business

BOJ ramps up risky asset buying, doubles pace of ETF, J-REIT purchases

21 Comments
By Leika Kihara and Tetsushi Kajimoto

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21 Comments
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"bold, unprecedented" measures to mitigate the pain the epidemic is inflicting on the world's third-largest economy.

Unfortunately for the workers and savers of Japan, these measures will increase the pain, not mitigate it, because the only thing the BoJ ever does is devalue the people's money.

7 ( +8 / -1 )

can you say "currency manipulation?"

5 ( +6 / -1 )

How about directly supporting the people and small businesses in Japan (those in need) who are suffering due to lost wages / earnings / customers.

Why are 'the markets' a priority? It should be people first. But TIJ, the land of fake kindness and compassion.

5 ( +7 / -2 )

fx

Not disagreeing, but they had to focus on ETF's and REITS as there is pretty much nothing else left to buy (unless they start buying actual property and land).  alternative will be to send every taxpayer 20 or so man yen to get the money out there.

4 ( +4 / -0 )

For

stabilize markets

Read

keep the yen from strengthening.

Pathetic.

3 ( +5 / -2 )

Yup. This move by the Feds will put pressure on the Yen to increase in value. So BOJ will likely have to do something to devalue the Yen to counteract the American effect. 

Japan is already at zero rates though. Has been, forever. The US is just temporarily joining Japan due to the crisis.

On the other hand, the US dollar has been surprisingly resilient versus the yen over the past week - an initial shock foray to close to 100 yen last week, but since then it's rebounded to 106-108 range. This is some true kind of economic crisis apparently, dollars are looking fine.

But the yen and US dollar will both do well against other currencies of economies that are heavily dependent on tourism and stuff like that. Japanese investment will be sucked out of those places temporarily.

Anyways, I see all the BOJ really opted for today was to buy twice as much ETFs over the year, in a pretty lame attempt to support the Nikkei. The Nikkei is going down in the short term, until this crisis ebbs. The BOJ is going to be taking big losses on paper for a time...

3 ( +3 / -0 )

Money before people...for the 1%ers...disgusting! Some of the above commenters have better ideas.

2 ( +5 / -3 )

PRINT a lot! please

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the only thing the BoJ ever does is devalue the people's money.

Has the yen been "devalued"? I must have missed something, because the yen has always seemed quite strong and stable for the past 20 years that I've been here.

Read keep the yen from strengthening.

The other central banks are loosening in response to the crisis. It would be really odd if the BOJ didn't follow suit.

1 ( +3 / -2 )

can you say "currency manipulation?"

yep its called forcing the so called impartial Federal reserve to drop interest rates to almost 0

The other central banks are loosening in response to the crisis. It would be really odd if the BOJ didn't follow suit.

exactly, whats good for the gander is good for the goose, did people really think that America is the only ones who are allowed to do it. LMFAO

1 ( +2 / -1 )

@wtfjapan ... Yup. This move by the Feds will put pressure on the Yen to increase in value. So BOJ will likely have to do something to devalue the Yen to counteract the American effect. But I just don't know how much else BOJ can do - I think they have just about done everything that they could already. Combined with greatly reduced tourism, a greatly reduced export due to a strong Yen is going to result in a lot of economic pain for everyone. :(

1 ( +1 / -0 )

Crank up the printing presses. 

wtf - really?  Does Japan import more when the yen strengthens?  Big chunk of what is imported are primary goods (oil, commodities) and services.  Stronger yen makes those cheaper, no?

1 ( +1 / -0 )

fxgai: "BOJ is going to be taking big losses on paper for a time"

Not only on paper. A world of hurt is descending on people who’s wealth is tied up in stock market linked pensions, annuities, and dividends. Those who’ve used inflated stock prices as collateral to borrow are already being hit with margin calls, further piling the pressure on battered stock prices as they’re forced to sell. Inflated price bricks and mortar won’t be spared either; with many owners forced to bail to meet margin calls on their cascading house of cards investments while those who can afford to, will sit tight, hoping things stabilize. Government backed deposit guarantees hopefully provide a sufficient disincentive to the herd behaviour we’ve seen with runs on toilet paper, but who knows how people would behave if trust was to evaporate to the point where faith in banks goes out the window. In manifold other ways too, real people are going to experience real pain in ways they, as yet, only dimly perceive. As firms downsize and raise their storm sails, freeters and contract workers, many of whom are already technically below the poverty line, are likely to see their hours and wages cut and forced to rely on the bank of mum and dad.

1 ( +1 / -0 )

Hey, here's an idea, how about we bring down tax consumption to 0% for a year ? give normal people a boost once in a while, not just the guys with assets.

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“I’ve invested a chunk of my savings in the stock market and have no fears about it”

I’m glad to hear that you’re in a position to ride out the storm. Many others however, and not just speculators and those who can afford to lose, are staring down the barrel and with the Dow off 2,800 points (13%) shortly after opening this morning, underwear manufacturers are looking better all the time. There must also come a point too, where even those like yourself, with long investment time lines, begin to contemplate what-ifs they may never previously have imagined possible. After the 1929 crash, the Dow didn’t recover for a generation. Nobody wants to sell at a discount to what they paid and investors who can afford to wait are well advised to do so, thereby not crystallising losses. That’s a luxury however which many can not afford and there is an inexorable logic to a falling market with no bottom in sight. Each fresh wave of selling ratchets up the pressure on the holdouts so that people who refused to accept a 20% loss end up capitulating at 50% rather than face even greater losses.

1 ( +1 / -0 )

Has the yen been "devalued"? I must have missed something, because the yen has always seemed quite strong and stable for the past 20 years that I've been here.

Surely you didn't miss the gigantic fall in the yen's value starting in late 2012 when the LDP regained power; it took about 80 yen to buy one US dollar, and over the next two to three years it soon took 110 or more.

And those aren't just esoteric numbers relevant only to currency traders -- prices at the supermarket have gone way up, with products shrinking. We're paying a lot more, and getting less, for our yen. There's nothing "strong and stable" about that. The LDP is devaluing its massive debts and making wage-earners pay for it in the form of devalued savings and devalued money.

1 ( +1 / -0 )

Helicopter money at last?

0 ( +0 / -0 )

Yeah, all these central banks are pretty much "us too!!" at this stage, there is nothing they can do to deal with this virus outbreak almost everywhere.

Measures to try to tide some smaller businesses over during the rough period are in order, but that's only mitigating the damage, and that's the best that can be hoped for.

0 ( +0 / -0 )

A world of hurt is descending on people who’s wealth is tied up in stock market linked pensions, annuities, and dividends.

A little over-dramatic, I feel.

Perhaps some people live directly off stock market dividends etc, but personally I don't think that's a way to plan to live out retirement. I have invested a chunk of my savings in the stock market over recent years, and I have no fears about it. But I won't need that money for many many years, by which time this little period will likely prove to have been a great buying opportunity (I plan to direct more of my savings than usual into investments in the short-term). So, I don't think those similarly taking a long term view will be feeling much hurt.

I think the real pain will be those who are in industries directly impacted - they simply don't have customers. The BOJ giving investors looking to dump the Nikkei and REITs a better sale price doesn't do much for them :(

Those who’ve used inflated stock prices as collateral to borrow are already being hit with margin calls

Such speculators will hopefully only be playing with money they can afford to lose.

those who can afford to, will sit tight, hoping things stabilize.

That's me there I guess! I'm not so much hoping though - I 100% believe that 5-10 years from now, things will look better for the global economy than they do today. I'd guess in 6 months time this will be the case, too, but not so certain as 100% :)

As for the BOJ taking paper losses on their Nikkei purchases, I do hope that it doesn't have deleterious effects on the value of the currency that the BOJ issues.

0 ( +0 / -0 )

because the only thing the BoJ ever does is devalue the people's money.

yet forcing the yen to appreciate, just accelerates the number of imported goods coming into Japan and Japanese wealth outside of Japan, at the same time providing more jobs to foreign countries less jobs for Japanese and lower paying jobs and conditions so Japan can compete, a lost Japanese job to overseas means less government revenue in the form of taxation, pensions, healthcare payments.

-1 ( +2 / -3 )

Japan just follow the puppet master. when trump talk , Abe bow

-2 ( +0 / -2 )

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