Courtesy of Mish.
With the Yen sinking to new lows nearly every day, and with French President Francois Hollande now in the act of pleading for a lower euro, it’s time to step back and review the currency war madness of the past couple of weeks. There is plenty of madness to review.
Hollande Calls for End of Euro Fluctuations
Please consider Hollande’s comments on euro fluctuations.
Mr Hollande called on government leaders to agree on a target for the currency’s exchange rate over the medium-term, warning that the rising currency may deepen the recession.
“The eurozone must, through its heads of state and government decide on a medium-term exchange rate,” he said.
“We can’t let the euro fluctuate according to the mood of the market.”
He added that the exchange rate should not be set artificially but that the eurozone should act on global markets to protect its interests.
Hollande says “Governments must decide exchange rates”. Mish says really? What if governments don’t agree with each other? Could that possibly happen?
Japan Must Stick With Stimulus says Pimco’s El-Erian
Pimco co-CEO tossed his hat into the madness last week with his silly idea: Japan Must Stick With Stimulus.
Japan’s government has to follow through with plans for stimulus spending, monetary easing and a doubled inflation target to sustain a weakened yen, said Mohamed El-Erian, co-chief investment officer of bond giant Pacific Investment Management Co.
Prime Minister Shinzo Abe needs to carry out stimulus spending while Japanese consumers will have to accept rising prices for goods such as oil as the yen depreciates, El-Erian said.
El-Erian says “Japanese consumers will have to accept rising prices”. Mish says really? If so, it implies the US, Eurozone, China, UK, Brazil, and everyone else will “have to” accept a higher exchange rate vs the Yen.
Even if everyone “accepted” the idea, is that a good thing? For who? For aged Japanese consumers retired on fixed incomes invested in Japanese bonds earning zero percent?
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