On Sunday night at 7:22 pm EST, Japanese Finance Minister Koji Omi told the media, "I am watching developments closely," lifting the dollar further to 115.20-yen.

Japanese Finance Minister Koji Omi said he agreed with PPT chief Henry Paulson in a phone conversation on August 21st that the two sides would closely watch market developments for a while. "We held frank discussions on market and economic conditions. We agreed that we will watch market developments carefully for a while." The dollar was trading at 114.80-yen when Omi spoke to the media.


the what if, and what's next start to play out...I love this thing


Even if ECB intervention could slow the dollar's decent, what possible reason would they have for doing so? The ECB is already concerned about inflation and is preparing to raise rates as a result. Intervention to support the dollar will only worsen Europe�s inflation problem and run counter to these efforts. This is because to buy dollars the ECB must increase its own money supply. That is exactly what is happening in countries like China and Saudi Arabia, which is why inflation in those nations is already much higher than it is in Europe.

Further, since the ECB is asking Europeans to endure higher interest rates to fight their inflation battle, why should they have to make additional sacrifices to help Americans fight their own inflation? Especially when our own central bank has held interest rates at the ridiculously low level of 2%, and has effectively excused Americans from the conflict.

Since we can't count on any help from our friends, the only option would be for the Treasury to intervene unilaterally. However, the US government should think twice about bringing a knife to a gunfight. The Treasury has only about US$75 billion in foreign currency reserves with which to intervene. The war chest is just a spit in the ocean.

To put this number in perspective, Poland has $77 billion, Turkey has $78 billion, and Libya has $79 billion. On the other end of the spectrum, China has $1.7 trillion (not counting Honk Kong�s $150 billion) Japan has $1 trillion, Russia has $550 billion, India and Taiwan each have about $300 billion. Singapore, a nation with fewer than five million people, has $175 billion.

In fact, the United States holds just about 1% of the world's $7.6 trillion of foreign currency reserves, and our total position amounts to just 2.5% of the total daily volume of foreign exchange trading.


"Clinton tried to stop this by balancing the budget and was nearly impeached for this."

I believe he did that by raiding the Social Security funds and having all new funds go directly into the Treasury. So it was a one-shot deal. So even that "accomplishment" was to pile up more debt.



They ALL raided the SS trust fund. Ever since Johnson, to hide the deficit caused by war spending in Vietnam.


Merrill says GM bankruptcy possible, shares drop

There goes GM.


DETROIT (Reuters) - General Motors Corp (GM.N) will need to raise as much as $15 billion in cash to shore up liquidity and bankruptcy is "not impossible" if the U.S. auto market continues to slump, Merrill Lynch said on Wednesday.

Although other analysts have suggested GM needs to raise funds to ride out the downturn in the U.S. auto market through 2009, Merrill's estimate of GM's financing needs was the highest yet. It also carried the most stark warning of the bankruptcy risk for the largest U.S. automaker.

Shares of GM, which have lost more than half of their value over the past two months, fell more than 7 percent to $10.88 in early trading.

Buffalo Ken

GM deserves what it gets. GM sabatoged mass transport at the beginning of the century. Karma never forgets.

Buffalo Ken

The 20th century that is.


GM has been in deep trouble for years. And they have been very, very slow to move away from the hulking gas guzzlers.

On yet another front, see:

The Industry Standard

Second Life users spending more time in world, but are they paying?
by Cyndy Aleo-Carreira

((----- Copy & Paste - W/O The Line Breaks -----))



«In the numbers, the average price for land shares in Second Life dropped from 3.23 Linden dollars (L$) to 2.86 L$ per acre. But an even greater concern for Linden Lab is the ratio of user hours to premium subscribers. Paid subscribers (those who pay a monthly fee for the privilege of spending more money on land rights) have been on a steady decline since December 2007, while the total number of hours users spend in-world has been on a steady upswing over the same period.»

Buffalo Ken

But lets not dismuss what GM did. They sealed thier own fate if you really think about it. They got cocky. Thought they could call all the shots.

They ended up fat, overextended, and most likely soon to be broke. They deserve it for what they did. Seems that way to me.

Seems like this is the case for many entities. Un-Alive corporate entities if you know what I mean.

Buffalo Ken

i swear i typed dismiss....oh well...typos they happen.

Buffalo Ken

I did a quick search and this is what came up (I didn't see the old reference that I know I have printed up somewhere around here)


Anyhow, if not for GM, then perhaps not so much oil, then perhaps we might not be facing the wrath of mother nature (so to speak). Really one thing leads to another.


Paul S

GM also scuttled battery powered cars. For years, Toyota, Honda, Nissan and others wiped the floor with GM in the much touted "free market". Look at GM now. Just like the neo cons, no amount of failure taught these smug, arrogant #%!& a thing. They will be looking for a Chrysler-type bailout soon. It's pathetic to watch these Titans of free enterprise turn into Das Kapital style Marxists when it's THEIR neck on the chopping block. I wonder if GM management will lay all of the blame on Union wages and benefits this time around. They are going to default on their retiree pension obligations anyway.

Blake K

Perhaps a note for GM ... from www.futurescenarios.org:

"One of the characteristics of a robust, enduring and mature civilization is the capacity to consider the longer term, aim for desirable but achievable futures, but have fallback strategies and insurance policies to deal with surprise and uncertainty. Given the globalised nature of culture, knowledge and wealth, our industrial civilisation should have been able to devote resources to serious redesign strategies at the technological, infrastructural, organisational, cultural and personal levels which are able to respond to the potentials of all four long term scenarios. Instead we see remarkably short term behaviour and a cavalier disregard of the fate of future generations.

While this is often explained as 'human nature' of fallible individuals, this explanation should not apply to institutions such as corporations -- let alone governments. History and systems theory suggest that powerful and long-lived human institutions should embody longer-term cultural wisdom and capacity.

We can interpret the short-sighted nature of information and decision making in our largest organisational structures as one of the many signs of cultural decay, reflecting the fact that our stocks of human capital may be declining, just as is our stock of natural capital."

hakan with the reindeer

Elaine, have you thought of this:
Number 8 in Chine is considered a real lycky number, in regional dialects the words for 8 and fortune or wealth is the same.

The Olympics start 08/08/08 08:08.


No new loans?! And no new money?!!

Oh My God! Lay Me Down!

Here come the Depression, right on schedule.

Death to Christians.

Elaine Meinel Supkis

8 is also infinity, by the way. The Japanese, Chinese, Siberians, and American Indians all think the number 4 is very sacred and 8 is doubly sacred. This has to do with the 4 directions in the Heavens namely, the ecliptic and the sidereal. As well as north/south/east/west and the 4 elements and the 4 seasons, etc.

This is part of 'good earth magic' and comes out of the yin/yang cycle of light and dark, male and female. Both needing to be in balance.

GM: I had to go off to help a friend with his diesel tractor and other diesel problems and didn't see the news after 10 am. As per usual when I go off, all hell breaks loose. I want to thank everyone here for giving me the hard news fast! Thank you!

Isn't is just pathetic about GM? I have owned both GM, Ford, Chrysler, Toyota, Volkswagen, Massey-Fergesson, Dodge, a huge number of vehicles of all sorts and types. Imported and native. All have had their pluses and minuses.

I hate to see competition fail. I like selections! I hate recessions because they cut off choices. The number of choices diminish as the recession grinds on. Eventually, we have virtually none and the winners, far from being improved by all this, get very nasty.

Sadly enough. With automobiles and other vehicles like my tractors and beat up old trucks, getting parts is HELL if the parent company folds! Often, only junk yards are available. So it makes me very nervous and annoyed to see them go under.


Dear Elaine ~

My husband spends a lot of quality time reading and emailing your blog. We are different in some ways and we appreciate that, so although he is fascinated with your blog, my big question are: does your depiction of a dog and a cat with the stars and stripes lady have anything to do with your involvement with animal welfare? I hope so, and if so what do you do about it? Thank you for the wonderful photograph today.


Erica Seelig

Christian W

Heh number 8. The Chinese realize that too much of a good thing leads to disaster, extremes are to be avoided. The number 8 configuration dreamt up by the Olympic committee is actually seen as a bad omen by the wise Chinese...

Elaine Meinel Supkis

All of the rulers love magic numbers! This is across the board. Each have their own magic spells they want to express this way. It is a very fascinating subject and in the Other Realm there is intense interest in all this for They over There are elemental creatures that can become real via numbers.

I like to think that the Creation of the Universe was when Lady Luck was playing with numbers and probabilities. When She used up all possible combinations of chance number cycles and systems, She tackled all the improbable possibilities. Then, using up these, She had only one recourse: to create an impossible number system that can't exist. This caused a massive explosion Astronomers call 'The Big Bang.' She called it 'The Big Accident...Oops!'

If we read the history of math and the creation of numbers, we quickly find ourselves in the middle of some of the queerest religious thought systems of them all. And these are queer because they are so ALIEN yet interface with describing Nature.

How is that, I asked, as a child. My father said, 'You can't understand the universe unless you understand how numbers are the way reality is written.' So I tried...from the opposite side. Not via being a great genius using numbers and formulas but via the opposite side of the reality system: via dreams and understanding the underbelly of the psyche. To my shock, these things merge there.

Erica: my cats and dogs hang out in my office when I write. They sit on my lap, the cats have a perch next to the keyboard, both dogs have beds under the desk at my feet and sleep there except in summer when it is too hot except if I air condition the office.

Animals are what keeps us real. They see right through us yet will love us anyway. A human has to be a total jerk to not be loved and tolerated by a cat or a dog.


Anthony, thanks for that 'blow by blow' reference, I used it in my 7-2-2008 article 'Yen Carry Trade Massively Unwinds As Investors Trade Out Of Stocks For Commodities', where I related that there was a massive unwinding of the yen carry trade, which complemented two others that occurred on June 6, 2008, and June 20, 2008, which can be seen in the BRICs, EEB, falling 3.8%.

EUR/JPY, FXE:FXY, closed at 1.69.

It's going to be just like July 2007 all over again. The weekly chart of EUR/JPY, FXE:FXY shows a double top: we have three weeks now of 1.68 or above, which makes for the second double top that matches the former top in July 2007.

I recommend that one be invested in gold.

Elaine Meinel Supkis

The yen carry trade has been stumbling along now for a year. Every time it looks like it will restart, all the players rush over, panting, to get it going and then the yen strengthens against the dollar. The hopes of driving it down again to the 120 yen to the dollar range is fading fast, I think.


I'd imagine Bush's dog whimpers when Bush actually deems it time for "attention".

Buffalo Ken

yeah, but "we" ain't bush's dog are "we", although the democrats collectively sure have been acting as if they are. I feel sorry for that damn dog, but not the democrats. They will get what they deserve. All of made up city of DC is corrupt to the core.

The rest of the country would be so much better off without it. Same goes for stinking texas -- no make that Tejas. Thats what it ought to be.

Buffalo Ken

Did you know that in the early history of the republic of "t", a "peace meeting" was called with the Comanche. All were to come to the table free of weaponry. The Comanche honored this agreement.

Well, what do you think happened? The "t" fuckers pulled out some guns and killed the Comanche chiefs. After that day, all Comanche became chiefs (or so I've heard).

Anyhow, this tells you all you really need to know about that state. No wonder the current "white" house occupier as well as many of the oil shit-fucks originate from the place. It is tainted and has been now since the mid-1800's. The rest of the country would be better off without it.

Or better yet, lets split that state up. It is too damn big. Either that or let the lone star bastards be by their lonesome. That state is a liability.

California ain't far behind. I don't want to be paying for it when California has their big earthquake. You know.

Just my humble opinion.


Buffalo Ken

Warning: Long post.

From: http://www.commondreams.org/archive/2008/06/26/9915/

(Post by "Native Son" June 26th 2008 1:49 pm)

Very good article and right on target. The need for a “leader”, a “president, king, emperor, or prophet, messenger, or representative of a GOD” is very strong in human history—-and a failed doctrine as history will attest.

In 1840 the newly formed “Republic of Texas” called all of the Plains Tribes “Chiefs” in Texas (mostly Comanche) together for a “peace conference”. When they were gathered in the “Council House” the Texans changed the rules of negotiations and when the Comanches protested and desired to withdraw, the Texans opened up on them with newly acquired Colt Revolvers, killing more than thirty Comanche Chiefs, who had arrived as agreed, unarmed. This began what history would later record as the most bloody period in the history of both the Texans and the Comanches. It also altered the Comanche leadership approach. From that day forward, no man was called a Chief by the Comanche, from that day forward ALL Comanches were chiefs. They learned from the “Council House Massacre”. They were successful and in 1868 after forty eight additional years of bloody war, the US capitulated at the Treaty of Medicine Lodge Creek—-they surrendered to the Comanche, in every way. The Comanche were later defeated by the fact that they had allowed themselves to be confined on relatively small tracts of land,(which later became even smaller, and then disappeared altogether) disarmed and dismounted. They made the same mistake TWICE ( a deadly formula when dealing with Americans/Christians/Civilized People) but they succeeded where no other tribes had, by realizing that there is no real need for leaders—–only those who carry out the decisions of the majority, FOR the majority. Something modern humanity if it ever learned, has abandoned for the present aberration in “leadership” which has lead to destruction and disaster except for a few.
The USA never has been an “example for all to follow”, but it could be—simply by learning from the mistakes of the past, and change the mistaken behavior.
It could be a refreshing change from history’s long accounting if the present US administration were to become the negative example for all time——-it’s up to us all.
There may not be enough time left for any more mistakes like these.
A political system that has always been under the control of “special interests” as the USA has been from the beginning.—- In the eighteenth century is was slavery/agriculture and the beginning of the industrial revolution; in the nineteenth century it was the Rail Road “tycoons” and industrial “Robber Barons”, in the twentieth century it was Big Oil and Big Business.

The American people in the twenty first century can either make the choice to be the “negative” or the “positive” example for history—by making very important and essential changes in the leadership technique——which would be an example true power.

Or they can piss it all away and wait for Jesus to rescue them—–from themselves.

I am one of the descendants of one of those Comanches present for the 1868 Medicine Lodge Creek Treaty———–I still do not have a “Chief”………nor do I need one.

Buffalo Ken

P.S. - the history of Tejas and the whole time period around the 1830's in the US of A is when (in my opinion) a whole bunch of seriously bad precedent was firmly established that set the country on its trajectory. Sam Houston, that Jackson dood, the Cherokee, the Seminole, the railroads, etc. In my opinion, a bunch of bad decisions were made (especially in stinking DC) and now we are paying the piper. You reap what you sow - don't you know? Is there going to be some learning or not?

I used to have a whole website dedicated to discussing the history of the 1830's and thereabouts, but not anymore. That story is no longer publically available, but if you are interested I'll be happy to send you a copy of the site I had made. Just send me an e-mail.

Regardless, the "accurate history" is out there for those who care enough to search, who have empathy for others, and whose minds are broad enough and humble enough to understand.

I'll say this. Peace is what we need, and time is of the essence, but time don't play around and our time is running mighty low. Don't you think? Momma earth is getting fed up with our species. We are losing all of our value and destroying more than we are creating, thus setting the stage for our own destruction. Complete and utter destruction.

Too bad because our brains can store so much. We could be so valuable to life in general, but if we can't do it, another species will eventually come along that can. Just now we seem to me to be led by a bunch of fools who are dumber than fungus (no offense to any actual fungus out there).


Elaine Meinel Supkis

Ah...yes. The native Indians who tried to negotiate things rapidly discovered these were all cover for imperial expansions. This continued to this very day.

Revenge came when Indians found out they could imitate Nevada.


a perspective on the irish 'no' vote to the
integrating european lisbon treaty --
the european constitution was designed to lock into a founding document the right-wing neoliberal policies espoused by berlusconi, merkel, blair (now brown?) and sarkozy.

The idea of a european superstate isn't what frightened the chickens, it was the fact that this new superstate would be entirely unlike the social europe we've come to expect, with high-quality public health, education, transport and communications free or subsidised for all.

The european constitution, drafted largely in secret, was rejected by the dutch, then by the french; after this, they rejigged the text as a series of amendments to existing treaties, so as to bypass the dutch and french rejections!!

But despite thier best efforts to railroad in a rightwing economic agenda, ireland voted no.

Ever since, the media here has been busy spinning deciet and deception, pretending that no-voters were all catholic-taliban anti-abortionists, stalinist commies, loony anarchists, or goosestepping nazis; that no-voters were scared of somthing they couldn't understand.

My favorite bits of the lisbon treaty:
" .. workers' right to srike NOT guaranteed .."
" .. countries must increase military spending .. "
" .. privatise services .. " (health, education, ... !!)

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