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BOJ January 25-26 Meeting Minutes: Increased Concerns About Sovereign Risk
Key highlight:
With regard to risk factors for economic activity, members concurred that, while there were some upside risks such as faster growth in emerging and commodity-exporting economies, there remained downside risks such as the possible consequences of balance-sheet adjustments in the United States and Europe as well as potential changes in firms' medium- to long-term growth expectations. They also agreed that attention should be paid to the effects of various recent international financial developments on Japan's economy, such as increased concerns about sovereign risk and developments in financial regulation and supervision around the globe. Many members were of the view that, compared with the risk assessment presented in the October 2009 Outlook Report, upside and downside risks had started to become more balanced due to faster growth in emerging economies. As for risks to the outlook for prices, members shared the view that, while there was a possibility that inflation would rise more than expected due to an increase in commodity prices, there was also a risk that the rate of inflation might fall due to a decline in medium- to long-term inflation expectations.
And also:
On the state of global financial markets, some members were of the view that stock prices and foreign exchange rates, after becoming volatile in response to Dubai's debt crisis in late November 2009, had recently regained stability. Some members said that the issues of fiscal deficit and fiscal discipline had started to attract market attention as economic conditions and financial markets regained stability. In relation to this, some members expressed the view that for individual countries -- including Japan, for which the fiscal situation was serious -- to be able to conduct appropriate policies while ensuring market stability, it had become all the more important to maintain market confidence in the conduct of both fiscal policy and monetary policy.
On endless deflation:
Members shared the view that, although the pace of decline in the CPI was likely to continue moderating as the supply and demand balance improved, downward pressure on prices was likely to persist for an extended period because the pace of economic recovery would probably be only moderate....They also agreed that the following basic view of prices remained unchanged: the year-on-year rate of decline in prices was likely to continue to moderate as the output gap narrowed; however, the year-on-year rate of change in the CPI was likely to continue declining even in fiscal 2011 [ending March 31, 2012] because the pace of the output gap's narrowing would probably remain only moderate.
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"there was also a risk that the rate of inflation might fall due to a decline in medium- to long-term inflation expectations."
this is bad...we need inflation! w/sarcsm
c'mon samurai! I am rooting for you....get your gold back!
Not to hijack anything here, but who knows how meaningful this actually is?
http://www.futureofcapitalism.com/2010/02/citi-warns-of-withdrawal-gate
This was only for the state of Texas, and they were required by law to announce it. They failed to clarify that it was for Texas only, which was clearly a PR mistake in light of the suspicion it generated.
So although I hate to side with Citi and I personally believe it to be more or less insolvent, this particular bit of news is not very meaningful.
Thanks! Fits other comments I've seen, although some of these bank account classifications are a bit esoteric.
Even if this is a typical classification technicality, and perfectly permitted by FDIC agreements, imagine the shock to the populaton if withdrawals were delayed en masse.
> imagine the shock to the populaton if withdrawals were delayed en masse
The bank would /de facto/ be broken, because it would have signalled to everyone that it wasn't able to cover withdrawals. And the outcome would be basically the same as a classic bank run by demand-account holders: after all, it doesn't matter what legal rights you have to the bank's money if the money's not there. It might help some depositors (those who still had demand accounts) and hurt others (those who joined the run early, but had a delayable account), but (roughly speaking) the average depositor would be just as badly burned afaics. And the FDIC would be as much on the hook in either case.
Well I agree this is not huge news and no need for panic, Calculated Risk had something that said Citi came out and corrected that it WAS for the whole country, not just Texas. I would pull my money either way at this stage. But I read too much.
True it only *currently* is pertinent to TX, they sent it out nation wide. So as other states implement these same laws, they've already given notice "a long time ago" and the story was buried because, at the time, it "only applied to texas" so no one really took note of it.
Its not as big as some say, but its not as small as you say.
Not to mention, it applies to fucking 'demand' accounts. or at least thats what checking accounts were until this...
As I see it, the USA like many countries has only two options: spend less and save more, or, increase the money printing to service and roll over the debt. Obviously, spending seems to be going up exponentially, so, money printing will have to go up even faster. Does it really matter if its the FED or the Bank of Japan or the Eurozone or even China doing the money printing?
If just one large central bank floods the world with easy money, assets tend to inflate, and, every country can issue bonds by the gadzillions and there will be someone with Yen or Euros or Remnimbi to buy them. I'm not sure if it's a Ponzi scheme, exactly, it's more like a con game where everyone is playing with Monopoly money. As long as people have confidence that the play money is real money, things kind of work, sort of. Once people lose faith in the play money, and will no longer accept it, then the system has a problem.
The reason the game keeps going is that there really is no viable alternative to play money. We get paid in play money, our debts are in play money, our groceries are denominated in play money. Heck, lots of things used to be money over the course of history. The only things that seem to have stood the test of time are things like food, land, and precious metals.
Health is the most valuable asset, and time.
We're in a the midst of a combination of massive deflationary credit collapse, otherwise known as a depression, and, massive money printing designed to soften the blow. I personally think its good that the banks didn't collapse. Eventually, the value of money will be highly diminished and inflation will take hold. But we're not there yet. Not even close.
ditto on most valuable assets being health and time.
Has this been re-posted on Zero Hedge yet? if not, it should be immediately:
Memo to Greece to make war with Goldman Sacs
http://neweconomicperspectives.blogspot.com/2010/02/memo-to-greece-make-war-not-love-with.html
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