Wednesday, October 18, 2006

Charlie's War & Yen Market Shenanigans

I just finished reading "Charlie Wilson's War" about the enigmatic Texas Congressman's championing and funding of the Afghan Mujahaddin's fight vs. The Soviets in Afghanistan during the 1980s. Some even go so far as to extend to Congressman Wilson the honor and credit of single-handedly being responsible for the destruction of the Soviet Empire. Eye-popping stuff, indeed. But much of the sordid details are not entirely unexpected for the slightly cynical. Grand conspiracy? No. But nonetheless, what one learns is that whatever was rumoured to have happened, or whatever deeds the CIA was alledged to have been undertaken, or whatever horse-trading one might insinuate to have been responsible for the legislation, money and events that followed was not only true, but more colourful and entertaining than anything a conspiracy theororist might have imagined in their wildest fanatsies.

Which brings me to the subject of the Japanese Yen and deflation. Here your faithful seer and prognosticator, "Cassandra", has been brutalized by the neo-mercantilist apologists for Japanese & Chinese fiscal, monetary and international economic policies that have - at leastly partly - perpetuated and exacerbated global imbalances. First hog-tied by a mysterious, arrogant and dismissive Asian economist (perhaps one who himself works for the Chinese government or such) followed by a pummelling from an official at a Japanese lobbying organizations active in advocating Japanese Policy to foreign governments, all for having the audacity to suggest that Japanese deflation has been whipped and is (and has been for a little while) a problem no longer, and that we find ourselves in our current predicament of "sticky", non-correcting exchange-rates, not as the result of happenstance, serendipity or for that matter, benign neglect, but as a result of conscious policy action in both China and Japan.

Seething dismissive derision was the resulting response. "Deflation is evil and causes AIDs, not to mention Nuclear Proliferation!", he chimed. "No one can live with it!". "Everyone will suffocate". And therefore, "No economist can understand what your suggesting!". His partner took over: "Conspiracy theorist!" "Prove it", he taunted, as he went on to explain that rather than being a conspiracy of the type our Cassandra suggested, it was actually the result of a different domestic policy conspiracy of the type he favored, one in whihc the Japanese Yen was simply innocent road-kill on highway of pacifying the farmers. All I suggested was that there were plenty of good reasons to believe that many prices in Japan should have fallen, and for that matter, still be falling. And that combatting this fall with ZIRP-tastic monetary policy was not only difficult, and unwise, but terribly uncivic-minded as far as the international monetary system goes. About as useful as putting out a candle with a high-pressure fire hose.

All which brings me back to the CIA. And Oliver North (remember him?), Charlie Wilson and Gust Avrakotos, the hero (of sorts) of the aforementioned Afghan story. You see, they did do all these things. Despite Jimmy Carter and the new moral foreign policy. The CIA did (and does) have fat balding paedophile-looking guys thinking about devious ways to blow-up our enemies, running proxy wars and destabilizing regimes just as the KGB was behind the Bulgarian assasination of their lliterary dissident in London with the funnny poison-tipped umbrella. And there were ideological wackos in the Pentagon thinking of ways to subvert Congress' will to NOT fund the Contra, by, yes, of all crazy schemes, supplying arms to anti-American Iranian mullahs (to fight Saddam who we were also supplying) in exchange for the Iranians giving money to the Contras. Silly as it sounds, people thought it was, at the time, sound and so it happened. Calmly and calculatingly, and stupidly.

In modernity, where "war" between advanced industrialized countries, and increasingly all nations, is often fought economically, financially, and in the realm of trade, it should come as little surprise that successful nations are doing everything possible to gain parochial advantage for their people and their corporations, through every means possible, including intervention in, and the resulting manipulation of, international money markets. And Japan is the King in this respect. After all, "PKO" (Price-Keeping Operations) only has meaning in Japan - something which saw government authorities indirectly and directly hoover-up many trillions of YEN of stock from all comers. Think Eisuke "Mr Yen" Sakikibara, who massacred dollar shorts and engineered an appreciation from the excruciating depreciation torture engineered by Secretary Rubin. So today, think of the double-talk of Tanigaki, lambasting the BoJ on every occasion for even hinting rates might rise. Or BoJ officials, even today, frantically denying stories they might be even gathering data on the potential size of the carry trade. "No! No! Absolutely Not!!!" "We have no idea, no such intention, and we do not care....."

Yeah, Right!

1 comment:

Anonymous said...

A couple for the pile next to the potted plant. Greek to me... but then maybe you are.