This page has been archived and commenting is disabled.
BoJ Conducts Survey, Promptly Ignores Results
Less than a week after former BoJ official Yuri Okina warned that Japan’s bond buying program was having a “huge” impact on market liquidity, a new survey from the BoJ itself shows nearly 70% of financial institutions believe the market is impaired thanks to central bank asset purchases.
Via Reuters:
The majority of Japanese government bond dealers think that the bond market is not functioning well and that bid-ask spreads are not very tight, a Bank of Japan survey showed today.
The BOJ surveyed 40 financial institutions that are eligible to participate in JGB market operations, in order to better understand how its purchases of government debt via its quantitative easing are impacting the market.
There are lingering worries that the BoJ's quantitative easing is hurting bond market liquidity [as] more than 60 per cent of firms [report] having some or a lot of trouble fulfilling orders.
It appears that monetizing the entirety of gross JGB issuance distorts markets after all and we can’t help but reiterate that wide bid-asks (i.e. impaired price discovery) lead to volatility which, if you’re Japan, could in short order collapse the entire ponzi scheme and shatter the Keynesian illusion in the process. As we’ve noted on a number of occasions, it certainly appears as though the BoJ is indeed losing control of not only the market, but the narrative as well. For evidence of this, look no farther than a simple chart of the yield on JGB 10s:

The punchline: the BoJ doesn’t seem to care about the results of its own survey. Here’s Reuters, summarizing comments from the BoJ’s number two, Hiroshi Nakaso:
The Bank of Japan must ease monetary policy further if oil price falls hamper its efforts to ramp up inflation expectations, its deputy governor said, stressing the central bank's readiness to top up stimulus to hit its ambitious inflation target.
So, again: more cowbell.
- 6270 reads
- Printer-friendly version
- Send to friend
- advertisements -


At some point Japan will drink from a fire hose.
"Don't ask questions you don't want to know the answer to."
Who the fuck are they kidding. They will not stop bond purchases when they hit 2% or 3% or 4% inflation. They have no other card to play. They are just buying time and the business media is too stupid to understand.
Will the liquidity kill them or the radiation? They are our petri dish of experimental horrors right now. More than one test going on does not allow for controlled conditions though.
Hell, they are about to remove the hose and suck on the main.
BOJ must act if oil falls affect inflation expectations: deputy governor
High oil prices bad for business and consumers...low oil prices good for businesses and consumers but bad for government.
Bizarro world.
Bizarro is relative. We were sold a fairy tale called capitalism where markets were based on supply and demand and other "fundamentals." Manipulation is not the new normal, it is simply normal (or so I think I have figured out for the moment). They don't tell us that part of the story, it does not sell well.
We call it bizarre when really we are just disillusioned.
There are checks and balances, but no one is checking so there is no balance.
Sounds like my bank account
"We were sold a fairy tale called capitalism where markets were based on supply and demand and other "fundamentals."
Quite so. Disillusioned and disappointed. And pissed.
When Kan took office in Japan, one of his first announcements was that he wanted to "financialize" the Japanese economy. Of course, few knew what that meant. It seems Abe continues the plan. It ain't just American and European politicians and bureaucrats who have been bought out.
Manipulation is the norm. You cannot ignore human nature. Human nature leads some to strive for advantage over others. No system can control or prevent human nature. This was the point of the American Revolution. Tear down the structure that allows some to have advantage over others, reform and start over. It isn't a one hit wonder. The rinse has to be repeated every couple of batches or the keg gets nasty.
I so agree, did not put this material in my post because it would have been too long. But if we are open and honest about our nature, accept the selfish beasts that we can become under the proper conditions, we could actually do some of this collective stuff effectively. Until then, not a chance in hell. Founders were geniuses, wise, or really honest with themselves. Maybe some of all of the above.
Ah, the daily BoJ doom-porn. As I have previously stated, I have a bet that Japan will default (awful I know, to bet against such things), but I was drunk at the time of agreement.
Was pleasantly surprised after sleeping off the hangover that I added a six month error margin (time-wise) onto the bet terms. I am sensing that the market is probably primed for a collapse in confidence. Armstrong will probably be right in that an external factor will send this domino toppling over. It is true what he stated yesterday, that their debt is held almost exclusively WITHIN Japan itself.
Still, confidence is swirling the drain and I see the makings of crisis looming, but hey, misery loves company and Japan will probably not be alone. Tick-tock.
Does not Japan hold much US debt? If they go belly up, what will they sell to make ends meet? Will then China not want out of US debt as it is going down? ECB will be the buyer of last resort over the next two years? What happens when even the ECB ship of fools starts to leak faster than they can print patches? Will the Fed start buying (openly) again? What happens then? Did I miss something?
No worries, Belguim will step up to buy them all!!!
I am not stating that other regions will not fall first, or will be unaffected. It isn't Japan only which is at risk.
Impossible for nations which are tangled up in a web of debt instruments to not be affected by one region collapsing.
Ease monetary policy even more...yeah, BOJ, that oughta help. Fucking morons! Blow up, already!