A Bloomberg report quoting Akio Mikuni president of the rating agency Mikuni &Co. provides a possible way out of the current mess. While he speaks paricularly with respect to Japan, his suggestions can be implemented by other countries which have a major dependence on US for its exports and are heavily invested in US treasuries. He says 1. Japan should waive or write-off US Treasury holdings as it is likely that US government will find it extremely difficult to service. 2. Given the size of its budget deficit and the potential amount of borrowing it needs to do will put tremendous pressure on the dollar which he sees at 50 to 60 Yen if such measures are not taken. 3. Japan also should invest in the infrastructure, roads and bridges that US plans to help create jobs and support personal ...

Japan’s exports fell the most on record in November, as global demand for cars and electronics collapsed, suggesting that more factory shutdowns and job cuts are likely as the recession deepens. Exports fell 26.7 percent from a year earlier, according to data from the Finance Ministry today (Monday). This was thus the largest fall since the data was first published in 1980. Exports to the U.S. were down 34 percent and sales to China fell the most in 13 years, helping explain why the Bank of Japan lowered its key interest rate to 0.1 percent last week. Exports to Europe slid 31 percent, the second-biggest drop ever.The yen’s surge to a 13-year high is only making exporters problems worse, and the possibility of government intervention ...

Aozora Bank..."Aozora Bank Ltd., a midsize Japanese bank, said Tuesday it has up to 12.4 billion yen ($137 million) in indirect exposure to the massive Ponzi scheme run by Wall Street money manager Bernard Madoff...the development represents an unneeded distraction for the struggling lender, whose top shareholder is U.S. private-equity fund Cerberus Capital Management." US GSE's..."Japan's private-sector financial institutions held slightly more than 10 trillion yen ($95 billion) in debt securities issued by U.S. mortgage lenders such as Fannie Mae and Freddie Mac as of the end of the fiscal year in March." Japan major banks' seen having $3B in Lehman debt..."The worst hit among the major banks in Japan was Sumitomo Mitsui Financial Group with 103.4 billion yen (US$990 million) in exposure to Lehman, mostly in loans, according to Shinichi Ina at ...

by Edward Hugh: Barcelonabr /br /Yesterday's comments by Bank of Japan Governor Masaaki Shirakawa that conditions in Japan's economy are severe and that monetary conditions are rapidly tightening should not be taken lightly in my opinion. Viewed alongside last weeks data revision which showed that Japan’s gross domestic product contracted much more rapidly in the third quarter than initially thought, and the recent admission by Japan’s Finance Minister Shoichi Nakagawa that employment conditions are also nowbecoming “severe.” it is clear that we are in the process of settling-in for what promises to be quite a long and hard recession.br /br /Revised data released last week showed that gross domestic product fell on quarter-by-quarter basis by 0.5 percent during the three months up to September, as compared with the preliminary estimate of only a 0.1 per cent decline. Year on year, the economy is now thought to have also contracted by ...

State Street Global Advisors' SDPRs offer the only two Japanese equity ETFs based on this index series. The annual rebalancing of the Russell/Nomura Japanese stock indexes just concluded, resulting in more than 30% turnover rates for each series in the benchmarking family. The Russell/Nomura Total Value Index had 212 deletions and 176 additions, while the Russell/Nomura Total Growth Index had 270 deletions and 136 additions. Those changes represented capitalization turnover ratios of 30.9% for value, and 33.3% for growth, among the highest-ever index rebalancing for the Russell Investments and Nomura Securities' Japanese equity benchmarks since their launch in 1981. There are Japanese stock exchange-traded funds from Barclays Global Investors' iShares family, Northern Trust's NETS and from WisdomTree Investments. However, State Street Global Advisors' SDPRs offers the only two Japanese equity ETFs based on this index series: the SPDR Russell/Nomura PRIME Japan ETF (NYSE Arca: JPP) and the Russell/Nomura Small Cap Japan ETF (NYSE Arca: JSC). JPP ...

Well, the outlook for the coming months in Japan looks none too positive, with machinery orders and small business sentiment both plumming the depths right now. Japanese machinery orders fell by 10.4 percent in the third quarter, equalling the biggest drop on record, as manufacturers cut their investment plans in anticipation of the impact of the global slowdown on overseas demand. The decline in orders, which is normally read as an indicator of capital spending the next three to six months, broadly equals a drop registered in 1998, the last time the Japanese economy fell into a really serious recesion.. Month on monthly Japanese machinery orders were up 5.5 percent in September, a move which was described by the government as a "weak rebound.'' Economy Watchers Index Hits Lowest Recorded Level Sentiment among Japanese small businessmen was the worst ever ...

Well, this blog is pretty quiet at the moment, for this my apologies to our readers. Claus is up to his eyes in math in Lausanne, and I am pretty overwhelmed by what is happening in Eastern and Southern Europe at the moment. But don't worry, the interruption in service is only temporary. We will continue, the really interesting part is only just about to start. Basically, most of the things that are happening at the moment are pretty foreseeable: the carry trade is unwinding, and the yen is shooting through the roof. At the same time, Japans export dependent economy is folding-in on itself. So over the coming months we will get to see the full real economy impact of all the financial carnage we have all been so fascinated by. Basically, when the dust settles, two fundamental questions will ...

With their exchange closed on Monday for holiday, the Japanese TOPIX Index soared 13.73% yesterday, according to the Emerginvest heat map. A Wall Street Journal article headline stated: “Tokyo Jumps 14% in Its Biggest Gain in 40 Years.” It’s not all that surprising since there was such a massive global upswing in global markets on Monday, which created a pent-up demand for Japanese equities for the opening yesterday morning. That being said, it was bolstered by the Japanese government announcement on Tuesday when they unveiled their banking support package. According to another WSJ article: “Bank to Ease Tension in Short Term Market,” the government announced additional provisions for share-buybacks, and hinted at injecting capital into shaky regional banks. More specifically, the article reported that the central bank will: “enhance its dollar-fund supply operations so it can provide an unlimited amount ...

Well, while most of the attention out there is justifiably focused on the dramatic events of recent days in the financial markets, the real economy is where the impact of what is happening all ends up, and news on this from in Japan continues to be pretty bleak. Today we learnt that a key barometer of corporate capital spending in Japan plunged in August to its lowest level in more than five years, as business investment retreated sharply amid fears of a broader global slowdown. Core private sector machinery orders, which exclude often-volatile orders from electric power firms and shipbuilders, fell 14.5 percent from the previous month to 891.7 billion yen ($8.9 billion) — the lowest value since April 2003. The result marked the third straight month of declines and was far worse than the 3.3 percent drop forecast by Kyodo news ...

It is not as if financial markets are short on action at the moment, and financial pundits and analysts are certainly being served an ample amount of ammunition from which to draw inspiration. With the recent news that Warren Buffet will be relinquishing his coffers of 7.5 billion to support the erstwhile jewel of investment banking Goldman Sachs, it is difficult for market participants to run fast enough to keep up. One thing though which does not seem to be running at the moment (apart from the entire global financial edifice that is) is the market for samurai bonds which are yen denominated bonds issued by foreign entities in Japan. Or more specifically, after Lehman’s default many observers have voiced concern that this might effectively blunt what has hitherto been a very sharp business for both issuers and investors. I ...