In response to an FT article by Robin Harding and Claire Jones on 7th April 2016, entitled 'Japan lashes out against rise of yen'
"The yen’s momentum comes despite the Herculean efforts undertaken by central banks to spur growth in Asia and Europe"
I suspect being compared with the BoJ will galvanise Hercules to change his PR agency. All those years of doing ‘the brave in the name of the good’ only to be bracketed with a bunch of academics doing ‘the ridiculous in the name of the absurd’.
Japan has been in a 'depression' for twenty six years; they've had periodic deflation and several recessions during that time; their sovereign debt burden is over 200% of GDP; NIRP hasn't helped; massive money printing by the Bank of Japan has not helped; and neither have the other two arrows in Abe's sheath - although to be fair to the arrows they are still in their sheath gathering dust. Thank the Lord for plan B - when all else fails, do more of plan A.
Can it get worse? Yes it can:
1. There are two vacancies on the BoJ, which are just about to be filled with highly compliant folks who will fit right in. After the 5-4 majority that Mr. Kuroda managed to eke out last time, plan B was beginning to look shaky. No fear of that now - 'groupthink' is about to be restored.
For anyone who'd like the details, Reuters have a piece on this:
2. The bond market looks like it may break. The BOJ is finding it harder to make bond purchases of as much as 12 trillion yen ($106 billion) a month, sudden price swings are becoming common, as are yield curve inversions that have nothing to do with economic fundamentals
For anyone who'd like more on this, Bloomberg have a piece:
I'll leave the last word to Dan Fuss, vice chairman of Loomis Sayles, who recently commented at an event in Tokyo:
“How can the BOJ head for the exit? If they open the exit door, there’s a fire on the other side”