On the Euro Crisis
Japan is more involved in the euro crisis than China.
Japan is facing its own fiscal woes but it also has considerable resources to draw on, with foreign exchange reserves currently worth over $1,200bn, second only to China....
Japan currently holds just over 20 per cent of the €10bn in bonds issued by the EFSF, and Mr Noda, who was finance minister until becoming premier last month, signalled that Tokyo would continue to back the expanded fund
.http://finance.yahoo.com/news/Japan-urges-action-euro-xft-1117049030.htmlThe German President recently assured Japan of hope for recovery of the euro system.
Even as far away as Japan, German President Christian Wulff could not escape talk of the eurozone's debt crisis, where he assured his hosts that Berlin was doing its part to ensure Europe would overcome its difficulties.
"Having now all glimpsed into the abyss, we must become more ready to draw the consequences," Wulff said Monday in Tokyo, during the second day of his state visit to Japan.
He pledged that Europe would "find the strength to see this crisis as an opportunity."Wulff added the sovereign debt crisis was not limited to Europe but was a "worldwide trend." Japan's debt is currently some 200 percent of gross domestic product.
Defending the euro
In a bid to assuage Japanese investor fears, Wulff said the joint euro currency was not in crisis and defended the euro itself as a "success story."
But Europe's banks, he said, are in danger "because there's been gambling and speculation - to an extent that stretches beyond the imagination."http://www.dw-world.de/dw/article/0,,15483159,00.html?maca=en-rss-en-top-1022-rdfBut, Japan faces its own crisis of the too strong yen.
The Bank of Japan expanded stimulus as Europe’s sovereign-debt crisis caused an appreciation in the yen that may endanger a recovery from the March earthquake, tsunami and nuclear crisis.
Governor Masaaki Shirakawa and his policy board expanded their credit and asset-purchase programs to a total of 55 trillion yen ($724 billion) from 50 trillion yen in an 8 to 1 vote, the central bank said in a statement in Tokyo today. It also kept the overnight lending rate between zero and 0.1 percent.Specifically, the Japanese electronics industry is facing a heavy challenge.
http://www.bloomberg.com/news/2011-10-27/bank-of-japan-expands-stimulus-as-europe-debt-crisis-pushes-yen-to-record.html
At the retail end of the supply chain, European markets are getting tougher for Japanese OEMs to crack, because the strong yen is making Japanese cellphones, video game consoles, PCs, and industrial electronics more expensive than Japan's competitors. Korean firms, happy that the won has not risen as sharply against the euro, are able to discount their products against Japanese ones, without cutting into their profits. That's a symptom of the sharp appreciation of the Japanese currency, compared to the Korean currency's flatter chart.
Over the long term, that's a problem Japanese firms will have to resolve internally. Most Asian OEMs have to compete against each other, but Japanese ones now also have to pit their supply sides against their demand sides in a particularly venomous way. The department of a Japanese OEM looking for high-quality assembly contractors at a lower cost must love doing business in Portugal or Greece right now, where high-skill labor costs 10 percent less than it did a year ago. The department selling flat-screen TVs must hate those same places because the TVs cost 10 percent less, too, in addition to tepid demand.
Japan is still Asia's electronics leader for design and innovation. But two disasters in a year is a lot for anyone to navigate.And, the US is also within a scope of influences from Japan and the EU.
http://www.ebnonline.com/author.asp?section_id=1098&doc_id=234273
The US’ president Barack Obama chose to blame Japanese earth quake and Euro zone‘s debt crisis as the reasons for the slow growth of the United States’ economy. The US has recorded higher jobless claims and unemployment rate in May comparing with the previous month April. The unemployment rate has increased to 9.1 percent in May from 9.0 percent of April.
While delivering weekly radio address, Mr Obama told his countrymen that earthquake and consequent Tsunami in Japan and fiscal problems of the Euro zone countries pose problems for the US to record fast recovery. He said they could not escape such problems that happened beyond the estimations of the analysts.
http://financialpolitics.net/2011/06/04/obama-blames-japan-and-e-u-for-us-slow-recovery/So, they discuss the matter in real.
No. The real problem is that when you have a $75 trillion portfolio, there's nothing special about it -- it mirrors the market. And since only 5 U.S. banks hold 96 percent of the derivatives held by all US banks, that means the same sort of instruments at the other top four -- JP Morgan Chase, CitiGroup, Goldman Sachs and HSBC USA -- are likewise at risk.
That number, again according to the OCC, is $58.16 trillion -- $55.1 trillion in cross currency swaps, and $3.06 trillion in net credit default swaps.
Again, the exact portion of Eurozone exposure to that amount isn't known. But by comparison, consider that 2010's global GDP was $74.54 trillion, and there are other, similar portfolios at other banks around the world--all in danger.The total face value of all the derivatives in the world? $601 trillion.
We slogged through a rehearsal of this in 2008 when Bear Stearns, Lehman Brothers, and AIG collapsed and threatened to take the global financial system with them. But the sheer magnitude of today's problems is immensely bigger, and the danger is therefore immensely greater.
Just one more set of numbing statistics to give you some perspective: The total 2007 revenues of AIG, of Bear, Stearns, and of Lehman Brothers totaled $215 billion. By comparison the 2010 GDP of Greecealone was $318.1 billion. If you add in Italy -- expected to be next -- the total is about $2 trillion. Defaults like that don't take place in a vacuum.
http://www.huffingtonpost.com/andrew-reinbach/euro-crisis-serious-busin_b_1031877.html
(to be continued...)
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The 2008 Financial Crisis of the US did not however make super-rich Americans poor.
The 2011 euro crisis in Europe is not going to make super-rich Europeans poor.
But, in an economic transaction, if you do not lose, you win.
In other word, for super-rich people to continue to be super rich, such a financial crisis occurs.
So, reasonably, the final solution is to make super-rich people poor. But, it is impossible in a democratic country. Democracy is not designed to make the super-rich poor. However, democracy gives power to others than super-rich people. In other world, what is at stake in the EU is its democracy rather than a financial system.
Mar 11:2 And saith unto them, Go your way into the village over against you: and as soon as ye be entered into it, ye shall find a colt tied, whereon never man sat; loose him, and bring him.
Mar 11:3 And if any man say unto you, Why do ye this? say ye that the Lord hath need of him; and straightway he will send him hither.