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Despite the fact that businesses are having trouble with rising input costs, the misery index being at multi-decade highs in Japan since QE started and other problems. But hey, the Nikkei's up.
Ya!!! I've been watching this, too. A 4.8% pop on the broad market index; come on. So, that market was too undervalued; not unlike the EuroZone today, too. Nope, just a lot of hot money. Amazing !!! With this kind of action, biotech/health should close up at least 5% today, here in the U.S.
Signing off from the world of financial enchantment. Catch
Some investment days, one feels like they may be standing to close to the financial fire; and every once in awhile someone throws some gasoline into the flames.....
Japan's public pension fund sells off bond holdings and moves to a 50% equity allocation.
So. Japan wants to increase inflation. They've been pumping QE, and increased the consumption tax from 5% to 8% this past April, 2014; and are planning to increase the tax again. So, how does this "help" to economy in the long run? If more monies are removed from the consumer; the consumer may taper their spending into the economy. Apparently this is what has indeed happened (I don't have the data at hand) so far in 2014. QE some more to fix the problem, eh?
Apparently, I need to find and read the book; "The Book of Economic Theory, For Dummies"
This "stuff" is more thrilling than the rides at Ohio's Cedar Point. 'Cept, at Cedar Point; one does know when and where the ride will end.
The thing really becomes you have a country that has to import just about everything (I've looked up the numbers before at the amount of energy that has to be imported, it's huge, it's too early and I haven't had enough caffeine to try to find them right now) who believes that their energy cost and inflation is too low and needs them higher.
Additionally, Japan does not live in its own world. Their attempts to wreck their currency to gain export advantage (and higher input costs) will not go without response. It's a loosely coordinated beggar-thy-neighbor policy that could certainly become disorderly.
Imagine yourself a Japanese citizen, who has worked and saved as best you could your whole life, who is now retired and living on a modest but comfortable fixed income. The value of your nest eggs are being significantly devalued before your eyes; inflation is inevitable now, perhaps quite a lot of it, reducing the buying power of savings, perhaps for the next decade or further. Your "safe" money is now paying you next to nothing as you know it will continue to do for quite some time. And there isn't a damn thing you can do about it. How far do you think you'll get now, in age, before checking in to BleakHouse?
Well, they've had a number of years of deflation, so your average retiree has seen his purchasing power go up while the rest of the economy suffers. They're aiming for 2% inflation, hardly BleakHouse style, especially since Japan, like has, has Cost of Living Increases in pensions for its retirees -- who are so powerful that the government has often granted those increases even though the cost of living has actually decreased. I wouldn't worry about Japanese retirees.
Inflation can be too low, and in fact it is in most of the world (one big exception is where I live, Brazil, and that's a whole different thing.) But a beggar-thy-neighbor policy of competitive devaluation could be exactally what we need to get inflation back into the 2-3% level, probably higher in Europe is needed. It's kind of what worked to get us out of the Great Depression, except back then the secret to ending deflation was gettinf off the gold standard.
Comments
Amazing !!!
With this kind of action, biotech/health should close up at least 5% today, here in the U.S.
Signing off from the world of financial enchantment.
Catch
Japan's public pension fund sells off bond holdings and moves to a 50% equity allocation.
Japan Public Pension Fund
This "stuff" is more thrilling than the rides at Ohio's Cedar Point. 'Cept, at Cedar Point; one does know when and where the ride will end.
From Oct. 2013 MFO post:
So. Japan wants to increase inflation. They've been pumping QE, and increased the consumption tax from 5% to 8% this past April, 2014; and are planning to increase the tax again.
So, how does this "help" to economy in the long run?
If more monies are removed from the consumer; the consumer may taper their spending into the economy. Apparently this is what has indeed happened (I don't have the data at hand) so far in 2014. QE some more to fix the problem, eh?
Apparently, I need to find and read the book; "The Book of Economic Theory, For Dummies"
Hey, have fun and make some money while ye may.
Catch
Additionally, Japan does not live in its own world. Their attempts to wreck their currency to gain export advantage (and higher input costs) will not go without response. It's a loosely coordinated beggar-thy-neighbor policy that could certainly become disorderly.
Inflation can be too low, and in fact it is in most of the world (one big exception is where I live, Brazil, and that's a whole different thing.) But a beggar-thy-neighbor policy of competitive devaluation could be exactally what we need to get inflation back into the 2-3% level, probably higher in Europe is needed. It's kind of what worked to get us out of the Great Depression, except back then the secret to ending deflation was gettinf off the gold standard.