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Japan's 2014 Budget To Approach Record 100 Trillion Yen

Tyler Durden's picture





 

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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Mon, 12/16/2013 - 11:52 | Link to Comment gmrpeabody
gmrpeabody's picture

100 trillion ain't what it used to be...

Mon, 12/16/2013 - 11:59 | Link to Comment prains
prains's picture

Japan is to be the giant global sink hole where all the shit is to be buried after it's all over, god ruck!

Mon, 12/16/2013 - 12:01 | Link to Comment OneTinSoldier66
OneTinSoldier66's picture

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.

Mon, 12/16/2013 - 12:04 | Link to Comment hedgeless_horseman
hedgeless_horseman's picture

 

 

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."

 

-Robert Mugabe

Mon, 12/16/2013 - 12:05 | Link to Comment Ignatius
Ignatius's picture

"It may be necessary to use methods other than constitutional ones."

Works for the CIA.

Mon, 12/16/2013 - 12:17 | Link to Comment OneTinSoldier66
OneTinSoldier66's picture

Nice one!

Mon, 12/16/2013 - 12:08 | Link to Comment OneTinSoldier66
OneTinSoldier66's picture

Yeah, those constitutions. They really hold government's accountable.

 

Thank you for the NDAA.

Mon, 12/16/2013 - 12:12 | Link to Comment ParkAveFlasher
ParkAveFlasher's picture

Holy Crap HH, those two guys look EXACTLY alike!

Mon, 12/16/2013 - 11:58 | Link to Comment OneTinSoldier66
OneTinSoldier66's picture

"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!!?

Mon, 12/16/2013 - 11:57 | Link to Comment youngman
youngman's picture

their energy is going to go thru the roof.....and their rice bowl too

Mon, 12/16/2013 - 12:01 | Link to Comment NoDebt
NoDebt's picture

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.

Mon, 12/16/2013 - 12:02 | Link to Comment Dr. Engali
Dr. Engali's picture

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!

 

 

Mon, 12/16/2013 - 12:10 | Link to Comment gmrpeabody
gmrpeabody's picture

Gives those SWAT guys something to justify themselves with...

Mon, 12/16/2013 - 12:41 | Link to Comment overmedicatedun...
overmedicatedundersexed's picture

 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.

Mon, 12/16/2013 - 12:43 | Link to Comment NoDebt
NoDebt's picture

This is roughly when fall semester finals take place before the Christmas break, is it not?  

Mon, 12/16/2013 - 12:04 | Link to Comment DaveyJones
DaveyJones's picture

"after all, Japan like the US is already soaking"

and it will take more than Calgon to take them away 

Mon, 12/16/2013 - 12:09 | Link to Comment Non Passaran
Non Passaran's picture

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!) 

Mon, 12/16/2013 - 12:08 | Link to Comment jaxville
jaxville's picture

  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.

 

Mon, 12/16/2013 - 12:12 | Link to Comment q99x2
q99x2's picture

Maybe they should adopt BitCoin. No?

Mon, 12/16/2013 - 12:30 | Link to Comment moneybots
moneybots's picture

"(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?

Mon, 12/16/2013 - 13:01 | Link to Comment sunnyside
sunnyside's picture

When Godzilla rises from the sea.  ROAAAAAAAAAR !

Mon, 12/16/2013 - 12:49 | Link to Comment Bunga Bunga
Bunga Bunga's picture

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.

Mon, 12/16/2013 - 12:52 | Link to Comment Smegley Wanxalot
Smegley Wanxalot's picture

100 Trillion Yen wont cover the costs of the first month of the upcoming war with China.

Mon, 12/16/2013 - 13:27 | Link to Comment yogibear
yogibear's picture

Zimbabwe baby!

Japan is the US Fed's PhD's grand experiment.

First Japan, then eventually the US. 

Mon, 12/16/2013 - 14:46 | Link to Comment suteibu
suteibu's picture

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).

Mon, 12/16/2013 - 19:29 | Link to Comment Spungo
Spungo's picture

Isn't a yen only like 1 penny? A budget of 1T USD for a country that size doesn't sound too crazy.

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