http://market-ticker.denninger.net/

The Curtains Are On Fire

I never thought I’d see this:

Dec. 24 (Bloomberg) — Japan should write-off its holdings of Treasuries because the U.S. government will struggle to finance increasing debt levels needed to dig the economy out of recession, said Akio Mikuni, president of credit ratings agency Mikuni & Co.

The dollar may lose as much as 40 percent of its value to 50 yen or 60 yen from the current spot rate of 90.40 today in Tokyo unless Japan takes “drastic measures” to help bail out the U.S. economy, Mikuni said. Treasury yields, which are near record lows, may fall further without debt relief, making it difficult for the U.S. to borrow elsewhere, Mikuni said.

“It’s difficult for the U.S. to borrow its way out of this problem,” Mikuni, 69, said in an interview with Bloomberg Television broadcast today. “Japan can help by extending debt cancellations.”

Jubilee for America by Japan, forced by a pending currency dislocation?

Uh, just one question – what’s China going to think of that?

The door is looking awfully small and the curtains are on fire.

You may also learn some trading techniques just from chatting with the folks who come here to exchange ideas. Everyone is helpful, so join in the fun.

If you are an investor, you might want to look at U.S. Treasuries, or Treasury-only money market funds. If the dollar comes under pressure, keep an eye on the Japanese yen and the Swiss franc. Both are considered safe haven currencies. FXY is an ETF that holds yen and is an easy way to invest. Some folks like gold, but I don’t understand it so I tend to avoid it.