Japan's foreign reserves to run out by midyear

Sometimes math can be so cruel.

Egad! Japan is dumping over 10pct of its total foreign reserves per month!

I guess this means the US economy doesn't have much longer to go at low interest rates! What happens to the housing market when the money runs out?

Sunday, Sep 21, 2003,Page 8
Taiwan currently has the world's third largest foreign exchange reserves, US$185.7 billion at the end of August. Japan has the largest reserves, US$555.1 billion and China is second with over US$320 billion

http://www.taipeitimes.com/News/edit/archives/2003/09/21/2003068696

NOTE: This article below is WRONG because the math doesn't add up--at the current rate of expenditure, Japan will run out of foreign reserves before the end of 2004.

The article suggests the housing market in 2004 will exceed that in 2003, but that is impossible because the amount of money required is more than Japan has in its entire foreign reserves.

Can anyone contact the author of that article?

i.e., Let's say the remaining reserves are 475 billion. 475 billion divided by 65 leaves only about SIX MONTHS of housing market left. For purposes of simplification, I leave out the maybe 10 billion dollar a month trade surplus from their side. That would leave another month or two.

CASTING A WIDER NET
Last month the Bank of Japan purchased $65 billion in U.S.
dollars, a pace that, if continued, could surpass its purchases
of $188 billion for all of last year.

http://biz.yahoo.com/rf/040213/financial_ginniemae_2.html

[KoKo]

1. Well, maybe the Saudi's can ante up some more. Who else? Taiwan?

We need a list of the World's richest to figure it all in. But then there's alot of drug money still floating around all over. It's probably already in the system, but it could be tapped for wider use. The Afghani's are growing their poppies, again...

They will find it. At least Greenspan thinks so, apparently.

[54anickel]

2. Nothin' to worry about. Russia is giving us their stablization fund.

http://www.democraticunderground.com/discuss/duboard.php?az=show_topic&forum=114&topic_id=5620

4. Nice but, that's peanuts 3.5 bill

That would help for about 2 days...compared to the Japan 65 bil/month.

[54anickel]

7. Sorry, was being sarcastic - should have noted. n/t

[Art_from_Ark]

3. When it comes to reporting about Japan, the Taipei Times

is a rag. Everything I've seen from them regarding Japan is sensationalist. If you want real English-language news about Japan, you should go to http://www.japantimes.co.jp

5. Okay, as long as the figures are in the ballpark

I didn't use any text from the T. Times, only the figures.

[Art_from_Ark]

6. If their text is suspect, how can you trust their numbers?

Besides, the Japanese government would not be dumb enough to fritter away its entire stash of half a trillion in reserves in the course of one year. The bureaucrats control the purse strings in this country, they aren't going to spend foreign reserves like drunken sailors.

[rapier]

8. notes

The logic of this whole thing escapes me. The essence of the Japanese actions is not to liquidate their dollar holdings but to expand them. They are buying dollars and then buying Treasury paper with them.

They are monetizing yen demominated debt and using the proceeds to buy dollars and then the Treasury paper.

They are doing their damndest to kill their own currency and astoundingly not having much success.

It has been suggested that they can do this forever but there is a political consideration, that being getting the authority to do it. The party is usually compliant with the bureaucrats there but even they are having some questions about this trade that continues to lose astounding amounts of money, on paper. There is also the matter of the consequenses there. The process should have some deflationary impacts on their own economy as the cash is being sucked out Japan to do it. If thier money supply falters or interest rates start to see some upward pressure they might have to stop the game.

[brokensymmetry]

9. Japan is doing what we want to do -

You mentioned: They are doing their damndest to kill their own currency and astoundingly not having much success.


If Japan's currency is weak, their balance of trade should stay strong...which leads to high employment...which they (ahem!) value.