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BOJ eases monetary grip; gov't to use Y920 bil for stimulus measures

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it's a sinking ship.

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Theoretical measure will have no impact practically. "to boost liquidity..." was liquidity a problem? No. Now, let's hear from the govt of Kan...stimulus package on the way? Yeah, let US take the initiative and Japan will follow next day !

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The BOJ is setting to house on fire to keep warm.

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Hey everybody. Let's imagine you take out a loan for 100 000 yen at 0.2% interest. How much are you paying on that per year? 100 yen.

OK. So now it is still 100 yen. Maybe for one more year. Big whoopee. Happy days are here again. I am going to go buy a Snickers and celebrate.

Easing is not going to work. Half of extremely low is not extremelier lowlier, it is just extremely low. Continuation is, well... continuation. Nothing has changed.

The loan programs are nice, but as my economics professors said so long ago, it is like pushing on a string. As painful as it might sound to some, it is time to stop relying on consumers and non-existent loan demand. Japan needs to sell a raft of bonds and take those funds to employ people in sustainable energy, agriculture, and environmental projects.

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It didn't seem to push the yen down at all.

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Let's imagine you take out a loan for 100 000 yen at 0.2% interest. How much are you paying on that per year? 100 yen.

I make no special claims for my maths abilities but there's something wrong here.

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The government is keeping interest rates super low and pumping money to the financial institutions but these companies are not passing it to the industries or individuals ti kick start the economy.

Let's do something unpredictable. Since financial institutions are not passing the money on, they should return those funds and the BoJ should fund the real sector directly. Let's threaten those banks a bit.

Completely against the principles of a central bank. It won't happen. But what is there to lose really?

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At least the banks are trying to do something while Kan and Co. sit on their hands.

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too little, too late people. Pls. go back to "observing" the economy and stop wasting taxpayer money.

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American_bengoshi: so you're saying that you were never pressured into showing your patriotism, by singing the national anthem of America loudly or showing a flag? Did you come from the same country I came from?

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Japan needs to sell a raft of bonds and take those funds to employ people in sustainable energy, agriculture, and environmental projects.

who exactly are they going to sell these bond to? The Japanese who have been buying less and less? To other countries? Which would you rather buy, a bond from Japan paying .2 percent, or a bond from Germany or U.S.A. paying 3.0 percent?

Japan is stuck in a corner, and there is absolutely nowhere to go. The only way out is to convince the Japanese people to be confident of their future so they spend more money, instead of saving it all.

That would take a united government and an extremely charismatic leader. Haven't seen either of those around lately.

If they want to boost their exports, they've got to bring in loads of southeast Asians and pay them 100 yen per day to offset the yen.

They need some pre-WWII style zealot to lead them to the promised land.

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who exactly are they going to sell these bond to?

@gaijininfo, China has been buying more and more. In addition, the BoJ could buy more by printing Yen which would stimulate inflation.

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Sorry Kyushu, I tried different figures and did not erase some I was playing with.

I tried doubling the interest rate, just to show that when rates get low enough, even doubling or halving them just does nothing whatsoever.

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"who exactly are they going to sell these bond to? The Japanese who have been buying less and less? To other countries? Which would you rather buy, a bond from Japan paying .2 percent, or a bond from Germany or U.S.A. paying 3.0 percent?"

The bonds are oversubscribed every time they are issued which means that there are multiples of people wanting to buy the available bonds. At a recent auction, there were basically 5 buyers for every bond. China has been buying more, but nothing that is any big deal. Mostly the buyers are Japanese. AND THEY WANT MORE. Postal savings gives about half of what the Japanese government pays, and are not insured to as high amounts.

If the dollar and Euro are dropping like rocks, I will buy the J bond, right? Everyone else is.

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So they basically did not make any decisions, and just kept the status quo? Ah, Japanese politics at work. Brilliant.

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Lowing the interest rate does nothing... these guys are stupid

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OK. They need to double or quadruple that. Japan can either stimulate itself by flooding the country with yen or yen debt, or it can buy t bonds, euros and renminbi and stimulate someone else.

I say keep it at home. Turn on the spigots and let me go get my bucket.

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Japan has the second highest debt to GDP ratio in the world after Zimbabwe. WIth a debt that is nearly 200% of their GDP, it's a wonder that their currency is worth anything. As well, the long term viability of their economy is threatened by their changing demographic. With one of the lowest birthrates in the world and the longest lifespan in the world, Japan will find itself with 40% of its population over 65 years of age by 2050. As well, with their birthrate well below the replacement rate, their population is anticipated to drop by 25% over the next 40 years. With this scenario, it is unlikely that they will be unable to sustain payments on their debt.

http://viableopposition.blogspot.com/

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yen’s recent sharp appreciation

It has been between 83-85 for the last few weeks. What sharp appreciation?

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Even when BOJ's move is in the forecast, one can't call it timid. I'd say the outcome will tell everything.

And in my perspective, job creation holds a key to vibrant economy, consumer spending.

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gaijinfo at 05:16 PM JST - 30th August. who exactly are they going to sell these bond to? The Japanese who have been buying less and less? To other countries?

Klein2 at 06:27 PM JST - 30th August China has been buying more, but nothing that is any big deal.

Yes, it's a big deal. China purchased over $25 billion worth of Japanese bonds in the first seven months of this year. China is a main player of investment in Japan and they will continue to diversifying their investments. No other countries buy this much bonds compare to China. Remember, at the same time, U.S. investors pulled out $33 billion in mutual funds in first seven months.

Also, B of A is currently at $12.50 a share, down from $17, which reflects the future lower earnings and lack of confidence for major Banks in the U.S. The investors see 6 to 12 months ahead of Bank problems and Wells Fargo is in same situation. U.S. banks will have continued problems for another 2 to 3 years.

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Steve Thompson Difference between Zimbabwe and Japan, Japan's debt is domestic.

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3 years ago or so we were at around the mid 120's to the US dollar - over a 100 to the Aussie, around 250 to the pound. This means the yen has appreciated about 50% in 3 years in relative value to other currencies. How the hell can an export based country survive that plus the demographics and debt issues. 3 years from now the yen will be back at 2007 levels. So enjoy your yen power now, buy non yen based assets and plan your escape!

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I'm not sure that selling more bonds is the answer.

Japan's Bond Bubble:

http://www.asahi.com/english/TKY201008100353.html

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