[Marxism] Japan said to warn of huge dollar selloff if drop continues

["Fred Feldman" <ffeldman@xxxxxxxxxxxxxxxx>]

There's much more than just currency manipulation in the dollar crisis,
but currency manipulation is there.  The plunging dollar, which is
driven by fundamental weaknesses in the US economy, lowers both the US
debt and the trade deficit in real terms.  Unlike the debt of
semicolonial countries, the US debt is partly a mark of power, of
dominance of the US imperialism, the dominance of the dollar, etc.  It
is a tribute being paid by the world, and most directly the Europeans
and Japanese, to US domination.

In refusing to rescue the dollar without more concessions from its
rivals, Washington is playing a game of chicken with the whole world
economy. This reported Japanese threat is a sign of fightback by rival
imperialists -- but they cannot afford a real breakdown in the US
financial markets.  Unless the whole situation has gone out of control
-- which will happen sometime, but is always improbable at the moment --
this latest phase of the crisis will probably end with concessions by
the French, Germans, and Japanese.  This will allow the dollar to
stabilize at a lower level -- good for Washington -- while adding the
momentum to gut social security and other social programs here.
Fred Feldman




 <http://www.guardian.co.uk/usa/story/0,12271,1366585,00.html>
http://www.guardian.co.uk/usa/story/0,12271,1366585,00.html

The Guardian (UK)
Sunday, December 5, 2004

Japan threatens huge dollar
sell-off

Heather Stewart in Tokyo
Sunday December 5, 2004
The Observer

Japan is warning the White House that there will be 'enormous capital
flight' from the dollar if the Bush administration maintains its
laissez-faire approach to the mounting currency crisis.
Tokyo fears that Japan's strongest economic recovery in a decade could
be derailed by the sudden appreciation in the yen against the greenback.



The criticism of President Bush's inaction, by a senior member of the
ruling Liberal Democratic Party, will be taken as a veiled threat that
Japan could start to sell off its multi-billion-dollar holdings of US
Treasuries. 'The Japanese government is going to ask for a strong dollar
policy; if it continues to fall, there would be enormous capital flight
from the dollar,' said Kaoru Yosano, chairman of the LDP's policy
council, adding that Japan would be calling on its fellow G7 governments
to demand the US deal with the massive fiscal deficit that has helped to
prompt the dollar's decline.


Yosano's remarks echoed a warning from a senior Japanese Ministry of
Finance official that if the US does not push up interest rates to make
the dollar more attractive, 'the one-way sentiment on the dollar will
have a negative impact on the flow of capital into the US.' He added
that Japan is urging its European counterparts to join a campaign of
coordinated currency-market intervention, saying: 'If the dollar is
depreciating, we should have coordinated action: that has already been
communicated to my European counterparts.'


Like Japan, the eurozone fears that its tentative recovery could be
choked off by the fall in the dollar, which European Central Bank
president Jean-Claude Trichet has called 'brutal'. However, the ECB has
so far dismissed the idea of intervening.


Japan is taking a double hit from the decline in the dollar because the
Chinese renminbi is pegged to the US currency, so Japanese exports are
simultaneously becoming sharply dearer in both their major markets.
Takeo Fukui, the chairman of Honda, admits, for example, that an
appreciation of 1 yen against the dollar, if it lasts for more than
three months, knocks 10 billion yen off the carmaker's profits.


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