Why is the Yen at such record highs against the US$ and considered a safe haven for investors? Well, it may be a case of us against them. Just about everyone else have much larger troubles ahead. Japan, in spite of it all, is still a country where people work hard, we tend not to protest, as the gap between rich and poor is not as huge as in other parts of the world.
The European Union this week is trying to deal with that huge gap - the 27 countries which form the EU have members that are not so strong, like Greece. Yet, there is a strong commitment to the Euro, the common currency. But what does it mean, when a country is told to deal with its debt, and tell people that pensions from the national government may not be forthcoming. And what about the salaries of the police force that is supposed to deal with the demonstrations? The Euro is supposed to be a common currency for all, a sense of security. But that is not how the global market players look at it. Thus, the Yen at record levels. Small planet, small world, huge effects on people.
The Guardian: Live blogging about the European debt crisis
Meanwhile, NHK World notes:
Japan's finance minister has urged European leaders to produce effective measures against their credit worries at Wednesday's summit to help stem the yen's historic rise.NHK World: Azumi: European measures needed to stem yen's rise
Jun Azumi told reporters on Tuesday that behind the yen's rise is euro weakness triggered by European debt problems.
Azumi said the flow of cash into yen is continuing but that Japan can't stabilize its currency alone. He said the world expects the EU to come up with a credible plan to restore market trust in the euro.
That just does not quite cut to the chase. If the negotiations fail in Europe this week, we may see a much heavier impact on the economy in Japan. Or, is Japan currently the only "safe haven" and are we in fact the only place on Earth where people feel confident about their future? Hmm... Stay tuned.
The Beatles: We Can work It Out
Update 1: The Financial Times has interviewed Prime Minister Noda, who notes that "the most important thing is to ensure [the fire] does not spread to Asia or the global economy.” Both China and Japan are expected to help bail out Europe through the European financial stability facility (EFSF). Japan currently holds 20% of the €10bn in bonds issued by the EFSF, according to FT.com.
FT.com: Japan urges more action on Euro crisis (log in required)
Update 2: Using the same fire analogy, but in a different way, Noda said in his October 28 speech to the Parliament: ""The (sovereign debt) crisis in Europe is not a fire on the other side of the river," he said. "Every child born today (in Japan) will have to live with the burden of over 7 million yen of public debt."
AJW.Asahi.com: Noda should clearly express his policy committments
Update 3: China appears to have rebuffed negotiators who hoped for help with the EU rescue package, and then the entire deal has been put on hold as Greek Prime Minister George Papandreou said he would hold a referendum (probably on Dec. 4). “Greece’s abrupt announcement on holding a referendum, which was not included in (the earlier agreed deal), has confused people,” Finance Minister Jun Azumi said according to AFP.
AFP/Japan Today: Greek referendum plan 'confusing,' says Azumi
Update 4: BBC says Greece may not opt for a referendum (who thought the words "Greece" and "democracy" had anything to do with each other?)
BBC: Greek PM Papandreou 'ready to drop' bailout referendum
Greek PM George Papandreou has said he is ready to drop a proposed referendum on the country's eurozone bailout deal. He said he had started talks to secure opposition support in parliament which would make the vote unnecessary. His announcement of a referendum angered European leaders and sent shockwaves through its markets.
Facing calls for his resignation, Mr Papandreou called for unity in the party ranks ahead of a confidence vote on Friday. He has a thin majority. But Finance Minister Evangelos Venizelos, addressing the Socialist Party (Pasok) MPs immediately after the prime minister, said Greece must say it was not holding a referendum.