There are two things I don’t like to do, quote oversized blocks of text and repeat items ad nauseam, but I can’t help myself on this one. The summation (found in an article here) actually sums up well through a set of quotations the current movements in the currency exchange markets.
He also told ABC’s “This Week” show over the weekend that a lower dollar “helps exports, and I think exports are getting stronger as a result.” The United States is leaning toward tolerating a somewhat weaker dollar. But Washington will maintain its strong dollar policy to persuade foreign capital to stay in the United States, said Akihiko Suzuki, economist at UFJ Institute. “(The comments by Shiokawa and Snow) are making the outlook of the dollar/yen a little uncertain for the immediate term. But I don’t think the United States will intentionally drive down the dollar,” Suzuki said.
“The dollar/yen is not likely to swing widely in the foreseeable future. The dollar is coming under pressure in general on uncertain outlook for the US economy. [Italics added] “On the other hand, its downside is supported by the market’s fears that Tokyo authorities will intervene to stem the yen’s rise,” Suzuki said. As long as the dollar stays under 120 yen, repeated yen-selling intervention by Japanese authorities will not alarm Washington, said Masayuki Hoshina, senior economist at Okasan Research Institute.
“Japan is concerned that rising of the yen will hurt exporters while the United States is letting the market make its own decisions,” Hoshina said. French Prime Minister Jean-Pierre Raffarin on Friday said he feared European exports would suffer at current euro-dollar rates while European Union Monetary Affairs Commissioner Pedro Solbes told Reuters last week the euro’s rise is a concern.
I can’t adequately express how utterly ridiculous the above mentality strikes me. If the Japanese wanted to actually accomplish anything, they should stop mucking around in the currency markets and try implementing necessary structural reforms. And several European countries, too, have their own long overdue reforms that require implementation. Just look at the GDP numbers! The US is expected to outperform both the EU and Japan, and the Japanese are worried about the “uncertain outlook for the uS economy.”
Personally, I believe that any government has certain obligations to its citizens, such as providing certain necessary services that serve as a social safety net. For the past six years, I have regularly read the news, and stories surrounding the Japanese and European economies have sounded the same themes. Despite the regular intervals of alarm, the political will has been lacking.
While a solid social safety net is admirable, without adequate flexibility, the ability to innovate and create entirely new technologies, industries, products, services and ideas are stymied in red-tape and unnecessary beauracracy. While I fear at times the US leans too far from meeting its obligations, Europe has smothered its ability to innovate in labor and financial regulation that make risk-taking far too costly. Japan, meanwhile, has relied to its detriment on the idea of exports, in place of moving toward a robust economy less dependant on such products. China, after all, has become the de facto master of cheap exports. At the same time, Japan has a systemic economic malaise, where the government finances massive, unnecessary construction projects design to prop up otherwise nonviable corporations while providing kickbacks to former government officials, all using the inexpensive financing courtesy of the postal savings from the citizens. Cleaning up that mess would lift GDP over the long term far more than a few ticks in the yen.