10,000,000,000,000 – That’s a lot of Yen!
Even in dollars (dividing by 87 this morning) that’s $115,000,000,0000 – enough to make 115,000 people millionaires. It looks like most of those millionaires will be yesterday’s bulls (not us), who must have known something as they bought and bought as we double tested the 10,250 mark on the Dow both yesterday and Friday. Perhaps they are right, perhaps the entire global econonomy has been deemed “too big to fail” and our leadership is willing to do whatever it takes to boost it at every turn.
Sure you can argue there is bound to be hell to pay at the other side of this transaction but whether the bill comes next week, next month or next year, it certainly doesn’t seem to be worrying any of the people who are gorging on the feast that is the great rally of 2009. Despite the fact that the Nikkei was up 2.5% on Monday, the BOJ had “an emergency board meeting” last night and decided to offer 3-month loans to our friends the commercial bankers at 0.1% driving bonds to the lowest level in 13 months, now just 0.455% for a 5-year bond.
Making bonds worthless is a great way to force more money into the stock market, which is also fueled by low-cost margin loans and, don’t forget, those commercial banks can leverage up that $115Bn ten to one – so we’re talking about 100 Trillion Yen put into play last night and that’s over $1Tn US Dollars, which is quite a lot – even if they don’t buy what they used to…
“The BOJ was facing a lot of pressure from the markets and the government, so it wanted to show that it was being proactive,” said Junko Nishioka, chief economist at RBS Securities Japan Ltd. in Tokyo. “The BOJ’s understanding is that deflation risks have increased.”
So what the G20 is telling us is that, no matter what price commodities are and, whether people can afford them or not, they are NOT going to let those prices fall. Better some starving poor people than some upset rich people seems to be the working theory.
IN PROGRESS
