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© 2015 AFPBOJ surprises markets with additional steps to boost economy
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© 2015 AFP
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fxgai
Why would firms invest in capital and staff when Abe has failed to deliver much of his 3rd arrow to open up new business opportunities?
It's not the BOJ that should be taking the lead here. Abe's inept government ought be taking that responsibility, but it's all war and electioneering from them...
Seems so, but they already have the pedal to the metal and their duration lengthening move shows that they know it.
... and bankroll the Government, since the GPIF decided to shift out of risky JGBs into more attractive investments.
Sensato
As I write this, the BOJ's "Christmas present" to the markets has so far resulted in a 360 point drop in the Nikkei, plus the yen has strengthened to 121.98 from 122.56 (the BOJ and GOJ would conceivably prefer a weaker yen).
Part of the reason this has seemingly come as a negative surprise could be twofold. First, the BOJ's move to buy longer-term JGBs means that it is more obviously financing the government debt and breaking longstanding BOJ rules on how much and types of government debt it can buy. Second, the BOJ's move to buy longer-dated JGBs means that the BOJ's policy option gun is running out of bullets.
Gary Raynor
SensatoDec. 18, 2015 - 03:21PM JST
Also from February 2016, even with buying the long term bonds, there won't be enough in the market for the BOJ to keep its Y80 trillion QE.
The only choice is for the BOJ to buy company assets and foreign bonds, and that becomes blatant currency manipulation, something that the other G& countries won't tolerate.
some14some
wonder lasts...few min. please announce next surprise next week !
Yubaru
Announced the other day, not raising the consumption tax from 8% to 10% on food and newspapers! Merry Christmas!
globalwatcher
This is a BS. Boosting economy? The truth should be told to the public that JOB cannot execute EXIT plan. Oh well, what else can I say. Very upsetting.
chomskyite
This is leading towards an inevitable yen crisis. How will you protect yourself?
umbrella
Do not, whatever you do, keep any of your funds in yen apart from your everyday needs. As soon as you earn yen change to Dollars and Swiss Francs. The yen is just going to collapse very soon.
globalwatcher
You've got it right.
Yes, Yen is on the way to collapse within two or three years as there is no way BOJ can execute EXIT plan.
I am sure you all know why. BOJ is a primary and sole buyer of Jbond from banks (printing), if BOJ stops buying, nobody else buys it, thus causing the bond to collapse. This bad practice should have been banned long time ago.
tinawatanabe
except Japanese people.
globalwatcher
tinawatanabeDec. 20, 2015 - 09:57AM JST
Tina, BOJ will run out of money. Currently, you and Japanese are indirectly holding Jbond through savings.
tinawatanabe
global, It is the banks who are holdings Jbond. If BOJ buy up from the banks, govt has less debt. BOJ will never run out of money.
globalwatcher
tinawatanabeDec. 20, 2015 - 01:32PM JST
It WILL because as you know bank fund managers are always looking for higher returns for customers. That's rule No. 1.
As the BOJ 6/2014 stats, these banks were already reducing JBond holdings by 51 trillion yen, Nenkin pension fund managers were by 4 trillion yen and life insurance fund managers were by 1 trillion yen.
In the past, Japan Company has been failing to balance the fiscal budget by 41 trillion yen every year. Who have been financing money to the government? You and Japanese have been. You have been buying JBond through bank savings, and these saving money have been used for government financing. But the sky has a limit. As you know, It is now mushroomed to over 1,059 trillion yen unfortunately.
Do not let them manipulate you by their saying it will be safe as long as Japanese keep JBond. But who will keep it? Jbond is not attractive at all. The same money will grow faster elsewhere.
tinawatanabe
globalwatcher
When the banks buy Jbond, they use our savings. But when BOJ buys Jbond, it doesn't.
to ride on booming J stock market but they're losing now. Those managers are always changing hands
or shrink faster.
globalwatcher
tinawatanabeDec. 21, 2015 - 08:40AM JST
Tina you've got it right. That's the problem. Actually BOJ is printing money.
fxgai
Tina, from the point of view of a foreigner, what is the difference between Monopoly money, yen and Argentinian pesos?
The yen has something the other two don't but that something is not guaranteed.
tinawatanabe
global, BOJ does not print money to buy Jbond. BOJ has account in the city bank who sold Jbond. The account records credit for the bank. .
fxgai, What is it?
globalwatcher
tinawatanabeDec. 21, 2015 - 11:05PM JST
BOJ print money to buy from the banks and then inject the YEN to the market. BOJ has been printing over 1,059 trillion yen and another injection of 80 trillion yen (QE2) was announced by BOJ last week. Hope you are getting the idea.
tinawatanabe
In Edo period, Japan did that but now BOJ does not need to print money. Jbond is collateral to BOJ. BOJ just make entry the amount according to the collateral as asset in the accounts of the city banks, and account ballance as debt.
With more credit, the city banks become more capable to buy long-term Jbond, thus lower the long-term interest rate.
globalwatcher
NO. JBond is an IOU or promissory note issued by Treasury Dept of Japan (Ookurashoo).
tinawatanabe
global, an IOU or promissory note can be collateral. If you borrow money from a bank to buy a house, the bank requires the house as collateral. Any asset can be collateral.
Anyway it is true BOJ is not printing money to buy JGB. They just give credit to the city banks..
globalwatcher
tinawatanabeDec. 22, 2015 - 03:07PM JST
We call it "printing" instead of credit. The truth of matter is that BOJ is a primary buyer of Jbond, and bankers are gradually shifting Yen to other currencies. You may want to do further research the Jbond rating in global finance. Good luck.
tinawatanabe
If only Japanese are buying, what good would "the rating in global finance" do? SK rating was raised a few days ago to two levels higher than Japan when their economy is rapidly worsening. I wonder why..