Tuesday, January 22, 2013

Black Swan Capital: Japan and more lost decades ahead?

 BSC Signature 

Japan: An ugly self-reinforcing cycle in the making? 

The yen was sharply higher this morning on news the BOJ
did implement a 2% inflation target, but didn't announce immediate open-ended bond buying. Instead, the BOJ collective was foolish enough to show a modicum of concern about doing too much already, because should even a tiny-weeny bit of inflation emerge in now tranquil sea of liquidity, it could get very ugly very fast. I think the BOJ clearly understands that a self-reinforcing vicious cycle isn't the type of animal they care to tangle with.

Obviously the big-brains on the BOJ board haven't been paying attention, some traders say. And Prime Minister Abe definitely seems to lack creativity in these matters. Instead of cajoling the BOJ into the dirty deed, it's time to "look West young man." That is your future.

Yup, it's time Mr. Abe called in the Zen Master of open-ended bond buying - Super Mario Draghi-san, now head of the European Central Bank (ECB). 


No comments: