The Sumo Japan Qe Thread

[Ash4781]

I thought according to the press Abe was going to call an election today?

[crashmonitor]

Wondered why the Nikkei had crashed overnight........surprise contraction in Q3 GDP ending the equities party.

http://www.actionforex.com/action-insight/market-overview/daily-report:-yen-recovers-as-nikkei-knocked-down-by-poor-gdp-20141117229276/

[zugzwang]

Surprise? Only for the likes of Paul Krugman.

For everybody else the only credible outcome was a stagflationary slump... and that's just the hors d'ouevre.

[council dweller]

Well, we have to face it folks.......the Japanese are all thick and the higher you look the thicker they are.

[Ash4781]

The GDP number reported seems to have been miles off the market expectation.

[interestrateripoff]

Stocks Decline With U.S. Index Futures as Yen Rallies on Japan Recession

[interestrateripoff]

Japan Prepares Stimulus After Unexpectedly Tumbling to Recession

Japan signaled it will pull together a stimulus program to shore up the world’s third-largest economy after it slumped into a fourth recession since 2008.

Phew just after the last emergency injection Japan is preparing yet another stimulus package....

[zugzwang]

Japan Prepares Stimulus After Unexpectedly Tumbling to Recession

Japan signaled it will pull together a stimulus program to shore up the world’s third-largest economy after it slumped into a fourth recession since 2008.

Phew just after the last emergency injection Japan is preparing yet another stimulus package....

Shore up the world's third-largest economy? Good luck with that.

[pipllman]

I think Japan has had 11 waves of QE so far

How many more would they try with the same results before they realise it isn't working?

[frederico]

Japanese national debt now 245pc of GDP. Debt payments alone take 43% of tax revenues.

I'm very surprise it has kept going this long

[interestrateripoff]

Japan Seeks to Strengthen 2015 Growth After Recession Hit

With Japan’s slump into its fourth recession since 2008 threatening the failure of the Abenomics reflation program, Prime Minister Shinzo Abe’s administration is taking steps to shore up growth for the coming year.

Japan Said to Discuss Cementing Timing of Sales-Tax Increase

Japanese government officials are discussing the option of locking in the timing of a delayed sales-tax increase, removing the flexibility of a postponement over weakness in the economy, according to people familiar with ..

[crashmonitor]

Well it appears that equity markets quite like the present pessimism...Japan going into recession , all good; Cameron's cataclysmic warning on the state of the World economy, good too.

Seems that the carrot of QE and zero interest rates forever just beats economic meltdown everytime. FTSE now at 6700...you couldn't make this up....I was expecting a complete spanking on equities post Japan GDP release and doom laden G20.

Edited November 18, 2014 by crashmonitor

[GloomMonger]

The GDP number reported seems to have been miles off the market expectation.

The Japanese are too honest, they need to follow our dear leaders and massage the figures.

[crashmonitor]

The Japanese are too honest, they need to follow our dear leaders and massage the figures.

Or may be they just don't have the fall back of imputed rents.........house prices have been falling there for three decades.

[zugzwang]

Well it appears that equity markets quite like the present pessimism...Japan going into recession , all good; Cameron's cataclysmic warning on the state of the World economy, good too.

Seems that the carrot of QE and zero interest rates forever just beats economic meltdown everytime. FTSE now at 6700...you couldn't make this up....I was expecting a complete spanking on equities post Japan GDP release and doom laden G20.

The Apeman postponed his useless consumption tax and called a snap GE = more govt pork, bribes and kickbacks all round.

Keep shorting the yen.. 120.. 130...150...200..

We're moving into the endgame now, whether the Japanese re-elect this tool or not.

[Guest_FaFa!_*]

The Apeman postponed his useless consumption tax and called a snap GE = more govt pork, bribes and kickbacks all round.

Keep shorting the yen.. 120.. 130...150...200..

We're moving into the endgame now, whether the Japanese re-elect this tool or not.

They will as it is unlikely the main opposition party will be able to find sufficient candidates to stand in all the constituencies.

Abe is changing a part of his platform and is going to the people. Perhaps you'd prefer the UK style where they break promises willy nilly and ignore the consequences?

My bet is the effects have worked their way through and that the Japanese economy will be growing again soon. Whether they can hit the nominal 5% they need remains to be seen. I'd be surprised if the yen gets anywhere near 200 - it must be getting to the point of looking cheap. I am thinking of bringing my GBP over now it has hit my target of 180 to the pound.

[zugzwang]

They will as it is unlikely the main opposition party will be able to find sufficient candidates to stand in all the constituencies.

Abe is changing a part of his platform and is going to the people. Perhaps you'd prefer the UK style where they break promises willy nilly and ignore the consequences?

My bet is the effects have worked their way through and that the Japanese economy will be growing again soon. Whether they can hit the nominal 5% they need remains to be seen. I'd be surprised if the yen gets anywhere near 200 - it must be getting to the point of looking cheap. I am thinking of bringing my GBP over now it has hit my target of 180 to the pound.

The yen has to fall far enough to allow the steady destruction of the govt debt mountain. Consumer purchasing power will be devastated in the process - the yen has already lost 35% of its value vs the USD since Abenomics was first mooted. Ultimately the yield peg will be sacrificed and JGBs will go the same way as the currency.

Inflation without compensation, no surprises there. And a hell of a lot more to come. Has Abe been straightforward with voters about that?

The consumption tax was a complete shambles, I think it's fair to say. Many people did say so but Abe chose to ignore them (and the historical precedent). On that basis alone I'm not sure how much confidence we can have in his judgement. The question now is how much lower can the yen go without kicking off a currency/trade war with China and Europe? If Abe and his advisors get that wrong then surely we're all f***ed.

Edited November 18, 2014 by zugzwang

[Steppenpig]

You never hear anyone lecturing the Japanese that they need to sort out the innefficiences in their economy any more these days (notably agriculture and the service industries). It's great that we've all discovered that just borrowing more fixes all your problems.

[Guest_FaFa!_*]

The yen has to fall far enough to allow the steady destruction of the govt debt mountain.

How far do you think it needs to fall?

Consumer purchasing power will be devastated in the process - the yen has already lost 35% of its value vs the USD since Abenomics was first mooted.

If you strip out the sales tax increase it is at 1%. I live here so I am afraid you cannot ******** me about the amount of pain involved

Ultimately the yield peg will be sacrificed and JGBs will go the same way as the currency.

When and by what process?

Inflation without compensation, no surprises there. And a hell of a lot more to come. Has Abe been straightforward with voters about that?

The ideas behind Abenomics are publicly available and it is a stated aim to raise wages which they have not managed in real terms as yet. If the opposition has better ideas let them speak.

The consumption tax was a complete shambles, I think it's fair to say. Many people did say so but Abe chose to ignore them (and the historical precedent). On that basis alone I'm not sure how much confidence we can have in his judgement.

Yes, agreeing to the tax which was not a part of his original plan when in opposition to get the agreement of the then PM to call an election was not a good move in retrospect.

The question now is how much lower can the yen go without kicking off a currency/trade war with China and Europe? If Abe and his advisors get that wrong then surely we're all f***ed.

Another Asian Financial Crisis is a possibility. Certainly rebalancing will be tricky and the attempts to move Japan to an economy more based on consumption will not be easy. Nevertheless Japan, like every other country, will pursue what it considers the best way forward for it. Germany and China are not in a position to complain given their own antics. We shall see.

[interestrateripoff]

BOJ Kuroda resolute in fight against deflation, says ready to ease more

NAGOYA/TOKYO, Japan - Bank of Japan Governor Haruhiko Kuroda on Tuesday stressed the bank's readiness to expand stimulus further to meet its price goal, a message that was partially echoed by an European Central Bank policymaker as the euro zone economy battles to lift off.

Can't have deflation it must be fought at all costs even if the currency is trashed.

[interestrateripoff]

• Abe Sales Tax Backfiring With More Debt Not Less: Japan Credit
• Kuroda Tells Japan Inc. to Stop Hoarding Cash as Costs to Rise

[interestrateripoff]

BOJ's Shirai defends latest easing, rules out incremental action

HIROSHIMA, Japan - A Bank of Japan board member who voted for last month's huge monetary expansion defended the move on Wednesday, saying that failing to act would have cast doubt on the bank's determination to hit its price goal and undermined its credibility.

[interestrateripoff]

BOJ’s Profit Soars 47% to Highest Since 2001 as Assets Grow

If they keep printing they'll keep making a profit...

[zugzwang]

How far do you think it needs to fall?

If you strip out the sales tax increase it is at 1%. I live here so I am afraid you cannot ******** me about the amount of pain involved

When and by what process?

The ideas behind Abenomics are publicly available and it is a stated aim to raise wages which they have not managed in real terms as yet. If the opposition has better ideas let them speak.

Yes, agreeing to the tax which was not a part of his original plan when in opposition to get the agreement of the then PM to call an election was not a good move in retrospect.

Another Asian Financial Crisis is a possibility. Certainly rebalancing will be tricky and the attempts to move Japan to an economy more based on consumption will not be easy. Nevertheless Japan, like every other country, will pursue what it considers the best way forward for it. Germany and China are not in a position to complain given their own antics. We shall see.

As I see it, whatever Abenomics stated aims it's real purpose is to save Japan plc from its own citizens, especially the >60s. To do this Japan's enormous debts have to be put on a sustainable trajectory once and for all and the country opened up to foreign direct investment and competition (which will also help with the debt carry). The first can only be accomplished via inflation - lots of it, much more than the advertised 2%. As inflation rises, so the value of JGBs must be allowed to fall, properly reflecting the market risk of default. Financial repression isn't accidental to the plan, it's instrumental. If that means sacrificing the life savings of the current population of retirees then so be it, better that than a debt reset in which they'll suffer even more. If that means eye-watering stagflation for the next 10+ years then so be it, better that than a waterfall loss of faith in the yen and a hyperinflation.

As you rightly say, Europe and China are no better off. They too need sharply lower rates of exchange to maintain inflation and keep their debts bounded. It's a problem endemic to the entire world wherever the liabilities of private sector debt peddlers have been fully assumed by sovereign govt.

[interestrateripoff]

http://www.zerohedge.com/news/2014-11-26/now-thats-what-i-call-bubble

"But the truth remains that few ever recognise the early stages of exuberance as attention is typically being diverted the other way."

Some food for thought from history...

At its peak Japan’s equity market constituted 42 per cent of global market capitalisation and Toyota was making more money from trading derivatives than selling cars.

Shares in the elite Industrial Bank of Japan rose sixteen fold between 1984 and 1989 to a price/earnings ratio of 170 times. It did not matter that IBJ’s free-float was just four per cent – a $130bn market cap ($250bn today’s money) transformed its appetite for risk.

Infamously, IBJ got involved with Osaka hostess-turned-restaurateur Nui Onoue, who channelled stock tips to her sponsors via a giant ceramic toad in weekend séances. The “Dark Lady” became the world’s largest individual speculator until the market collapsed and the $20bn she had borrowed was found to have been fraudulently obtained. She took down the bank’s chairman and two small lenders, ending up with a twelve-year jail sentence and personal debts exceeding $3bn.

Property prices were out of this world. With Tokyo fast becoming an international financial centre, it was claimed that 250 super high-rise buildings would need to be built. Prices were marked up to the point where the capital’s landmass was worth more than Canada and the value of its Imperial Palace grounds – which you can run round in about 40 minutes – could buy the entire state of California. The government’s Management and Coordination Agency valued Japan’s land at ¥2,000tn – $15tn at the time, or about four times that of the US with twenty-five times the area.

In a Japanese version of tulipmania, golf club memberships were traded like stocks. Koganei Country Club to the west of Tokyo cost over $3m to “join”, plus green fees. Organised crime could not resist getting in on the act. Ibaraki Country Club turned out to have minted around 52,000 subscriptions rather than the 2,830 officially sanctioned.