I was supposed to post this yesterday. Unfortunately my DSL provider was not able to make a timely response to the line breakdown in our area. So I was inaccessible to the internet for nearly two days and had been compelled to take a vacation.
Just a few days after the announcement of additional stimulus, the Bank of Japan (BoJ) found that this may have been insufficient and declared a back to back expansion of monetary steroids.
From SFGate/ Bloomberg
The Bank of Japan expanded its asset-purchase program for the second time in two months, a move that failed to cheer investors as stocks slumped amid mounting evidence that the economy contracted last quarter.The fund will increase by 11 trillion yen ($138 billion) to 66 trillion yen while a separate credit loan program will stay at 25 trillion yen, the bank said in Tokyo, acting hours after data showed the biggest decline in industrial output since last year’s earthquake. The BOJ will also offer unlimited loans to banks to boost credit demand
Chart from Danske Research
Part of such action undertaken by the BoJ has reportedly been due to political pressure
From another Bloomberg article
Economy Minister Seiji Maehara attended his second BOJ meeting yesterday, highlighting political pressure for action from the central bank. The joint statement he issued with Shirakawa and Finance Minister Koriki Jojima after the meeting was the first of its type, Maehara said. It said that the government “strongly expects” powerful easing until deflation is overcome.
This is further proof that “independent” central banks are a fiction.
Desperate times calls for desperate measures.
Like their developed economy counterparts, Japan’s politicians and bureaucrats have increasingly been resorting to monetary measures meant at shoring up an unsustainable political economic system anchored on debt.
Japan’s default is on the horizon, this is not a matter of IF but WHEN.