Word: yens
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...option. The world's second-largest economy, Japan labors under the globe's highest level of public debt--140% of GDP. Across the nation, bankruptcies and unemployment are soaring. Practically everything else--stock values, consumer prices, confidence--is in free fall. The biggest crisis of all is the yen. With the Bank of Japan printing money to offset a liquidity crisis, the currency is sliding fast. It hit 134 to the dollar last week, a 15% decline since a year ago. The decline has prompted cries of foul from U.S. manufacturers over the competitive edge a weak currency gives Japanese...
...government's tack: to weaken the yen, make Japan's exports a little more affordable, buy a little time. Most people consider that a bankrupt solution for a nearly bankrupt nation. A weak yen certainly won't help the wide-eyed man with a two-day growth of beard wandering the tunnels connecting subway stations in central Tokyo. "HELP ME," reads a sign around his neck. "RESTRUCTURED." There were nearly 20,000 bankruptcies last year - the second-highest yearly total since World War II. "It's simple," says Andy Xie, Morgan Stanley's chief economist for the Asia Pacific region...
...clearly nobody was paying enough attention when, at some point last year, Rusnak began to run up losses. He seems to have bet that the yen would strengthen against the U.S. dollar, but the exact opposite happened. Normally, currency traders reduce such risks by buying options to hedge their positions; in Rusnak's case, he would have had to enter into options contracts for dollars. But the options he is said to have bought turned out to be fakes...
...business and economics, technology stocks will remain in the dumps, though investors in the U.S. will continue to pin their hopes on a "V-shaped" recovery. But watch out for Japan; if the economic crisis gets worse there and the yen continues to devalue, Japanese corporations will snap up market share, which could turn the American V into more of a U shape. Not all the gloom can be attributed to last year's attacks, though. Everything from the value of the newly launched euro to the collapse of the Argentine economy has antecedents that far predate Sept...
Summers called for coordinated policies of structural reform coupled with “reflation” to strengthen the Yen...