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MOSLER'S LAW: There is no financial crisis so deep that a sufficiently large tax cut or spending increase cannot deal with it.

Archive for October 25th, 2010

Japan- Govt Seeking Y340bn For Extra Budget

Posted by WARREN MOSLER on 25th October 2010

The only nation going in this direction?

Probably too early to short the yen, but keep an eye on it…

Govt Seeking Y340bn For Extra Budget

TOKYO (Nikkei)–The government is looking to secure 336.9 billion yen in a supplementary budget for fiscal 2010 to implement its new growth strategy, The Nikkei learned Monday.

The draft budget, to be approved at a cabinet meeting Tuesday, aims to ensure a stable supply of rare earths and to fund the eco-point program for housing, among other priorities.

About 319.9 billion yen is expected to be spent on job creation, including 51.1 billion yen for employment and training of new graduates and other young people.

(The Nikkei Oct. 25 evening edition)

Posted in Japan | 2 Comments »

Pound Set for Pain as Cuts Push King to Print Money

Posted by WARREN MOSLER on 25th October 2010

The UK is tightening fiscal policy while the CB is enacting QE. The market thinks that this will substantially weaken the pound, is that the correct logic

no. but drives short term portfolio shifting and specs

or is QE not real money printing and the tight fiscal is the real force to be reckoned with?

yes. but takes longer to bite.

I’m just wondering if the mkt is getting positioned the wrong way based on faulty logic. Any thoughts?

totally agreed! the trick is timing and vs what currency.

the euro has it’s own set of deflationary forces already in place.

the dollar looks over sold against something based on wrong way qe betting.

the pound selling has to be against something.

the only currency left is the yen, which may be where the flight to safety is going. Shorting the yen has also been the widow maker- more reason to believe it’s over bought.

And their trade flows aren’t so positive any more, and they have been sporadically selling it probably vs the dollar, adding to supply. And the prospects of meaningful fiscal tightening in Japan seem less than the UK, euro zone, or even the US.

so the home run may be the yen against the pound.

the other flight to quality currencies have been the commodity currencies which could correct substantially. The $A looks particularly over valued based on anecdotal purchasing power parity. a diet coke is $3 for example, but they are China’s coal mine.

again, it will be about timing.

if the pound does start firming against the yen fundamentally, which it should, it can go for a long time, so it’s probably not worth trying to call the exact bottom.

Posted in UK | 6 Comments »