Sunday, August 30, 2009

Another Nail in the Dollar's Coffin...

In an event that will inevitably be downplayed by the U.S. media spinmeisters (CNBC, Wall Street, the Obama Administration), the Democratic Party of Japan overwhelmingly took control of the Japanese Government in elections this weekend.  Why do we care, you ask?  Take a look at this statement by Masaharu Nakagawa, the chief finance spokesman in the DPJ:

the nation should consider shifting its $1 trillion of foreign reserves away from the dollar and buying  International Monetary Fund bonds. “In the medium to long term, we need to do what we can to avoid the risk of currency losses or economic turbulence that could result if the dollar were to swing,” Masaharu Nakagawa, the shadow finance minister in the Democratic Party of Japan, said in an interview in Tokyo on July 9. “Many countries are starting to diversify their reserves.”

A DPJ-led Japan Will Start Unloading Dollars

In an interview with  BBC News back in May, Mr. Nakagawa asserted that Japan should only buy U.S. Treasury bonds if they were denominated in yen, rather than dollars.  At the time, the BBC believed that the DPJ had no chance of taking power in Japan:

More Headwinds For the U.S. Dollar

It is clear that Japanese citizens voted for sweeping changes to be made in the Japanese Government.  One of the major policies in the DPJ's platform is to reduce Japan's exposure to the U.S. dollar.  Now we will see if the Japanese will get real change or "Obama Change." Obama Change is no change other than to change the rate of ongoing financial and political decay in the U.S.  If the DPJ holds firm to its campaign platform, real change in Japan will mean a substantial change in the wealth of America - to the downside.

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