BOJ's Shirakawa Lowers Japanese Growth Outlook, Prepares For More QE, Blames "Mrs Watanabe" For Yen Surge

Tyler Durden's picture

It is one thing for sellside research, caught in its traditional lemming frenzy, to cut national GDP outlook. In the case of Japan the resistance to reality provide futile early on and based on the average of 43 economists' forecasts, economic growth is now expected to post a 0.22% GDP decline in Q1 and a whopping 2.83% in the April-June period. As had been predicted this is not surprising. What is surprising, is that the head of the BOJ, Shirakawa-san himself has now indicated that Japanese growth is stalling. Per the WSJ: ""We are now expecting production and GDP will decline in the first quarter and the second quarter," Mr. Shirakawa said in an interview on Friday. It is rare for the central bank governor to make such forecasts and is the first time that Mr. Shirakawa officially admitted the likelihood that the economy may shrink in the first two quarters of the year, in line with many private-sector economists' predictions." So for those wondering who will take the temporary lead in money printing in the brief period between QE2 and QE3, look no more: "given high uncertainties surrounding the Japanese economy, many analysts expect Japan's central bank to be eventually forced to take additional easing steps." And just how much money printing are we talking here? "The central bank currently buys ¥1.8 trillion of long-term JGBs every
month from financial firms as part of its regular market operations. The bank's hands are tied by the so-called banknote rule, which
limits long-term JGB buying to the amount of banknotes in circulation.
But the central bank still has capacity to purchase around ¥20 trillion
of long-term bonds, according to the central bank's latest account data." In other words, lots.

From the WSJ:

The BOJ's policy board will meet April 28 to discuss forecasts for Japan's economy and is scheduled to release its semiannual outlook report, including numeric forecasts for real GDP.

Given the cloudy outlook, Mr. Shirakawa said the central bank stands ready to take further easing action if economic conditions worsen.

"We are always carefully monitoring the situation and if we think it is necessary to take additional action, we as central bankers are ready to take such action," Mr. Shirakawa said.

In addition to expanding asset purchases, the BOJ has supplied ample liquidity to the money market amid growing concerns about the ability of banks to meet a surge in demand for funds from companies and households.

As a result of aggressive fund provision, the current account balance--the funds that financial institutions in Japan keep at the central bank, which they can use for lending or other needs--had expanded to more than ¥42 trillion in late March. That significantly exceeds the previous high of ¥36 trillion recorded during the BOJ's quantitative-easing program in the early 2000s.

To support reconstruction efforts in the affected areas, the central bank also introduced a special lending facility that makes ¥1 trillion of low-cost funds available for banks in the affected areas, and started considering accepting a broader range of collateral to make it easier for financial institutions to secure funds.

In other words, throwing the kitchen sink at the problem this tie will truly be different.

Or not.

In a statement that puts Shirakawa's perception of reality starkly into question, also on Friday the BOJ head blamed the massive surge in the JPY in mid-March not on repatriation and heavy trading desk margin liquidation, but on, wait for it, Mrs. Watanabe.

In a rare reflection of wild currency moves following the March 11 earthquake, Bank of Japan Gov. Masaaki Shirakawa said it was not the widely anticipated selling of overseas assets by Japanese insurers, but rather moves by the Mrs. Watanabes that propelled the yen to an all-time high against the dollar.

In an interview on Friday, the BOJ chief said actions by investors engaged in margin trading—the favorite game among the herd of small Japanese investors represented by a mythical housewife, "Mrs. Watanabe"—were mainly to blame for the yen's rise to 76.25 against the dollar in the early hours of March 17.

"The most promising explanation was such loss-cut trading," Mr. Shirakawa said, referring to yen buying by the retail investors that accompanied their compulsory loss-cut sales of foreign currencies in margin trading.

Japan's central bank, like the U.S. Federal Reserve, is not in a position to comment on the currency market, but in a lengthy analysis on the causes of the dollar's fall on March 17, Mr. Shirakawa cited two other reasons: expectations of fund repatriation by Japanese insurers and unwinding of the so-called yen-carry trade.

"First was the alleged repatriation by the institutional investors such as life insurers," Mr. Shirakawa said.

But he said the insurers didn't have strong reasons to sell their foreign assets because insurance resulting from the earthquake were not large, and as they have a sizeable amount of liquid assets in yen.

Well at least he didn't blame CDS traders or Citigroup bond runs. And the explanation would have been wonderful if only there was not this one glaring fact to the contrary (read about this here).

So yes, even as the clueless finally accept reality, they unfortunately still remain clueless. But that is a key job requirement of any central banker it would appear.


Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
cossack55's picture

Mrs. Watanabe Bitchezzzz!*

*special delivery for thatthingcanfly

bankrupt JPM buy silver's picture

how does a country produce ANYTHING when it has an 80 km radius of waste land?

Tail Dogging The Wag's picture

"Investors need to diversify, they need to own some real estate, they need to own some farmland, they need to own some equities, some cash, and some precious metals..."   Marc Faber —Investment analyst

Got real estate and farmland outside your home country?

"Buy land, they're not making it anymore"

—Mark Twain

Iam_Silverman's picture

Sorry, but placing a quote by a famous and revered author does not mitigiate your posting of SPAM.

Why cut and paste the same crap in every topic?  At least try to make your shilling for your blog appear to address the issue.

Urban Redneck's picture

Mrs Watanabe must have thousands of twitter followers to be able to orchestrate the near simultaneous trade executions that created the billions in bid volume which comprised the tsunami that rolled wiped out everything its path for 30 minutes.   

Mike2756's picture

Didn't know retail was that powerful, gotta put postion limits on those guys.

Sudden Debt's picture

If only Obama had somebody to blame so he to could use it as a excuse for more QE...



Aengrod's picture

Ahahah they will find something/someone to put blame on dont you worry :)

StychoKiller's picture

It's those greedy oil speculators, dontcha know!?

bigelkhorn's picture

yes their are so many idiots talking about QE and how its about to stop. What a load of crappy shit. they will just call it something else. Why do people not wake up and see this. 


The dollar looks horrible here. Those FFT guys have been crushing the market latetly. I am a VIP member and love their technical analysis, but they just uploaded a FREE video of what they think is going to happen in the next few weeks to the S&P 500. Its well worth a watch!



Montgomery Burns's picture

Do you have to post that link in every m fing thread?

slewie the pi-rat's picture

i'll forgive the poor Shirakawa S.O.B.

he could just have a thing for mrs. watanabe like slewie's thing for blythe.

wait!  no!  he's a bankster!  the fuker's lying! 

AC_Doctor's picture

Japan is forked.  The world will be forked before the end of summer.

Hephasteus's picture

They got 2 vital industries. Dying of cancer and moving.

falak pema's picture

fork tongued? fork fukked? forked pork? fork fingered?

fork lifted? fork drifted?

I'm lost at the f***ing fork!

medicalstudent's picture

japanese<>american cross pacific conundrum.


it looks like an epic puzzle... to save the usd is to let japan founder (higher rebuilding costs and i would guess a much less timely fuckyoushima repair) and to ultimately irradiate north america.


to let go of the usd is to give japan the resources it needs to save north america's food supply.


i truly hope our criminal leaders are not faced with the choice of preserving the financial system status quo and passively, permissively destroying north america.


because they may not care about a country with a gutted industrial base, a petroleum-corexit-artificial bacterium stew in the gulf, an encumbered fluoridated population, and no hope of paying off the national debt.


it looks like in this game of jenga, the only piece left to pull will bring the entire house down.


pm holders, the free market is about to empower you to save our somnolent race by efficiently allocating resources.












DNB-sore's picture

the swans are flocking and they haven't lost a feather

DNB-sore's picture

Just had another close-up look on the swans seeing that they have formed a circle with each swan's head in the ass of another

TIMMAYYY's picture

oh my fukin goat...


hands off my spam...

Misean's picture

So Japan chooses the hyperinflationary colapse route. Better model that carry trade accordingly.

thames222's picture

standard...they've got a bunch of idiots running their shit, not because they're not smart bbut because they're too damn prideful to make the right decision lol.

slewie the pi-rat's picture

japan has a lot it didn't choose.  apparently the japanese are still pretty fuking tough, even by Fight Club standards. 

sex4king's picture

Everything can be solved by QE!!

Gordon Freeman's picture

This is all "priced in", doncha know?  Very, very bullish for the world economy...really

High Plains Drifter's picture

fukushima is like 2000 A bombs.

one commenter wrote the following:

AIPRI BLOG, 16 April, 2011,

English Translation. Any errors of translation are my own and I take responsibility for the English version. – Bob Nichols

Fukushima, or rather the almost 200 tons of fuel present in the four reactors and the 2800 tons of old reactor cores in big 40 ft deep swimming pools that stand over the reactors, represent a lethal and potentially apocalyptic contaminant for the internal poisoning of the whole human race. Taken together, the active reactors and old cores are equivalent to 2000 atomic bombs of 500 kilotons each. Fukushima is then, capable of dispersing in the biosphere, five times the long lived breathable radioactive poisons, cesium 137, Strontium 90, plutonium 239, etc., than all the combined nuclear detonations to date. It is as if Fukushima were equal to a 1000 megaton Atomic Bombs; or expressed another way, 2,000 individual 500 kiloton Atomic Bombs.

Note: Around 360 Kilos of Cesium 137 were released in atmospheric testing – 190 Megatons-. Fukushima and its nuclear waste products can release 1800 Kilos! One Megaton is arrived at by the fission of about 57 kilos of Uranium 235 or of Plutonium 239. That means that every Megaton produces 57 kilos of fission products of which 17 kilos (30 %) are fission elements with a life of more than a year, Strontium, Technetium, Promethium, Samarium, Europium, etc. Every megaton also yields about 23 kilos of activation products such as U236, Plutonium238, Plutonium239, Plutonium240, Plutonium241. Am241, et

The first successful test of the atomic bomb occurred at the Trinity site, two hundred miles south of Los Alamos at 5:29:45 a.m. on July 16, 1945.

Robert Oppenheimer was beside himself at the spectacle. He shrieked, "I am become Death, the Destroyer of worlds."

yes you were bob. and i want to thank you for all your good deeds too pal.....

Atomizer's picture

No worries Japan, Obama has your back. He told us that the real culprits will be brought to justice.

Dear Leader Calms the Energy Storm

We have new nuclear power plant designs to sell you. GE rates these news designs to handle a 12.0 magnitude earthquake.

High Plains Drifter's picture

check it out tyler, radiation detectors, keychains , how to books, and of course ready made fallout shelters are so to speak, flying off the business is picking up for some people. i have not seen this since the 50's and 60's .........

falak pema's picture

you've been long in this hit n miss business!

High Plains Drifter's picture

let me tell you something my friend. discussion of nuclear fallout was a big thing back in the late 50's and into the 60's .......believe me.....then came the cuban middle crisis. heck, many home builders had at their showrooms , a mock up of their nuclear fall out shelter, that they would build on your site.  perhaps , americans should have all bought them back then, just to be on the safe side. would it have been such a bad idea?  i think not.

Lndmvr's picture

Saw a large oil rig lifeboat in a farm field the other day. They are going to bury it for tornado/ whatever. I'd sure like to have one.

High Plains Drifter's picture

chernobyl concrete cover is cracking. built in 1986, it has reached its time design limit. attempting to raise money in the euro zone, from countries that are financially broke. the new cover will be as tall as the empire state building. wow!

buzzsaw99's picture

Japan is being ruined by the same type maggots we have in the usa. Clearly they are just a bunch of crooks.

etudiant's picture

The Japanese political leadership does seem to be gearing up for a more difficult environment.

The driving force may be the still ongoing Fukushima disaster, which is gradually poisoning a large swath of central Japan. An additional area outside the prior 30km radius is being evacuated.                                                            The Fukushima press coverage has consequently become more challenging for the government, as well as for the TEPCO leadership.

So in future theresponsible government entities will give unified press conferences, limited to representatives of select news organizations, who are additionally admonished to 'adhere closely to a news ethical standard'.
Independent internet news reporters will not be allowed to participate.
Further details here:

Sounds very much like a war time press pool.

cossack55's picture

Yes, the Five O'clock Follies on steroids. Rather than "We see light at the end of the tunnel" it will be "We see a glow at the end of the tunnel". Dopes.

Hephasteus's picture

We want computers for games and entertainment and to make business more efficient and less labor intensive. Not shit like this.

Sylvia Plath's picture

Don't you people get it... If Fukushima blows up the rest of the world has a lot more to worry about than just economic recovery. Too bad media and the news is a tool to control the masses instead of inform them. Even ZH is a form of media influence, just from another point of view.

gall batter's picture

Sylvia, you're correct.  Some of us here on ZH understand this completely.  And we've expressed deep concern and sympathy for the people of Japan. Also, for the rest of the world. I think of the children. This link was posted on another thread and it's one of the most important I've seen:

falak pema's picture

Sylvia I can hear you loud n clear : make love not war! Let's waste no time. It is Fuku limited!

High Plains Drifter's picture

either that, or fukushima is more or less a local event, except for the radioactive water getting into the ocean.  there may be some scare tactics being used on the united states etc. not sure on this. it is quite possible. even if nothing about this ever effects the united states, just the thought put in the minds of the sheep is enough to cause massive turmoil , and this happens without firing one shot........just think about it. if you think that bad things are about to happen and/or happening, you are just as much being controlled as if they were actually in reality happening. the thing that gets me, is that the plumes of radioactive smoke etc, are not getting in the jet stream. if this material does not get in the jet stream, then it will settle in and around japan, i would think. if however, there is a significant nuclear explosion there and that is a distinct possibility, then for sure, it is lights out over this whole world. there is enough material there in that one area, to kill the population of the world many times over.  they must cover this mess as fast as they can. the problem was and always has been the damn spent fuel rods. those idiots were fools storing that crap in those buildings. of course who or what country in its right mind, would ever consider taking that crap as nuclear waste and storing it ?  not many i guess, so they keep it on site. its in the realm of insanity and for me, it does not compute what is going on over there. who in their right mind would put so much damaging material in such a place as fukushima?  i live in south texas. we are in drought conditions right now. maybe that is a Godsend at this stage, i don't know. go to amazon and check out their geiger counters. you can't hardly even get one and the assholes have pumped up the prices on all of that stuff. i wish i had gotten one a few years ago, when they couldn't even give those damn things away. i mean come on, almost 200 dollars for a fucking keychain, give me a break. all i can say now, is that i used to enjoy walking in the rain sometimes. i have always enjoyed rain. so now, am i going to hate the rain? am i going to have to stay indoors now from now on, during certain times because of radiation alerts ?  God help us on this.

Ned Zeppelin's picture

Perhaps Ben is looking to the BOJ as a pioneer in testing how much easing the market will tolerate before turning on a currency. 

Youri Carma's picture

13 March 2011 - The Bank of Japan injected a total of ¥15 trillion ($183 billion) into the markets Monday and enlarged its asset-purchase program in a bid to bolster financial stability (MarketWatch)

14 March 2011 - Bank of Japan moves to shore up markets, economy - Moody’s says no fiscal crisis imminent but analysts cut GDP view (MarketWatch)

In addition to the ¥15 trillion injected into the financial system, the central bank offered to buy ¥3 trillion in government bonds from lenders in repurchase agreements later this week, Bloomberg reported. The bank’s policy board also increased its asset-buying program by ¥5 trillion.

14 March 2011 - Bank of Japan eases further to support economy (MarketWatch)

The Bank of Japan's policy board voted 8-1 on Monday to expand the central bank's asset-buying program by 5 trillion yen ($61 billion), to ¥40 trillion.

11 April 2011 Japan eyes 1 trillion yen for post-quake measures (MarketWatch)

22 April 2011 - Japan approves extra budget for disaster relief - Plan totals $48.5 bln, doesn’t call for any new bond issuance (MarketWatch)

falak pema's picture

Mrs Watanabe on spending spree! Did she buy herself a new vibrator? or was it a gas mask and geiger counter?

High Plains Drifter's picture

plutonium and strontium have been in california since march 18.

this is not good my friends. not good at all.

let us not forget, that they had that major rain storm that stood still in california on march 20 of this year.

perhaps, it was necessary to soak this crap into everything and everyone in california. who knows.....

Grouch's picture

Tyler, you are wrong about the is Mr. Corrigan.
We are talking about a few hundren billion yen last week (in equity inflows). Whilst this might be a 5 sigma event, it is meaningless in the context of total capital flows.
Please check the data before turning chicken little.

disabledvet's picture

Show your face, Oscar.  Out of garbage can NOW!

glenlloyd's picture

perhaps they'll create a committee to root out fraud?