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Japan QE Limit Approaching As Goldman Says BoJ Risks Losing Crediblity
As the BoJ continues to widen the gap between Japan’s haves and have-nots with its JGB monetization frenzy and multi-trillion yen foray into Japanese equity markets, and with the now unfabricated wage growth data from 2014 suggesting Abe’s “strategy” whereby wage growth begets economic growth which in turn begets confidence either isn’t working very well or never existed in the first place, the chairman of Nippon Life is joining a bevy of other folks in Japan who apparently still live in the real world and are skeptical of the sheer insanity that passes for monetary policy in Tokyo. As Reuters reports, Kunie Okamoto thinks further easing is foolhardy as the central bank already has a monopoly on the market:
It is... unwise to assume that Japanese yields will not spike simply because domestic investors hold more than 90 percent of government debt, Kunie Okamoto said in an interview with Reuters.
"Additional monetary easing is not desirable," Okamoto said on Friday.
"The BOJ is already buying around 90 percent of bonds in the market. It is not good for this to be sustained."
Nippon Life Insurance and other life insurers are major buyers of long-term government debt because they need a steady income stream to offset their liabilities, so their views on the bond market carry weight.
Note that Okamoto also warns against becoming too complacent about a spike in yields, which, as we have warned on several occasions, would be a veritable disaster as it would effectively collapse the ponzi scheme and plunge the country into BlackRock warned would be a fiscal crisis.
Meanwhile, back in Kuroda crazy land, deputy BoJ governor Hiroshi Nakaso sees no reason to alter the central bank’s inflation pledge despite the fact that plunging crude prices will make it impossible to hit. Nakaso cites “evidence” that the country is shedding its “deflationary mindset”:
The BOJ is under pressure to cut its forecast that inflation will hit 2 percent within the current fiscal year at a twice-yearly review of its projections on April 30, due to the impact of falling oil prices.
But while acknowledging that inflation was moving away from the BOJ's target, Nakaso said there were clear improvements in inflation expectations such as the rising number of firms promising wage hikes, including for temporary workers.
"We're seeing some positive changes in corporate and household behaviour that rarely happened when Japan was mired in deflation," Nakaso said.
"That's evidence that Japan is shaking off its deflationary mindset."
We suppose Nakaso isn't counting inflation expectations as “evidence” because, well…
...and Goldman isn't buying it either...
Regime shifts occurred in the forex market in January 2013 (when the 2% inflation target was introduced) and in the JGB market in March the same year (when the current BOJ governor took up his position), according to our Markov regime-switching model estimates. Had regime shifts not occurred, we estimate that the shadow rates for USD/JPY and the 10-year JGB yield would be just under 95 and around 1% as of February 2015, respectively. This suggests that under an ‘extreme’ hard landing scenario (an abrupt return to a normal regime from the current BOJ commitment regime), both the forex and JGB markets could experience major shocks.
We see little sign that the 2% inflation target will be met in the near term. We expect core CPI to continue to slow down and believe the BOJ likely undertake further easing as early as July 2015. Even so, with the 2% inflation target looking out of reach, we think the BOJ will need to revise its 2% commitment out of concern that it may otherwise lose its credibility. However, given concerns of an above-mentioned reverse regime shift in the markets, we think the BOJ would handle its exit strategy with extreme delicacy. We forecast that the bank would eventually switch from a rigid 2% inflation target to more realistic one like a 1-2% band and start tapering from 2H FY2017, by which time the adverse effects of the second consumption tax hike is likely to have eased. In view of potential delays with fiscal consolidation and possible major shocks to the markets, however, we think any tapering would end up being very limited, with the BOJ continuing to purchase a certain amount of bonds.
* * *
Finally, underscoring the risk that yields could suddenly rise (a risk which is of course exacerbated by the fact that BoJ purchases, like Fed Treasury purchases, have sapped the market of liquidity and impaired price discovery), Okamoto suggests that with yields artificially low, the central bank shouldn't take the life insurance industry bid for granted:
Okamoto also warned that simply because banks and life insurers have been reliable buyers of JGBs in past does not mean that they will continue to do so in the future.
Is the BoJ's back against the wall? We certainly think so as the evidence increasingly supports the notion that the central bank is bumping up against the limits of accommodative monetary policy and may soon be headed — as we've variously predicted —for "failed nation" status.
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for "The Next Currency Set to Fail" .. sure is doing well..
http://hedgeaccordingly.com/2015/03/japanese-yen-the-next-currency-set-t...
fukashima-Sushi for dinner ... tho
C.C Paul Krugman
"We forecast that the bank would eventually switch from a rigid 2% inflation target to more realistic one like a 1-2% band and start tapering from 2H FY2017,"
Fucka Yu
Japan can never taper. It gets 1/2 of it government revenue that it spends from bonds it buys and creates yen out of thin air. Where do you dumb fucks come from, you really aren't this stupid are you.
As I understand it at the end of the Shemitah Year (Sep-Oct 2015) there is supposed to be some giant earthquake that levels Tokyo, and oddly there are lots of geological statiticians who support some forms of 'overdue for the big one scenario.'
When Tokyo is levelled the central planners in Japan will be forced to freeze the Nikkei indefinitely and they will also be withdrawing all international investments (aka US treasuries and US stocks) which will be the last 'straw' removed holding up the entire global monetary scam.
It will trigger massive corrections in the US stock market and of this the Obama Freeze will follow (forced bail-in's, 401k forfeitures etc).
But the elite will be ready when those on social assistance come out and start rioting and people will be shocked when US and foreign mercenaries open fire in US Cities some time mid-2016.
Do not worry about the value of the stock market or the dollar or their pet bonds, just stockpile piles of food and get ready - seriously
as you understand what? FFS go troll elswhere. Kim K is trending I am sure...
Actually they get 100% of revenue from BoJ bought bonds and over 50% goes to pay interest.
I'm making over $7k a month working part time. I kept hearing other people tell me how much money they can make online so I decided to look into it. Well, it was all true and has totally changed my life. This is what I do... www.globe-report.com
Pot calling kettle black...
Hey ~ What's good 4JEWS is what's good 4 humanity... RIGHT?
what is good for jews, is to know who leads them. oh, those appearances.....
One word.?.Fat Boy.
And Little Man
actually it counts 2 words.
Drinking Oberon beer looking at the Rossi .38 I got today. This will be a gift to one of the sons. Nice gun, good starter. Got to pick up some +P rounds.
Step back and see this for what it is - look at other posts on the 'net these days, even debates on FB. People now there is something terribly fucked up going on. Who flinches first? I got out a long time ago.
The hardest part is the waiting.
I'll visit Japan when the exchange is $1 = 220 yen.
I can use the extra dough to buy a radiation suit.
"But while acknowledging that inflation was moving away from the BOJ's target, Nakaso said there were clear improvements in inflation expectations such as the rising number of firms *promising* wage hikes, including for temporary workers. "
BOJ FukuYouNomics Douche: 'We promised to buy metric fucktons of your stock at ridiculously high prices and make you and your whole vested managment team and your investors insanely wealthy; -and you promised in return to give the peons a ridiculously tiny pay raise to cover for our basically printing a fortune and gifting it to you but raising taxes on the peons to pay for it.
We kept our part of the bargain and bought metric fucktons of your stock at ridiculously high prices and made you and your whole vested management team and your investors insanely wealthy...
Are you going to give the peons a tiny raise so we don't look like incompetent assholes or crony capitalist lackeys that only know how to print up phony money and buy stock options off of corrupt politically connected financiers and industrialists?
Please?'
"Risks" ?
seems we have to cancel all currencies and debt so that we can get back to it.... although the next currencies won't be worth very much in the west.
Given Japans ability to export high quality items it is only a debt problem... but with the reset western buyers won't have any money for 'quality' items and will have to buy chinese... so double lose.
You would think at some point people would rather have a device that is maintainable rather then disposable.
"Okamoto also warned that simply because banks and life insurers have been reliable buyers of JGBs in past does not mean that they will continue to do so in the future."
in other words, either get your balance sheet in order or you will answer to us. the economy is already toast so, i think he's thinking about the future. has to be.
Tick fucking tock.
Get ready to eat grass and bark mutherfuckers.
Haha, Goldman giving "advice". Where is their internal memo? Show me that one.
What's the dollar? chopped liver?
With Abeonomics I expected this a lot earlier. Guess the Japanese believe there is a wizard behind the green curtain.
Should be riots in the streets and central banksters having to deal with mob justice.
Without 2 BOMBS they would still be fighting WWII. They are stubborn = stupid = no learn from mistakes - so guess what? They will drive their economy into a suicidal Banzai charge - just like they did on island after island. Only a lot of good Marines died showing them the way to the Emporer's version of paradise. Now for the bad news - they will drive each of you to financial collapse. It is all tied together - and our economic leaders are following right behind them. Get your ass a Marine to guard you.
When did the BoJ ever have any credibility? They've been failing hard for the past 2 decades.
Oh Goldman got "street cred" mutha fuckers. They run the mutha fuckin FED. Ain't gonna take no shit from dem punk ass bitches in Japan. Dem funkin mutha fuckers want a currency war, they'll get one, fuckin punk ass bitches.
When will they just start handing out money to its citizens way easier than this whole QE bullshit
and the citiens would have been better off (paying down debts, etc.,etc.), and that money would have ended up in the bansters hands later rather than sooner... too bad the banksters didn't have that delayed gratification gene in their genetic makeup.
The BOJ has pushed prices so high that there are no buyers at these levels. How many times have we seen government schemes to prop up prices, only to end up with massive surpluses? Wine lakes, butter mountains and soybeans piled up outside grain elevators, all because the government thought to "fix" the price above the level dictated by supply and demand. A massive spike in interest rates is baked in the cake, probably accompanied by a currency crisis.
Having a hard time understanding who can legitimately say who is or is not credible in a world sloshing in fiat currency.
This whole centrally planned gangbangkster clusterfuck already lost all it's credibility.