Update: Japan Finance Chief Nakagawa Resigns in Blow to Aso, Bloomberg, Feb. 17:
Japanese Finance Minister Shoichi Nakagawa resigned amid accusations he was drunk at a Group of Seven press conference, dealing a fresh blow to Prime Minister Taro Aso’s teetering government. “I deeply apologize to the prime minister, the people and members of parliament for the significant trouble I caused,” Nakagawa, 55, told reporters in Tokyo today. Aso appointed Economic and Fiscal Policy Minister Kaoru Yosano to replace him.
Full article here.
Drunk and Disorderly at the G7 Meetings
Courtesy of StockJockey at 1440 Wall Street
A long holiday weekend is giving 401(k) holders a brief respite from the shellacking they have been taking, but stock index futures are under pressure as it becomes increasingly clear that European banks are in worse shape than their U.S. counterparts and Japan’s economy is in its worst tailspin since the early 1970’s.
The battleground in the Yen has gotten the attention of many traders – has it run out of steam against the dollar?
Its recent strength as a safe haven might be in jeopardy as currency traders try to play a game of "relative suckiness". And while there is much to admire about the Japanese and their thrifty ways, their GDP number was a debacle, and leveraged carry trades have largely been unwound as the worldwide de-leveraging heads into the late innings. Is that chapter over, and the next beginning?
Japanese investors, realizing the yen has become very expensive and assets abroad have become very cheap, are now exporting capital to purchase these bargains abroad. Unlike trend following currency traders, real Japanese investors can recognize when their currency is too expensive and when there are bargains in foreign asset markets abroad. Such Japanese investors are more likely to export capital than repatriate capital, even if their economy is in serious decline. FrankVeneroso
The rally in the Yen is beginning to look a little wobbly, kind of like the Japanese Finance Minister’s performance at the G-7 meeting this weekend.
The latest setback for the embattled Prime Minister Taro Aso: his finance minister’s slurred speech and sleepy demeanor during an important press conference.
Finance Minister Shoichi Nakagawa on Monday apologized for his poor behavior at a Group of Seven press conference late Saturday in Rome. Television news videos of the conference showed that Mr. Nakagawa at one point mistakenly took a reporter’s question about interest rates meant for Bank of Japan Governor Masaaki Shirakawa, who was also present.
“Hmm? What? Can you say that again?” Mr. Nakagawa asked the reporter. He also tried to grab a glass placed in front of Mr. Shirakawa instead of the one right before him.
“We received expl … explanation on the U.S. measures,” Mr. Nakagawa said at another point, stumbling. WSJ
It appears Mr. Nakagawa was ready to fall on his sword after dishonoring the land of the rising sun, but Prime Minister Aso is a forgiving soul, apparently:
“My conduct at the press conference was the result of medicine and some wine. I apologize for it,” he told reporters. He said he would resign if Mr. Aso wanted him to, but later told reporters the prime minister asked him to stay in his post.
Perhaps we should give Mr. Nakagawa a little credit…he might have found the perfect way to get through the economic nightmare we find ourselves in.
And while it might be too late to short the Nikkei, keep an eye on those trend following currency traders. They do not pledge allegiance to any flag or currency, and if we are at an inflection point they will quickly cut and run. And apparently they have not figured out the Yen has routinely been beaten to a pulp as Japan’s economy enters a major slowdown.
Maybe this time it will be different. But we should know by Easter, in any case.
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Japan Minister Apologizes for G-7 Press Conference Performance
WSJ
