Saturday, October 27, 2012

Bank of Japan Adds More Stimulus

So what else has been new, the Bank of Japan (BoJ), like their developed economy counterparts has been delivering as I have been expecting
Yet the huge amount of coming infusions from the FED-ECB will likely be complimented by the Bank of England, and Bank of Japan, as well as the Swiss National Bank whom has been the quasi-pioneer implementer of the unlimited option via the Swiss-Franc Euro price cap
Instead of unlimited QE, the BoJ steadily just keeps increasing their stimulus via balance sheet expansion, their supposed elixir to a crumbling economy.

From Bloomberg,
Japan announced 750 billion yen ($9.4 billion) of fiscal stimulus to shore up growth as bond investors told the government they’re worried about delays in financing more spending.

With lawmakers in the Diet blocking financing legislation, some of the extra money will come from discretionary budget funds, the government said in Tokyo today. The Finance Ministry said the impasse may affect a debt sale planned for December, after an emergency meeting with primary bond dealers.

Finance Minister Koriki Jojima said last week that the government will run out of money by the end of November if the financing bill is not passed. The yen touched a four-month low today as a report showed consumer prices slid for a fifth month in September and as a Bloomberg News survey indicated the Bank of Japan (8301) may expand an asset-purchase program by 10 trillion yen on Oct. 30.

“The risk of a Japanese fiscal cliff is quite big,” said Soichi Okuda, chief economist at Sumitomo Shoji Research Institute in Tokyo. “Without the passage of the bill, the government can’t pay for necessary spending and the implementation of the budget will be delayed.”


Japan seems to have been corralled into a corner with huge gross rollover financing requirements which accounts for the largest in the world in 2012.

The BoJ will likely become the biggest financier directly or indirectly, as backstop to the banking and financial industry, whom so far has been the biggest owners of government debt (both charts from Deutsche Bank-Zero hedge)

This has not been about the rising yen, this has been about political desperation to survive the current crumbling debt based political order.
Japan's default is in the horizon

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