business

BOJ meeting marks end of era before leadership change

4 Comments
By Peter Brieger

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Making the same mistakes the US has made

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exports were in the red last year.. though the full extent wont be known till the end of the current financial year. The fact remains a decreasing yen raises the costs of manufacturing and various other elements in a society, extensively reliant on importing its energy needs. Obviously, corporations would have hedged their resources.. still there is no concrete government policy in place, that intends to rectify Japans energy needs.. Financing any ventures to do so, will probably need the full backing of the next BOJ administration, which i doubt anyhow, since the 90s, the BOJs half-hearted attempts, to ameliorate the situation through monetary management has failed, largely due to the lack of fiscal reform..

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@ Rys2sense,

What mistakes has Bernacke made? He studied at Princeton and wrote his dissertation on the Depression. He was the perfect candidate to be there and is why he stayed there. Sure he has flooded the market with teh dollar but what was he suppose to do? Lets go back to 2009 and tell us what you would have done differently. I will be the first to admit, he may be prolonging open ended monetary policy and we should be waining ourselves off of it but I think QE's have worked wonders. Hence the markets are higher than they were before the crash and that was the Fed's move all along.

Now lets move to Japan... Abe and Kuroda have nothing else to do... The Japanese are in a two decade deflationary tailspin, wages frozen, and near zero rates. Should they adopt Shirakawa's approach? That worked so well! Look at all of the Japanese corporations who have lost tremendous marketshare globally due to a stronger Yen? When they lose profits, they lay people off... While the risks are there, Japan utilizing an open edned monetary approach si the correct thing to do. Many analysts and economists agree but we should take your word right?

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(Continued)

We will most surely see inflation in the near future and that will affect emerging nations economies but for a country like Japan, that is the whole point. The issue with Japan is will the corporations raise wages to keep up with inflation. If not, easing will not mean a thing because people will not be able to afford goods anyway.

Abe and Kuroda are taking some risks but they are suppose to! No risjk no reward! Do you want Japanese companies to become less competitive? That is what Shirakawa's policies have done. Sure the Fed helped by QE's and sent investors flocking to the Yen and Swiss Franc but like the Swiss, Japan is now handling it. And lets keep in mind, this movement is based off of rhetoric only... Look at the Nuikkei 225 and the broader TOPIX since November!

We may have gone from a credit bubble to a liquidity bubble but inflation is always easier to tame than deflation or worse stagflation. There is no perfect solution, sorry to tell you that... Its not a game where you can just be black and white, like your comment is...

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