BCA Research in Montreal thinks that "sovereign wealth funds" owned by Asian and Arabian governments will control some $13 trillion by 2017 – "an amount equivalent to the current market value of the S&P500 companies."
Isn't Japan trying to balance its currency so that the yen doesn't either (a) rise, and hurt Japan's export competitiveness, or (b) drop, so inflating costs of imported raw materials and energy?
As I understand it (obviously not well enough), Japan gets rid of its accumulated dollars through buying US Treasury instruments, but also gets rid of a lot of yen through the carry trade, based on its policy of low interest rates to keep down the exchange rate. The tos and fros of global liquidity are rocking their boat.
The Arab oil kingdoms don't seem to have much interest in manufacturing, and as for energy costs, energy is their asset; China isn't offering yuan for reinvestment abroad by third parties, and is very competitive in manufacturing. So neither of them has to do the same balancing act as the Japanese.
I hope I've got that at least partly right. I wish the experts would explain it all more clearly and simply for you and me.
2 comments:
So if sovereign wealth is to be so large, why the moaning today from Japan about the U.S. troubles coming over to Japan?
Isn't Japan trying to balance its currency so that the yen doesn't either (a) rise, and hurt Japan's export competitiveness, or (b) drop, so inflating costs of imported raw materials and energy?
As I understand it (obviously not well enough), Japan gets rid of its accumulated dollars through buying US Treasury instruments, but also gets rid of a lot of yen through the carry trade, based on its policy of low interest rates to keep down the exchange rate. The tos and fros of global liquidity are rocking their boat.
The Arab oil kingdoms don't seem to have much interest in manufacturing, and as for energy costs, energy is their asset; China isn't offering yuan for reinvestment abroad by third parties, and is very competitive in manufacturing. So neither of them has to do the same balancing act as the Japanese.
I hope I've got that at least partly right. I wish the experts would explain it all more clearly and simply for you and me.
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