LONDON (AP) -- Japanese central bank eased monetary policy again!

[Neubarth]

LONDON (AP) -- Japanese stocks led the way in world markets Monday after the country's central bank eased monetary policy again in its latest attempt to shore up the economy.

Last Friday's hint from the Federal Reserve chief that the U.S. central bank was ready to do more to help the U.S. economy had already helped stocks around the world start the week on a positive tone.

Nevertheless, the Nikkei 225 stock average proved to be the standout, closing up 158.20 points, or 1.8 percent, to 9,149.26 after the Bank of Japan decided at an emergency board meeting to further ease monetary policy by expanding a low-interest loan program for financial institutions to 30 trillion yen ($355 billion) from 20 trillion yen.

There may be some disappointment that the move has seemingly done nothing to halt the export-sapping appreciation in the yen -- by mid-morning London time, the dollar was down 0.7 percent at 84.75 yen.

Last week's decline in the dollar to a 15-year low of 83.61 yen proved to be the catalyst to the Bank of Japan's emergency meeting. The worry is that the rising yen will make it more difficult for Japan's high-value exporters to compete in international markets. That would further threaten the country's paltry economic recovery -- recent figures showed that Japan's economy grew by only 0.1 percent in the second quarter from the previous three-month period.

 

[Neubarth]

Sadly all of their efforts seem to be for naught.

 

[xotoxi]

 

[mal]

peace...

 

[Mad Scientist]

Japan needs the Yen to be in the 120 Yen to Dollar rate for their economy to start exporting again. I was there in the nineties when the exchange rate went to 79 Yen to the Dollar.

The population is getting older, the young people aren't having babies and they don't like immigration, even from Asian countries.

You guys think we got problems? Japan is the country that's really fucked!

 

[loosecannon]

But analysts called the measures too timid in the face of the problems facing Japan’s export-oriented economy. A yen that has paradoxically surged to 15-year highs despite weaknesses in the country’s economy, coupled with the damaging phenomenon of falling prices known as deflation, continues to hinder hopes of a strong recovery, analysts said.

“There seems to be a sense of fatalism. The B.O.J. continues to play the same old game of making incremental, but ultimately meaningless, policy changes in response to political pressure,” said Richard Jerram, economist for Japan at the global investment bank, Macquarie.

“The government talks of the need for fiscal reconstruction, but then tries to construct an economic stimulus package with tiny fiscal measures and minor, uncoordinated structural reforms,” Mr. Jerram said. Intervention in the currency markets “looks necessary, but is absent,” he said. Japan has not intervened in currency markets since 2003-04, when the finance ministry sold 35 trillion yen for dollars.

http://www.nytimes.com/2010/08/31/business/global/31yen.html?src=busln

 

[Toro]

Japan needs the Yen to be in the 120 Yen to Dollar rate for their economy to start exporting again. I was there in the nineties when the exchange rate went to 79 Yen to the Dollar.

The population is getting older, the young people aren't having babies and they don't like immigration, even from Asian countries.

You guys think we got problems? Japan is the country that's really fucked!

I agree completely, and I have positions on to profit from this coming disaster.

For example, in their last budget, total tax revenue was ~40 trillion yen. Total expenditure on social security and interest payments on the debt was ~40 trillion yen. They have revenues of ~10 trillion yen from other sources, i.e. dividends from investments, but their total expenditure was over 90 trillion yen. Their savings rate has dropped from 15% 15 years ago to 2% today. And the working population in Japan has begun to decline. They have to borrow about $500 billion each and every year, and they are running out of sources of capital. They can't raise taxes because every time they do, people stop spending. The Japanese are truly and totally fracked.

 

[loosecannon]

Japan needs the Yen to be in the 120 Yen to Dollar rate for their economy to start exporting again. I was there in the nineties when the exchange rate went to 79 Yen to the Dollar.

The population is getting older, the young people aren't having babies and they don't like immigration, even from Asian countries.

You guys think we got problems? Japan is the country that's really fucked!

I agree completely, and I have positions on to profit from this coming disaster.

For example, in their last budget, total tax revenue was ~40 trillion yen. Total expenditure on social security and interest payments on the debt was ~40 trillion yen. They have revenues of ~10 trillion yen from other sources, i.e. dividends from investments, but their total expenditure was over 90 trillion yen. Their savings rate has dropped from 15% 15 years ago to 2% today. And the working population in Japan has begun to decline. They have to borrow about $500 billion each and every year, and they are running out of sources of capital. They can't raise taxes because every time they do, people stop spending. The Japanese are truly and totally fracked.

so why is the yen at a 15 year high?

 

[Toro]

Japan needs the Yen to be in the 120 Yen to Dollar rate for their economy to start exporting again. I was there in the nineties when the exchange rate went to 79 Yen to the Dollar.

The population is getting older, the young people aren't having babies and they don't like immigration, even from Asian countries.

You guys think we got problems? Japan is the country that's really fucked!

I agree completely, and I have positions on to profit from this coming disaster.

For example, in their last budget, total tax revenue was ~40 trillion yen. Total expenditure on social security and interest payments on the debt was ~40 trillion yen. They have revenues of ~10 trillion yen from other sources, i.e. dividends from investments, but their total expenditure was over 90 trillion yen. Their savings rate has dropped from 15% 15 years ago to 2% today. And the working population in Japan has begun to decline. They have to borrow about $500 billion each and every year, and they are running out of sources of capital. They can't raise taxes because every time they do, people stop spending. The Japanese are truly and totally fracked.

so why is the yen at a 15 year high?

Take your palm. Place against your nose.

That's the typical site-distance of a portfolio manager.

 

[loosecannon]

while that is a pretty good answer it can't be the whole truth.

There is no good reason why people would be fleeing to the yen as a safe haven given the depth of their predicament and the fact that they have essentially no options to address their economic and debt woes.

Collectively we need to find out if there is a bottom to deflationary spirals, if they self correct after they bottom out.

our economy is in the exact same trap as Japan's is about 10 years behind.

And to think this entire world wide demographic extreme featuring a dependent population spike coupled with a contracting workforce is all the result of WWII.

And people still say that war is good for the economy.