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Mix-Ansicht- BoJ beginnt mit Aktienkäufen (reicht angeblich nicht): - dottore, 11.10.2002, 12:43
- Zum dem Thema ein kleiner Auszug vom Privateer... - Boyplunger, 11.10.2002, 13:22
Zum dem Thema ein kleiner Auszug vom Privateer...
-->THE BANK OF JAPAN IS BUYING SHARES
The bells are now tolling for Japan's banking system and, by extension, for Japan's financial system. This week (Sept. 16- 20), the Bank of Japan (BOJ) came out and officially announced that it had started a 6 TRILLION Yen program to buy all the stale shares on the books of Japan's capital pressured banks. This is both an expected as well as an utterly astounding event, as can be easily seen were it instead to have been an announcement out of the US that the Fed had begun buying, for cash, shares held by American banks and still"valued" at their original purchase price, although most of them were now a small fraction of that. This is not happening in the US - not yet - but it IS happening in Japan. This type of action is the very last any credit money system can engage in to stave off a collapse.
The Zig-Zag Response:
Initially, upon hearing the news that the BOJ was buying shares from the Japanese Banks, Japan's Nikkei soared. The Nikkei rose in the face of precipitous falls by almost every other major stock market in the world. But then, everybody thought a bit further ahead and by the end of the week, the Nikkei was beginning to falter again.
It was in fact Japan's official bond market which figured out first what this really means. Having done so, Japan's official bond market sold off to the tune of 20%. This got the attention of the stock market and, once it too had figured it all out, it started to sell off too.
Nobody has yet tried to"rescue" Japan's official bond market, the market which holds Japanese Treasury bonds to the tune of 140% of GDP. Think about that for a minute. The bond market holds Japanese government paper to the tune of 140% of GDP. It has sold off to the tune of 20%. A 20% fall in a market which is 1.4 times the size of Japan's GDP is the equivalent of a fall of 28% of Japan's GDP.
And this gigantic financial loss, amounting to 28% of Japanese GDP - took place in a single day.
The Step Before The FINAL Step:
Officially, Japan's banks stand with bad loans to the tune of 141 TRILLION Yen (about $US 1.175 TRILLION). These same banks also stand with shares to the tune of 10% of the entire Nikkei. It is all these shares that the BOJ is now buying directly from them, bypassing Japan's stock exchanges. Once this shuffle is over, assuming it is carried through to the end, the BOJ will hold 6 TRILLION Yen of dud shares and the banks hold the cash. But the real problem, which Japan's Treasury bond market figured out in an instant, is that once the BOJ has finished this operation, there is nothing left inside Japan's enormous banks - except all the bad loans.
The final step in Japan's experiments with a pure credit money system will comes when the BOJ sees itself driven to directly buy a large part of these $US 1.2 TRILLION of bad loans. It is one thing to"monetise" Treasury's bonds. The US Federal Reserve has been doing this for decades. But it is most certainly another thing, monetarily, economically and financially, to have any Central Bank out in the market place"monetising" failed commercial and private loans.
Worried depositors can now get their deposits out of the banks, the Central Bank made that possible by printing fresh money as required. The problem is that when, say, $US 1 TRILLION worth of freshly printed Yen hits the street and the corner store, what will such a Yen buy? The historical answer is - next to nothing. That is why the unlimited"insurance" on demand deposits in Japanese banks, which was due to end on April 1, 2003, has just been extended until September 1, 2003.
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