As troubling as Japan's deflationary, and now negative interest rate, economic quagmire is, the biggest threat facing Japan has little to do with its balance sheet and everything to do with its demographics, for the simple reason that not only is Japan's population the oldest it has ever been, as well as the oldest on average in the entire world, but is now also officially shrinking.
We have joked about it in the past: with equities around the globe all correlating tick for tick with the price of oil (supposedly "lower oil is good for the economy", just don't tell that to the stock market), instead of doing piecemeal interventions and monetizing stocks, something which as even Citigroup has noted no longer works, what central banks should do instead is monetize the source of all market problems: oil itself.
We first joked last January that the ECB should do it...
Following The Bank of Japan's voyage into NIRP never-never-land, the market has sent a clear signal of its displeasure and now a growing number of Japanese officials (and former officials) are questioning Kuroda and Abe's Peter-Pan-ic dream that 'they' can fly. Having called for sub-zero rates more than two decades ago, Takeshi Fujimaki, the Japanese banker turned opposition lawmaker, warns "The BOJ is trapped," now that QQE efforts have flattened the yield curve, since "if the curve is steep, banks can make profits even at negative rates.
Submitted by Raul Ilargi Meijer via The Automatic Earth blog,
That the world’s central bankers get a lot of things wrong, deliberately or not, and have done so for years now, is nothing new. But that they do things that result in the exact opposite of what they ostensibly aim for, and predictably so, perhaps is. And it’s something that seems to be catching on, especially in Asia.
A radioactive water leak has halted plans to re-start a reactor at a the Takahama nuclear power plant in western Japan. The leak comes amid a push to restart reactors after the catastrophic meltdown at Fukushima five years ago and would would have been the fourth to come online after a nationwide shutdown. Yahoo News reports: Kansai Electric Power said some 34 litres (8.8 gallons) of cooling water containing radioactive substances leaked out from the reactor at its Takahama plant 380 kilometres (236 miles) west of Tokyo.