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Japan's 2014 Budget To Approach Record 100 Trillion Yen
Since we live in a connected world, in which the central bank "Flow" must, well, flow, one emerging line of thought is that with the Fed set to taper (even by a modest $10 billion per month driven by Treasury market liquidity constraints where the Fed is now monetizing 1% of the entire bond market in 10 Year equivalents every three weeks), the BOJ will have to step in and boost its own monetization by a comparable amount. And as we noted in November, speculation that the BOJ will do just this set off the latest Yen crushing move, which has seen the EURJPY surge higher by a massive 1000 pips all but pricing in any BOJ moves for 2014. However, to be able to do this, Japan will need to provide its central bank with the capacity to monetize as many Treasurys (or more) as possible: after all, Japan like the US is already soaking up a record 70% of all gross issuance.
And Japan is ready to comply: as Reuters reports, in the next fiscal year, Japan's budget will exceed 96 trillion yen, or about $930 billion. With Japan's GDP standing currently shy of half a quadrillion Yen (not to be confused with Japan's debt load which is now over the one quadrillion mark), it means the budget will be about 20% of the country's entire economic output.
More from Reuters:
The government is in final negotiations on the general-account budget for the year from April, which will exceed 96 trillion yen ($931 billion), the sources told Reuters on condition of anonymity.
The draft budget, to be approved by Prime Minister Shinzo Abe's Cabinet on December 24, will be up from this fiscal year's initial budget of 92.6 trillion yen.
Abe, elected a year ago Monday, has used heavy government spending as one of his main tools in a bid to end 15 years of deflation and sluggish growth for the world's third-biggest economy. But with public debt of more than twice the size of the economy, Abe also aims to balance the budget over time, starting with a sales-tax increase next April.
With an economic rebound and a tax increase, tax revenues next fiscal year are tipped to clear 50 trillion yen, a seven-year high, while bond issuance will decrease from this year's 42.85 trillion yen, the sources said.
So while the total spending framework has already been set, it remains to be seen if and how much tax revenues will indeed pick up providing the funding for about half of the spending needs. And if they don't, so much the better: it means debt deficit-funding will only rise, giving the BOJ even more dry powder which to monetize and flood the global system with even more excess reserves.
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100 trillion ain't what it used to be...
Japan is to be the giant global sink hole where all the shit is to be buried after it's all over, god ruck!
A Trillion pieces of paper here, a trillion pieces of paper there.. pretty soon you're talking real pieces of paper. You might even eventually end up with enough to use in the bathroom.
What happens when ¥100,000,000,000,000 per year still is not enough?
"I believe it is important that we Japanese write a constitution for ourselves that would reflect the shape of the country we consider desirable in the 21st century."
-Shinzo Abe
"It may be necessary to use methods other than constitutional ones."
Works for the CIA.
Nice one!
Yeah, those constitutions. They really hold government's accountable.
Thank you for the NDAA.
Holy Crap HH, those two guys look EXACTLY alike!
"with the Fed set to taper"
WTF? All i've ever seem actually come out of The Federal Reserve System is: the spice must flow!
Who is it that's watching what they say, and not watching what it is they are actually doing!!?
their energy is going to go thru the roof.....and their rice bowl too
Would it be possible for Japan to just knock about 3 zeros off the back end of their currency so I can even comprehend how big these numbers are and what they mean?
Trillion, OK. Quadrillion and above... forget it, just use scientific notation for all that number means to me.
headline on Drudge:
Terror Scare at Harvard!
http://online.wsj.com/news/articles/SB1000142405270230440380457926213238...
I don't know about the rest of you, but bomb threats were called into our schools when we were young and it was no big deal. Now It's fucking pull your hair out and panic TERROR!
Gives those SWAT guys something to justify themselves with...
Harvard terror -hsa goons will have to go house to house in the whole state, until they find one with a boat in the back yard, new SOP for this type of terrorism. wait maybe we got photos of them at the marathon, ya that's the ticket.
This is roughly when fall semester finals take place before the Christmas break, is it not?
"after all, Japan like the US is already soaking"
and it will take more than Calgon to take them away
But some currencies are more equal than other... The Swiss are defending the euro peg, aren't they?
OT: bitcoin is beginning to look "tired" vs. USD. I doubt it'll touch $1K anytime soon.
Will it drop below $500 before it touches $1,000 again? I say yes.
(EDIT: damn, I thought I was commenting on that article about the Swiss and Bitcoin. Ugh, I have nothing to say about Japan. Arigato!)
Japan financed much of the Western excesses in the 90's through the yen carry trade. The fed can't carry the water much longer so with fingers crossed, Japan steps up to the plate once again.
Maybe they should adopt BitCoin. No?
"(not to be confused with Japan's debt load which is now over the one quadrillion mark)"
When does that reach the 100 quadrillion mark?
When Godzilla rises from the sea. ROAAAAAAAAAR !
How can government spend 20% of GDP without a military industrial complex? Oh, I see, they have some blown up nuclear reactors where they can pour all that money over.
100 Trillion Yen wont cover the costs of the first month of the upcoming war with China.
Zimbabwe baby!
Japan is the US Fed's PhD's grand experiment.
First Japan, then eventually the US.
Japan's budget is as big a scam as the 4.1% unemployment rate. So-called "special budgets" add as much as 20 to 30 trillion (they have a 5.5 trillion stimulus planned for 2014 already).
Isn't a yen only like 1 penny? A budget of 1T USD for a country that size doesn't sound too crazy.