Japan needs to implement a new policy and diversify its huge holdings of U.S. treasuries
News On Japan via Modern Tokyo Times -- Jul 18
It is extremely essential that Japan introduces an independent economic policy which is based on supporting the future of this country rather than pleasing political elites in Washington. In late 2011 the government of Japan held a staggering $900 billion dollars of U.S. Treasuries and in 2012 these holdings will likely increase.
However, given the frailty of the economy of America then is it in the national interest of Japan to continue this favorable policy towards the United States of America?
In 2011 Standard & Poor downgraded the credit rating of America and clearly the dollar and yen rate is favoring policy makers in Washington. What is striking is that policy makers in Japan have been very quiet about the lack of interest within government circles in America to assist the dollar. Therefore, Japanese export companies are feeling the pain from the strengthened yen and the weakening dollar. It is also noticeable that while Japan points the finger at China for manipulating the currency, that little is said about the lack of ambition in America towards the weak dollar.
Obviously, currencies always fluctuate when government control isn't allowed to manipulate like China. However, a collective approach to stability will be taken by major powers during times of upheaval in order to reduce the impact of the economic crisis.
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