Japan's central bank may announce plans to buy asset-backed securities when it issues its policy decision later Tuesday, the Nikkei business daily reported. The newspaper had reported earlier in the week that the Bank of Japan may expand its low-interest loans to financial institutions. But in the report Tuesday, the Nikkei said "a growing number of board members argue that the bank should go further" and begin buying securities backed by loans to small and medium-sized enterprises. The report, which didn't cite sources, said such a move would be aimed at making more funds available to the private sector.
Increasing risks to Japan’s recovery prompted what may become the biggest threat yet to the Bank of Japan’s independence as politicians seek to redress its failure to end the deflation entrenched in the economy since 1998.
Your Party, an opposition group, plans to submit a bill in the Diet session running through December that would give the government a greater role in BOJ policymaking. Ichiro Ozawa, a former challenger to Prime Minister Naoto Kan whose calls for currency intervention and enlarged fiscal stimulus have been adopted by Kan, made a similar proposal last month.
The debate comes after BOJ Governor Masaaki Shirakawa refused to expand purchases of government bonds this year even as deflation persisted. The bank may today instead widen a 30 trillion yen ($358 billion) program providing loans to banks, according to 14 of 17 economists surveyed by Bloomberg News. The effort has so far failed to stanch a contraction in lending.
Shirakawa’s intransigence has incurred the ire of politicians pressing the bank to boost efforts to end deflation, which erodes corporate profits, makes debt harder to pay back, and enhances the yen’s lure by lifting its purchasing power. The GDP deflator, a gauge of prices across the economy, has fallen 14 percent since 1997, according to data compiled by Bloomberg.
“Japan is the only industrialized country which has had consumer price changes of minus or zero over the past decade,” Keiichiro Asao, head of policy research at Your Party, said in an Oct. 1 interview in Tokyo. “If the central bank is a guardian of stable prices, it shouldn’t allow price declines.”
The BOJ, which has kept its benchmark interest rate at 0.1 percent since December 2008, currently purchases 1.8 trillion a month of government bonds. At the current pace of buying, the bank’s self-imposed ceiling for bond holdings will be reached in 2014, according to Barclays Capital estimates.
The Federal Reserve, by contrast, has eschewed any such ceiling and indicated last month it’s prepared to add to its holdings of U.S. Treasuries. At the same time, the Fed’s balance sheet, at $2.3 trillion, is smaller than Japan’s relative to the size of the economy, at about 16 percent, according to data compiled by Bloomberg. The BOJ holds about $1.5 trillion, or about 26 percent of Japan’s GDP.
The BOJ's balance sheet, which has been relatively flat when compared to peer central banks, especially since FX interventions will likely be sterilized, is about to explode and the JPY will plunge once the carry traders reorient themselves to shorting the original carry currency of choice.
As a reminder, here is how Japan has demonstrated remarkable restraint (at least recently) as everyone else has been printing.
In other words, the BOJ will continue to use FX intervention as an acute weapon every time the USDJPY drops below 83, and gradually implement asset-backed purchases as the chronic intervention against endless deflation.
Because this time it will be different. And, because, as the G-7 people promised, and everyone believed them, there will be no competitive devalution. Ever.
Politicians Know This Time is Different! It's hard not to laugh out loud at the sarcasm in the last paragraph above.
Not only did QE fail to do what the Bank of Japan wanted (raise prices), QE has also failed to stimulate bank lending as Bernanke wants. Moreover, Japan's currency intervention efforts have not accomplished anything, ever.
But yeah... this time is different, because .... politicians know better!
By the way, this exercise in stupidity by all the central banks in question, shows just how hard it is to destroy a currency, even when you try (except against gold of course).
Mike "Mish" Shedlock
I found a most wonderful place to take the kids for a day out in the sun and for some great excitement, fun, sports and adventure. It is called Heiwa no Mori Koen Field Athletic Course (平和の森公園フィールドアスレチックコース) and it's about a ten minute walk from Keihin Kyuko Heiwajima station or a ten minute bus ride from JR Omori station.
The Heiwa no Mori Koen Field Athletic Course is an obstacle course for kids. The entire course, from start to finish has 40 obstacles that the kids have to challenge. There's climbing giant rope and wood jungle gym types of structures to climbing over walls using ropes to jungle bars and rowing across ponds full of deadly piranhas (oh, and I'm kidding about the piranhas part). You and your child could have a wonderful time at this fun park.
I'd say that it is best for children between the ages of 6 to 12 but younger ages will also have a blast at this park as mom and dad can help them out with the obstacles that are too scary!
I got together with my friend, Satoshi Miyaki and, unbeknownst to him, I've come up with a list of Japanese Girl Rock Bands that matter in 2017.... Satoshi, who just likes cool music because, well, just because that's what he does, has selected a bunch of these groups (Thanks Satoshi san!)... I have also added a few of my own. This isn't the complete list. This is just Japanese girl bands - with girl members only - who are performing gigs now.... If I miss your band from the list, send me an email as I am going to make another list a little later.
Also, these are all female only bands. There's lots of cool bands in Japan but if we start making exceptions and adding bands that have guys and girls, we'd be here forever. Also, these are bands that I think (from my most probably confused viewpoint) that a foreign audience might like. Also, there is no particular order to this list excepting the first two. I think not putting Shonen Knife at the top of the list along wit…
Mike (in Tokyo) Rogers' Top 50 Best Songs of 2016 マイク・ロジャースの2016年のトップ５０曲（１から５０の順番リスト！）
These are my favorite songs and/or something from my favorite artists of the year. These are just my favorite 50 as I placed on the weekly Top 3 Video Countdown (http://robot55.jp/?s=top+3). There are also 5 songs included this year from the Cool & Strange Music Countdown too! (http://robot55.jp/?s=cool+%26+strange+music) Now, some of these songs were not released in 2016... But so what? I play alternative and underground stuff so this year was the first time I had heard them and it's my countdown, so there! Also, these songs were chosen by my iTunes software as the Top 50 songs I played from October, 1 2015 until December 20, 2016 (Plus some late entries and other stuff that tickles my fancy!).... I have placed videos with the songs whenever and where ever possible. #1) Ginger Wildheart - Do You?The real story here in 2016 was Ginger Wildheart. Not only did he tour Japan but his music was…