So I’ve been ragging on the Korean Won for awhile now and thought I should be a little more even handed.
Fortunately for SNL and The Onion, it looks like Mexico is having a repeat of 1994.
The peso has taken a nose dive in the past two weeks, losing 20% in value.
And believe it or not, another currency has them beat. And I don’t mean the Zimbabwean dollar which for all intents and purposes doesn’t exist.
Ol’ Iceland couldn’t defend a peg to the euro for an entire day. The quote on the krona is mercurial, changing all of the time — in a downward fashion. Yea, you know you’re in bad shape when Russia is the only country willing to bail you out.
Seriously. Stop doing whatever you’re doing and watch this video.
Amazing. Or are they really animatronics?
Oh, and should I mention that the Yen has reached an 10 year high against the dollar. Probably because guys like Jim Rogers having been pimping it during their interviews.
Remember the last time it appreciated greatly? I believe it was spring of 1995 where the Yen hit 79.85 a dollar, making the Japanese economy about the same size as the US. Here is a Fed paper (pdf) on that.
Is that the direction things will go? I’d like to say yes, but then again, Japan has a ginormous amount of government debt which actually knocked down its credit rating. Then again, they also have a ginormous foreign exchange reserve.
The be-all, end-all IMF meeting takes place this weekend. Supposedly this is where the collective state apparatus will pull out whatever guns it hasn’t used yet.
According to Henry Blodget this includes:
* Temporary guarantee of all bank deposits
* Guarantee of all interbank lending
* Capital injections into banks.
I couldn’t say what kind of short-term effect it will have (maybe the markets will enjoy it for a couple days like the original $700 billion bailout), but in the long-term this is literally the end of the market economy in the finance and banking industry.
But that is a saga for another day — be sure to read Bob Murphy’s discussion on this matter.
Alms for the poor
Rather, this post is to discuss how many finance ministers will be coming to Washington to beg for money. Unfortunately for them, it’s difficult to see how any of the G7 are in any condition to hand out free cash.
Instead, I wouldn’t be surprised to see if China and OPEC-members are hit up for some quick cash — in part because they have relatively decent cash flow (even with oil taking a hit) and huge foreign reserve stockpiles. Hopefully, for their own sake, they won’t budge.
And as you might have guessed, the one country I’m thinking of in particular is South Korea.
While I have discussed the ins and outs of this current quagmire confronting the Hermit Kingdom, I think Reuters has a really good wrap-up of what is at stake.
My bet for their overtures: they won’t come away with the necessary ammo to back up the Won.
Note: here is a recent interview with Jim Rogers on Asia:
