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Global financial markets are making waves again. This time, the focus is on the United States and Japan. Speaking of which, you may remember Japan's 9.8 trillion bailout plan, what was the result? The results don't seem to be as good as they could be.
And the financial strategy of the United States has once again put Japan on the cusp. In this seemingly complex financial game, Japan seems to be the biggest loser. Now, Japan wants to find a way out, but U.S. Treasury Secretary Janet Yellen does not seem to plan to let go.
The loser of the Sino-US financial war was born
Recently, the financial war between China and the United States has intensified, and Japan seems to have become the biggest loser in this storm. Against the backdrop of the US economic pressure on the Asian market to ease its own economic pressure, the US dollar is so strong that Japan's economic situation can be said to be worse.
In order to protect the fundamental rights and interests of Wall Street operators, the Federal Reserve insists on not cutting interest rates.
It is worth noting that the underlying reasons behind the strong performance of the dollar index against this background are actually very clear - on the one hand, to smoothly achieve the "occupation" of Asian financial markets, and on the other hand, to avoid the deep crisis of the US itself.
After all, once it chooses to cut interest rates, it means that the United States will have to admit the reality of defeat in this financial war.
Japan, one of the victims, has fared particularly badly this year. On June 28, the yen fell below the 161 mark against the dollar, setting a new low in decades.
Since the beginning of the year, the yen has depreciated by more than 14 percent, which has not only hit Japan's exporters, but also weighed on Japan's financial markets.
However, unlike before, this time Japan did not choose to suffer in silence. Looking at China's move to reduce its holdings of U.S. debt at the end of last year, Japan has also begun to act.
Although Japan was hesitant at first, after all, its relationship with the United States has always been delicate, but as the impact of American financial policies on Japan has intensified, Japan has realized that it can no longer sit idly by.
On that day, known as "Black Monday", the yen suffered a sharp drop in price. The financial giants on Wall Street have carried out large-scale short-selling operations on the yen in an attempt to seize the opportunity to grab huge profits, which has undoubtedly deeply pricked the nerves of the Japanese government and people.
The Bank of Japan (BOJ) unexpectedly embarked on a massive market intervention amid speculation that it would let it go unchecked. In just one week, Japan used more than 9.8 trillion yen to buy the yen in an attempt to stabilize the exchange rate.
When everyone wondered where such a huge amount of money would come from, a month later, the answer was revealed - it turned out to be raised through the sale of US bonds.
This act was so bold and shocking enough to shock the United States. The U.S. bond market, the world's largest bond market, is of vital importance to the United States. And Japan's actions have undoubtedly caused problems for the United States.
However, this is not a simple financial transaction, but more like a struggle in the global financial landscape. Japan's move is undoubtedly a warning to the United States and other Western countries: As the largest holder of US bonds, it has its own bottom line and principles that cannot be violated.
In the global financial chess game, countries are not passive chess pieces, but chess players with the ability to think and act independently.
Japan wants to run? Yellen doesn't allow it
Remember the other day about Japan's fifth-largest bank?
It was the Central Treasury of Agriculture and Forestry that announced its decision to sell and replace all of its holdings of more than 10 trillion yen ($63 billion) worth of US Treasury bonds and Eurobonds by March 2025.
Why? Because they are facing huge unrealized losses, simply put, what they have in their hands is worthless.
This is not a problem of the Bank of Japan itself, in fact, this situation is encountered by many banks around the world. Take last year's Silicon Valley Bank as an example, it also closed its doors because the value of the bonds in its hands plummeted, and it couldn't make up for it after it was sold.
The point is that if everyone starts selling Treasuries, the price of U.S. Treasuries will continue to fall.
When the price of a bond fluctuates downward, the corresponding yield will show an inverse growth trend, showing a negative correlation with each other.
As yields rise, so does the potential cost of holding bonds, which undoubtedly puts heavy pressure on many financial institutions and may even lead to the outbreak of potential risks.
Today, when the Japanese banking industry is facing a dilemma of shrinking the value of its assets, they often respond by selling these assets in the hope of effectively reducing their losses.
However, the consequence of this strategy is that the pressure on the remaining market participants increases dramatically, which in turn may trigger more selling, triggering a vicious cycle.
The United States, of course, is sensitive to this. Because Japan is not only a big buyer of US bonds, the Bank of Japan invests almost 90% of its foreign exchange reserves in US bonds.
The United States is in a bad situation right now, and if big players like Japan and Britain also start to retreat, the pressure on the United States will be great.
Therefore, the U.S. Treasury Department has adopted some policies, such as putting Japan on the exchange rate watch list, in fact, putting pressure on Japan not to retreat easily.
At the end of the day, the situation is like a big financial game. When the United States is not good, don't think about these "little partners" around you.
Countries such as Japan and the United Kingdom, which hold a large amount of US debt, wanted to find an opportunity to take a break, but the United States directly said: "No, you have to continue to eat." ”
For these financial institutions, the current situation is quite awkward. They wanted to reduce their losses by selling bonds, but now it seems that the United States is determined not to let them withdraw easily.
Once large-scale selling does begin, it may not only be a problem for financial markets, but also a wider range of economic and political implications. This is the charm of the financial market is also a trap, if you are not careful, the whole game may be shaken.
Japan's economy is facing serious challenges
On the topic of the current state of the Japanese economy, it is really difficult to say.
Please note that Nikkei Research recently completed a public opinion study that is of significant relevance.
The survey results reveal that more than six out of ten Japanese entrepreneurs believe that they do not need to blindly follow the United States and impose additional tax burdens on goods from China.
In light of this important fact, it is clear that Japan's business leaders have maintained a very clear and rational attitude.
But when it comes to the Japanese government Fumio Kishida, it's a different story.
A telephone public opinion survey conducted by Japan's Kyodo News Agency some time ago showed that only 10.4 percent of people wanted him to continue in power, and more than 30 percent wanted him to resign as soon as possible.
Looking at this support rate, the Kishida cabinet is also quite embarrassed, with less than a quarter of the people supporting it, and more than sixty percent of those who don't support it.
Let's talk about the yen, the depreciation of the yen is really not a small problem. First of all, the import cost of small and medium-sized enterprises has risen, affecting industrial development and exports; Second, prices have also risen, which is even worse for Japan, which has been weak for decades.
What's more, if the yen continues to depreciate, Wall Street's capital forces will not stop plundering the Japanese economy, and many vital industries such as industry, semiconductors, and information technology will face serious threats.
Although the Kishida cabinet has already taken a series of measures, such as quietly intervening when the yen exchange rate climbed to a high of 150. Recently, it has spent 9.8 trillion yen to stabilize the market situation.
But looking at the results, this measure lasted less than two months, and the yen exchange rate still "fell endlessly".
Originally, there was news this year that Japan's economy was quite prosperous, but the Japanese people did not think so. If the economy is really that good, then there will be no more people who support Kishida.
As for the Japanese people and companies, it seems that they also want to "run away", but the United States does not seem to agree. The brothers who used to go up the mountain with Biden now want to say that Biden is a bandit and doesn't want to play with him, which is really a bit embarrassing.
Therefore, as long as the U.S. economy does not collapse, Japan may have to continue to bleed like this until one day the U.S. really collapses. This situation is a bit complicated when you think about it.
Information sources:
"Japan is included in the "Exchange Rate Manipulation Monitoring List" by the United States", China Economic Net
"Japan: 9.8 trillion yen intervenes in the foreign exchange market with little effect," Financial Times