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Massive Intervention


I cannot overstate the incredible amount of intervention that occurred overnight in the dollar/yen.

We estimate that the Japanese bought around $8 billion starting at 106 all the way up to 108.25 with an average execution of 107.25. The government of Japan basically took all offers in an attempt to break the will of the market. They obviously didn't accomplish this since the dollar is trading back down to 106.60.

They are in buying again after the employment data has sent the dollar reeling, at least against other currencies.

At this rate the Japanese are on track to buy nearly all of our public debt. At this rate they seem to be willing to finance our entire trade imbalance.

There is only one analogy I can use for this situation. In the mid 1980's the Japanese went on a buying binge in the U.S.: they bought huge amounts of our real estate. Does anyone remember Pebble Beach and Rockefeller Center?

Well, we know how that ended. After the 1987 crash they sold it all back to us for 50 cents on the dollar. This made the whole crash episode much easier for this country and much harder on theirs. Thank you!

They seem to be doing it again. Thank you! Thank you! But please don't stop.
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