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Abe Approval Tumbles As Majority Say Japan's "Banzainomics" QE Will Have Negative Effects

Tyler Durden's picture




 

Remember that for all the hollow rhetoric about this and that, the main reason why the Fed first tapered and then ended QE is because it literally ran out of bonds to monetize: as first Zero Hedge and then the TBAC warned last summer, and as we saw on October 15, the liquidity in the bond market dropped so much thanks to the Fed's endless attempts to "fix the economy and the middle class" that the $12 trillion bond market flash crashed forcing market participants to pull a page right out of the May 2010 playbook and "turn those machines back off."

Furthermore, the reason why the task of carrying the weight of the developed world's flow was put on the shoulders of Japan, is that while the country is now an official economic basket case, at least it has a lot of Treasurys to monetize. Indeed, as the following chart from JPM shows, while the BOE and Fed peaked at about 35% of total 10 Year equivalents monetized (a metric we have been using since 2012 even as the Krugmans of the world look at the the bond market in the gross and inaccurate terms of GDP over notional), Japan is only just ramping up.

Well, there may be a problem: unlike US Treasurys where a vast majority are held by fast money accounts, in Japan the bulk of the Private Sector holdings, those from which the BOJ will be purchasing, appear to be far stickier. As Bloomberg reports, citing Shinji Hiramatsu, senior investment manager at Sompo Japan Nipponkoa Asset Management, the BOJ boosting its bond purchases is "crowding out the market", and the already broken Japanese bond market is about to get even more broken, until we get a repeat of April 2013 when every single day the JGB market was halted limit down, or up, and the BOJ had to radically change its approach to monetizing debt, meaning hire a whole lot of Goldman consultants to explain just what is going on.

According to Bloomberg, "the Bank of Japan’s plan to step up bond purchases by 60% will obscure price discovery and add to concerns about the nation’s fiscal position."

"The presence of a big buyer who snaps up securities regardless of yields risks preventing the market from reflecting growth and inflation accurately,” says Shinji Hiramatsu, senior investment manager at Sompo Japan Nipponkoa Asset Management, which oversees the equivalent of $9.8b. “The BOJ’s move on Oct. 31 was favorable for my investment, but made me very concerned about a loss of fiscal discipline."

Shockingly, even in the basket case country that is Japan, those who directly benefit from the BOJ's terminal experiment are now openly and vocally slamming it because they know that if continues, the final endgame is now near.

As a reminder, Japan’s outstanding debt at a record 1.04 quadrillion yen ($9.1 trillion) is over twice as much as its GDP, the highest in the world.

Major JGB investors’ monthly net purchases this year averaged 2.33 trillion yen; that was about 36% of the amount bought by the BOJ

It has gotten so bad that Japan's population, living in unseen "misery" has had enough, with more respondents to a recent poll stating that the negative effects of Japan's QE surpass the positive. Perhaps that is why the approval of Abe's cabinet is suddenly crashing.

  • Japan Cabinet Approval Rating Falls 8 Ppts to 44% in NHK Poll
  • 38% of people said they don’t support the cabinet, up 4 ppts from last month’s survey, NHK reports on TV and website.
  • On question as to whether govt should raise sales to 10% in Oct. 2015 as planned, 20% said yes, 41% said it should be postponed, and 33% said it should be cancelled
  • 56% of respondents said that they couldn’t say whether the BOJ’s recent increased monetary easing would be good or bad for the economy, with 14% saying positive effects would be larger and 20% saying negative effects would be larger

Perhaps this explains why, suddenly, Abe - who already had a stint as Japan's PM tragically cut short due to an explosive bout of diarrhea - suddenly appears quite focused on existing stage left:

  • ABE MAY DISSOLVE PARLIAMENT THIS MONTH ON TAX DELAY: YOMIURI

Needless to say, if Abe - who is the critical link in the reflation experiment - is gone, and Japan's QE ends prematurely, it's all over.

 

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Mon, 11/10/2014 - 21:57 | 5434916 Newsboy
Newsboy's picture

SEPPUKU!

ONAGAISHIMASU!

Mon, 11/10/2014 - 22:11 | 5434964 TahoeBilly2012
TahoeBilly2012's picture

Wheelbarrows anyone? 

Mon, 11/10/2014 - 23:02 | 5435165 Anusocracy
Anusocracy's picture

I think Japan will be the first country to become an Idiocracy. Then again, maybe it already has.

I hope their finest minds can keep the inflatable doll factories going.

Tue, 11/11/2014 - 02:03 | 5435635 sun tzu
sun tzu's picture

BOJ just announced they will be buying equities along with bonds

Mon, 11/10/2014 - 21:54 | 5434906 Soul Glow
Soul Glow's picture

Japanese PMs never have a long shelf life.

Tue, 11/11/2014 - 04:01 | 5435714 Carpenter1
Carpenter1's picture

Good god, Al'Qaeda can find thousands of guys willing to blow themselves up just to kill a handful of meaningless foot soldiers or civilians, why can't we find one guy willing to blow himself up at a nuclear reactor near new york?

That would finally bring this mess to an end. 

Mon, 11/10/2014 - 22:00 | 5434922 NoDebt
NoDebt's picture

"if Abe - who is the critical link in the reflation experiment - is gone, and Japan's QE ends prematurely, it's all over."

Nothing is over until we decide it is!  Was it over when the Germans bombed Pearl Harbor?  Hell no!

Germans?

Let it go.  He's on a roll. 

Mon, 11/10/2014 - 22:02 | 5434932 Yen Cross
Yen Cross's picture

  Abe = Fukishima Pt.2

  Kuroda is in charge of the spent ¥ pool 100' above ground.

Mon, 11/10/2014 - 22:15 | 5434979 Soul Glow
Soul Glow's picture

The Yen lives!

sarc

Tue, 11/11/2014 - 06:57 | 5435846 Panic Mode
Panic Mode's picture

Abe = Herpenomics

Mon, 11/10/2014 - 22:08 | 5434954 Eyeroller
Eyeroller's picture

Just get this shit show over with!

Mon, 11/10/2014 - 22:29 | 5435036 Hamm Jamm
Hamm Jamm's picture

ABE, you look surprised !

your one of the dumbest dipshits on the planet

 

Mon, 11/10/2014 - 22:34 | 5435053 WTFUD
WTFUD's picture

Abe's nappy rash is playing up again.

Mon, 11/10/2014 - 22:38 | 5435067 WTFUD
WTFUD's picture

Abe has the perfect look for an even less clued up Clouseau.

Mon, 11/10/2014 - 22:55 | 5435147 WTFRLY
WTFRLY's picture

Colorado cops show off cannabis harassment tactics for CNBC crew, give tickets for cigarettes http://wtfrly.com/2014/11/10/colorado-cops-show-off-cannabis-harassment-...

Mon, 11/10/2014 - 22:57 | 5435150 AdvancingTime
AdvancingTime's picture

It is to late to reverse the weak yen policy, Japan has gone over the edge into the abyss. It is clear that the prospects for Japan are lousy. The writing is on the wall. Japan is facing a wall of debt that can only be addressed by printing more money and debasing their currency.

This means paying off their debt with worthless yen where possible and in many cases defaulting on promises made. Japan's public debt, which stands at around 230% of its GDP and is the highest in the industrialized world. They are past the point where they can return to a "free and fair market" interest rate marketing their bonds to the world and still be able to pay the debt service.

The moment the Japaneses stock market fails to rise enough to offset inflation and the people of Japan realize that even a weaker yen will not help we will see a tsunami of money fleeing Japan. This will constitute the end of the line for those left holding both JGBs and the yen. This has been a long time coming and I contend the cross-border flow of money leaving Japan is why some stock markets have remained so resilient . When Japan crumbles it will be felt across the world. More on this subject in the article below.

http://brucewilds.blogspot.com/2014/05/japan-sliding-towards-abyss.html

Mon, 11/10/2014 - 22:57 | 5435152 AdvancingTime
AdvancingTime's picture

From hero to goat in such a short time.

Mon, 11/10/2014 - 23:22 | 5435241 Yen Cross
Yen Cross's picture

lol

Mon, 11/10/2014 - 23:54 | 5435373 the grateful un...
the grateful unemployed's picture

ah yu no lik, maybe we build newklaere powa pland in yr nabahood. rael cloz to oshun

Tue, 11/11/2014 - 01:34 | 5435593 yogibear
yogibear's picture

Abe is only following the US Federal Reserve's printathon script.

Tue, 11/11/2014 - 02:18 | 5435648 WTFUD
WTFUD's picture

It's clear from those polls 1 in 2 people in Japan don't have an opinion. That's what being coerced does to one's brain. Barry's Toast and so are you Schmucks for bringing in the High Priest Executioners of Goldman Sucks to fix your problems. Maybe ONE of the greatest Oxymora EVVVA!

Tue, 11/11/2014 - 02:51 | 5435672 petkovplamen
petkovplamen's picture

so will this affect the tenticles raping animes? if not, who cares?

Tue, 11/11/2014 - 04:11 | 5435724 ebworthen
ebworthen's picture

Abe looks like Lou Costello of Abbot and Costello in that pic on the article headline.

Tue, 11/11/2014 - 04:21 | 5435729 synopsisTODAY
synopsisTODAY's picture

Shockingly, even in the basket case country that is Japan...

If Japan deserves this assessment then the US should be called "the toe-tagged-cooling-out-in-the-morgue country that is Obamica." Oh, well - I tried.

Tue, 11/11/2014 - 06:56 | 5435845 Panic Mode
Panic Mode's picture

To those who voted Abe: you voted that tosser. So take the consequence and stop moaning about it. Is the saying "Be careful what you wish for" rings any bell?

Tue, 11/11/2014 - 09:04 | 5435979 JenkinsLane
JenkinsLane's picture

Blimey

Do NOT follow this link or you will be banned from the site!