Uber-Traders Don’t Make Good Central Bankers.

Here is something interesting from JC just to show he isn’t entirely useless:

“If the Japanese don’t stop the appreciation of the Japanese yen against the major currencies we could be days away from a crash of 20+% across the globe.

I never realized this side swipe as things are moving very quickly and it’s only come to me this weekend after witnessing what has happened in japan/asia over the past few days.

Japan must stabilize the Yen and change its direction in the next few days and move to zero interest policy asap.

Japanese investors have been killed over the past few weeks as a result of the yen’s appreciation.”

You see these lunatics lurch from one disaster to another because they don’t understand the situation and aren’t interested in doing the right things. Here is Paulson futilely trying to shore up the banks at the expense of the taxpayer. And he tries one thing on ……………. and another disaster rears its head.

Supposing if they resolve this yen disaster?

Well Bernanke and Paulson have put a poison pill in the water a few months earlier. They have crashed the commodity markets in this short-term-clever, long-term-idiotic move to recapitalize their banks.

THE SURGICAL COLLAPSING OF COMMODITY MARKETS BY THE CLEVER BERNANKE AND PAULSON

This happened when they guaranteed Freddie and Fannie. All the short-money around the world started flooding in to bail out of the short-positions on these losers. You see smart guys the world over knew that Freddie and Fannie were in trouble and they quite rightly had accumulated short positions. These guys all had to sell out of their commodity positions to liquidate their massive short positions and so now commodities are too cheap, which is a boomerang waiting to come back and whack these oh so clever lunatics in Washington.

Look these two might be the most genius market players that the world has yet seen. But this cleverness is not what the world, and particularly the US, needs right now.

Then the next thing they did is try to continue this recapitalization of their banks with a high-pressure bialout. Now they have put the dollar in trouble and they have convinced all these Europeans to flood their own systems with money to bail out their own banks…. Actually that last point might not be entirely accurate. Since I don’t think the inflationists in Europe needed a great deal of convincing. Who knows what went on behind closed doors. Some monetization was in any case needed and was actually crucial.

THE ARRIVAL OF THE NEW DISASTER CAUSED BY ATTEMPTING TO MANIPULATE THEIR WAY OUT OF THE OLD DISASTERS.

… So then a new disaster arises. The Japanese yen starts appreciating. Since the Europeans and the Americans are bleeding red ink everywhere and the printing presses are running hot, it is only right and proper that the yen ought to be appreciating.

Now JC reckons that the central bank of Japan must act like this incredible welfare agency and give away cheap loans to people who are insolvent. And it has to debase its own currency or there will be a disaster. Since for many years now we have had the yen carry trade. The famous yen carry trade that everyone talks about.

WHAT HAPPENS IF WE FOLLOW JC’S ADVICE?

So supposing that Paulson and the JC’s of the world convince the Japanese to do these counter-productive things?

What do you imagine will happen to the commodities boomerang? It will come back to destroy all these lunatics. Since their immensely clever market move earlier this year will have reduced supply, inventories and the investment in further supply of commodities.

If its not one thing its another. There is no way some sort of uber-trader can manipulate his way out of this deal. We need to do the right things. The honest things. We need to do the things that we know will work in these situations. And bank failures and writing off bank debts is a big part of the solution.

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