Friday Fizzle – BOJ and GDP Disappoint Investors, Again

M-m-m-m-my Kuroda!  

As you can see from the Nikkei chart – it's been a wild morning already as the BOJ ended up doing nothing, sending the Nikkei down 600 (3.6%), then back up 600, then down another 600 then back up 300, down 300 up 500 and now settling down 120 overall – what a mess!  Imagine what would happen if they ever tightened (don't worry, not going to happen). 

Still, lack of loosening is tightening as far as Japanese traders are concerned and the Yen blasted 2.5% higher, which is about as much as a currency ever moves in a single day and we're back to just 103 Yen to the Dollar, well below the 110 the BOJ and the Keiretsu demand to keep the exports flowing.  

The BOJ left the door open for more easing at the September meeting by saying there would be a "comprehensive assessment" on the effects of easing but I think the Western Press is misinterpreting it as the Japanese don't like to say no and this, to me, sounds like a no, which is not surprising given the INSANE amount of easing they've already committed (yes, like a crime) in the past 2.5 years of Abenomics.

Sure it's only Yen but 400Tn of them begin to be real money – close to $4Tn, which is about the balance sheet of our own Federal reserve except that our GDP is $20Tn and Japan's GDP is now less than $5Tn and falling fast.  Nonetheless, no matter how low rates go in Japan (-0.1% now) – they have been unable to dissuade people from buying JGBs – after all, getting 99% of your money back after 10 years keeps you well ahead of their 0.4% annual deflation, right?

This is not the CPI chart of a healthy economy folks and Japan is $12.5Tn in debt which is, if you care to count 1,287,000,000,000,000 Yen – that's 1.287 QUADRILLION Yen in debt – not even Zimbabwe had enough fake money to cover that sort of deficit and Japan is adding another 10% of the GDP ($500Bn) to the debt pile every year.  This is why the BOJ seriously
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