As was perfectly expected by Zero Hedge, Japan is issuing its first batch of Earthquake relief debt to the tune of ¥10 Trillion. And with massive repatriation flows (as confirmed today when Steve Liesman denied the very concept), and little demand out of domestic purchasers, Japan is about to (re)discover the pleasures of massive quantitative easing.
From Sankei (obviously Google Translated):
East by the earthquake, the government budget for compensation for the rehabilitation and reconstruction, the central bank to fund the full amount directly to undertake major "earthquake reconstruction bonds" decided to issue an emergency. Several government sources have revealed. Issuance is expected to more than 10 trillion yen. Coordination with the ruling and immediately entered the Bank of Japan, including an agreement aimed at the opposition.
The government aims to secure new funding disaster reconstruction measures, it was considered appropriate the full amount of financial resources such as free child allowance and the highway was recorded in fiscal year 2011 budget, approximately 3 trillion yen not only to determine effective measures to hit.Government bonds was also considering a new financial situation worsens if you ask on the mass distribution in the bond market, there is a risk that falling interest rates lead to higher bond ratings.
This bill makes the rapidly rising debt to assume the Bank of Japan quake reconstruction. Underwriting government bonds by the central bank has been prohibited by Article 5 of the Public Finance Act, the provision of the phrase "within the scope of the amount passed through the Diet in the cases where special circumstances will not apply" has been defined, and this The earthquake is "special reason" was considered spent.
The Bank of Japan has secured its independence in the Bank of Japan Law that could frown, are expected to respond to the acceptance and finally that there is a movement of the revised BOJ Law strengthen the involvement of the government parties.
Reconstruction measures in the Great Hanshin Earthquake in 1995 was recorded a total of 3 trillion yen supplementary budget for 3800 of 3 degrees.This earthquake is far from the large scale "in 10 trillion yen and 20 trillion yen is not enough" (Kamei Shizuka national party representatives), but some of this.
Meanwhile, the president of the LDP Tanigaki Teiiti proposed a tax deadline, Prime Minister Naoto Kan, "Japan's economy could worsen further," it shows a negative thought.
In the FY2011 supplementary budget measures aimed at the ruling party recovery, the child allowance was recorded in 23 year's budget (¥ 2.2 trillion) of highways and free (£ 100 billion) of free high school tuition (400 billion yen), security systems door to door farm income (6,000 million yen) was distributing the financial resources devoted to planning and policy in government bonds to cover the rest of earthquake reconstruction. Roads and bridges (speak today), is considering issuing bonds for construction and ports.