BOJ burning money to prevent Nikkei collapsing

[Buraku]

BOJ supplies funds to calm call market after Lehman

The Bank of Japan injected the money market with its biggest cash infusion in six months via same-day operations on Tuesday to help ease jitters following the collapse of Lehman Brothers.

The BOJ injected a total of 2.5 trillion yen ($24 billion) through two operations, with the first injection of 1.5 trillion yen coming earlier than its regular operation time, as the overnight call money rate rose several basis points above the central bank's 0.5 percent policy target.

The overnight call rate eventually fell to around 0.45 percent TANSHI after the second funding of 1 trillion yen from around 0.55-0.56 percent before the BOJ's actions.

Traders said the central bank was likely to remain vigilant and step in to add more liquidity if the call rate stayed above the target, as long as tension remained in the market.

"I expect the BOJ to keep a generous funding stance for a while until market jitters subside," said Shinsuke Kanabu, joint general manager at money broker Central Tanshi.

If things don't change I expect much of the developed world, Japan, Europe, the USA etc to be in full recession by November followed by one of the worst holiday periods as car sales drop and parents can no longer fork out the cash for the latest sports gear and playstations - with the US subprime shit now influencing the world economy negatively the total Christmas/Holiday period sales are going to suck this year

interesting vid here
[yt]KNq0bF074mA[/yt]

After several hours of trading, Japan's Nikkei index ended Tuesday down 4.95 percent, while the Hang Seng Index in Hong Kong declined 5.9 percent. A leading indicator of stock values in South Korea -- the KOPSI index -- had gone down 6.3 percent.

J-banks Aozora, and Mitsubishi UFJ and Sumitomo hit hard

[Buraku]

[james]

the sky is falling!

[Buraku]

not yet, but if Bernanke doesn't get off his ass this big house of cards might come crashing down on our heads

Derivatives And Dangerous Times
http://www.forbes.com/finance/2008/09/16/lehman-derivatives-swaps-pf-guru-in_rl_0916croesus_inl.html

[pheyton]

not yet, but if Bernanke doesn't get off his ass this big house of cards might come crashing down on our heads

The sky started falling around Nov. of 07 if you were paying attention. There is nothing the FED can do to stop this as evidenced by the failures already. It has to play itself out. We have to go through a painful period and emerge stronger with regulations back in place.

I'm hopeful the world will emerge on the other end of this thing more responsible when it comes to these un-regulated financial products and these financial companies. Until then though a lot of people are going to be miserable. Don't know your past, don't know your future.

[wuchan]

OH MY GOD, THE DOW DROPPED 500 POINTS!!!!!

douche bag investors. The dow only includes 30 major companies out of the thousands on the NYSE. This is in no way an indicator of the US economy. 105 yen to the dollar? Less than a year ago wasn't the dollar trading at 95 yen? People are just plain stupid, if anything this means BUY NOW. If the fed cuts rates the banks (the big four) will have tons of cash to play with. That means more profit for investors. People need to read more books and less big media run newspapers.

[Uhhuh35]

I'm hopeful the world will emerge on the other end of this thing more responsible when it comes to these un-regulated financial products and these financial companies. Until then though a lot of people are going to be miserable. Don't know your past, don't know your future.

Lehman Brothers is regulated by FINRA:
http://www.finra.org/Newsroom/NewsReleases/1999/P010275
Do you mean "non-government regulated"? How would have government regulation prevented this? Fannie Mae/Freddie Mac are government regulated, what happened there?
http://www.marketwatch.com/news/story/fannie-mae-freddie-mac-still/story.aspx?guid={8C607E06-7ED2-458E-B7DF-DF07E08D9712}
I for one am happy that Lehman isn't getting a bailout. Why should the taxpayers have to pick up the tab for someone else's mistakes?
By the way did you know Lehman brothers was involved in that carbon cap and trade scam? Follow this link and click on "The Business of Climate Change":
http://www.lehman.com/who/intcapital/

[pheyton]

Lehman Brothers is regulated by FINRA:
http://www.finra.org/Newsroom/NewsReleases/1999/P010275
Do you mean "non-government regulated"? How would have government regulation prevented this? Fannie Mae/Freddie Mac are government regulated, what happened there?
http://www.marketwatch.com/news/story/fannie-mae-freddie-mac-still/story.aspx?guid={8C607E06-7ED2-458E-B7DF-DF07E08D9712}
I for one am happy that Lehman isn't getting a bailout. Why should the taxpayers have to pick up the tab for someone else's mistakes?
By the way did you know Lehman brothers was involved in that carbon cap and trade scam? Follow this link and click on "The Business of Climate Change":
http://www.lehman.com/who/intcapital/

Welcome to the conversation knuckle dragger. Of course I wouldn't expect you to know the fine you were quoting was before the passage of Gramm-Leach-Bliley when regulations were still in place. When the Clinton Administration would still enforce laws. Remember those? Read up Forrest
http://en.wikipedia.org/wiki/Gramm-Leach-Bliley_Act
As far as Fannie and Freddie are concerned, I can't give a definitive answer to that without reading more about how they operated. So, I'll get back to you on that one. I will say after reading the above article it appears everything was working and new legislation was being offered to get FM & FM out of the MBS bullshit.

Yes, yes we can all be happy and yell from the highest roof tops "I for one am glad they didn't get bailed out my friends!". Of course you right wingers are hoping people don't find out that the reason all of this is happening is because of deregulation ushered in by Republicans since Reagan.

How does McCain fit into all this?
http://alittlereality.blogspot.com/2008/09/mccain-deregulation-hawk.html
* In the 1980's McCain was a key figure in deregulating the savings and loan industry. McCain parlayed it into highly profitable graft for himself. That led to wholesale theft and the collaspe of many S&Ls. McCain got caught in the the ensuing scandal but successfully used his POW line to wiggle free.
* McCain's economic guru, Phil Gramm, slipped the "Enron Loophole" into legislation in the year 2000. This deregulatory loophole was used by that infamous company to game the electricity markets so egregiously that it led to Enron's own collapse. Since then, McCain has blocked every effort to close the loophole which is now being used by energy traders to game gasoline prices.
* The current banking crisis traces back to the repeal of the Glass-Steagall Act in 1999. Again Phil Gramm get direct blame for deregulating banks. Again, John McCain followed Gramm like an servile puppy in the effort. The effect is an economic crisis the world has not seen in 75 years.
* McCain has said he will make Phil Gramm Treasury Secretary.
* McCain's son, Andrew, ran an Arizona bank into bankruptcy earlier this year under curious, at least, circumstances.
* Not content with fucking the nation's economy, McCain is campaigning on a platform of deregulating health care.

Add to this list privatizing Social Security. I sure would love to see my retirement in a fund that was invested in Lehman, Bear Stearns, AIG, etc.

[Jack]

OH MY GOD, THE DOW DROPPED 500 POINTS!!!!!

douche bag investors. The dow only includes 30 major companies out of the thousands on the NYSE. This is in no way an indicator of the US economy. 105 yen to the dollar? Less than a year ago wasn't the dollar trading at 95 yen? People are just plain stupid, if anything this means BUY NOW. If the fed cuts rates the banks (the big four) will have tons of cash to play with. That means more profit for investors. People need to read more books and less big media run newspapers.

If the Dow is down 4% then chances are smaller stocks are also down at least more than 4%. Plus a lot of index investing is driven of indeces like the Dow or S&P 500.

If I recall interest rates in Japan were near zero and yet banks wouldn't even lend money. Same thing could happen in the U.S. even if the Feds cut rate further. Buying now may be a good idea if you will not need that money in the short term.

[wuchan]

If the Dow is down 4% then chances are smaller stocks are also down at least more than 4%. Plus a lot of index investing is driven of indeces like the Dow or S&P 500.

If I recall interest rates in Japan were near zero and yet banks wouldn't even lend money. Same thing could happen in the U.S. even if the Feds cut rate further. Buying now may be a good idea if you will not need that money in the short term.

Short term investing is for suckers. Look at Waren, he won't sell anything until has held it for at least ten years. If the fed cuts now the big four won't giving them a larger profit margin than they currently have. Shit, BAC found enough money to buy merrill. FedEX and UPS only fell 1.3% in the same time as the DOW fell 4. That means people are still buying things and the economy is not as bad as some would like you to believe. The nature of the modern market is much different of the market in the 80's or 90's. These days, if some are loosing there is a good chance that others are winning. Look at big oil over the last 3 years. Everyone seems to be loosing but these companies are reporting record profit.
The difference now is the huge number of short term investors in the market thanks to companies like Ameritrade. Average joe types treating the market like LasVegas, some of these people take a hit and the rest bug out and sell everything off. Fund managers lying has not helped much either. The bottom line here id the stock market is much more complicated than it was when all the 40 or 50 something brokers went to college. The traditional ways of analyzing the market don't work as well as they used to.

[Jack]

FedEX and UPS only fell 1.3% in the same time as the DOW fell 4.

All airline stocks were up better than 10% yesterday and the day before because oil price declined. FedEx and UPS were not a good example.

[pheyton]

Short term investing is for suckers. Look at Waren, he won't sell anything until has held it for at least ten years. If the fed cuts now the big four won't giving them a larger profit margin than they currently have. Shit, BAC found enough money to buy merrill. FedEX and UPS only fell 1.3% in the same time as the DOW fell 4. That means people are still buying things and the economy is not as bad as some would like you to believe. The nature of the modern market is much different of the market in the 80's or 90's. These days, if some are loosing there is a good chance that others are winning. Look at big oil over the last 3 years. Everyone seems to be loosing but these companies are reporting record profit.
The difference now is the huge number of short term investors in the market thanks to companies like Ameritrade. Average joe types treating the market like LasVegas, some of these people take a hit and the rest bug out and sell everything off. Fund managers lying has not helped much either. The bottom line here id the stock market is much more complicated than it was when all the 40 or 50 something brokers went to college. The traditional ways of analyzing the market don't work as well as they used to.

LOL, ya I bet those long termers who had stock in Bear, Lehman, Fannie, Freddie, and just about every major financial Co., are sure wishing they had taken the short route instead.

To a larger extent I agree with most of what you are saying though. However none of this should have ever happened. The blame lies squarely with Phil Gramm (John McCain's Financial Advisor and former Senator), Greenspan and deregulation. John McCain was against regulation before he was for it!

A decade ago, Sen. John McCain embraced legislation to broadly deregulate the banking and insurance industries, helping to sweep aside a thicket of rules established over decades in favor of a less restricted financial marketplace that proponents said would result in greater economic growth.

http://www.washingtonpost.com/wp-dyn/content/article/2008/09/16/AR2008091603732.html?hpid=topnews

[TFG]

The safe haven is GOLD!
And during the traditional marriage season in India, gold prices rise 10% or more due to the Indian tradition of dowries in massive amounts of gold.

Interesting.

http://www.thejewellerycompany.com/static/articles-jewellery-and-the-indian-dowry.htm

[Mulboyne]

The bottom line here id the stock market is much more complicated than it was when all the 40 or 50 something brokers went to college. The traditional ways of analyzing the market don't work as well as they used to.

I think you've got things a little back-to-front. It's the fact that people thought they were doing something different and that they could use different analytical and trading metrics which led them to mis-price risk. "Traditional analysis" just means analysis which has shown its value across in any number of different market condition and it seems to be working just fine. Securities analysis, however, has to be combined with the knowledge of how a market works. An asset might have been worth $100 yesterday and will be worth $100 tomorrow but if you have to sell today and no-one has $100 to give you then it's only worth what someone will pay.

[Buraku]

Asian Stocks Slide

http://www.fxstreet.com/news/forex-news/article.aspx?StoryId=8f5fa9e0-d856-409f-84eb-df754545168c

Market psychology now has "people starting to mention names that they have ever had grudges against and that is quite dangerous."

Asia's market falls came after the Dow Jones Industrial Average sank 4.1% to its lowest close in almost three years, down 7.1% so far this week. Financials were hard hit: Washington Mutual fell 13%, Citigroup 11%, Wachovia 21%, Morgan Stanley 24% and Goldman Sachs 14%.

It was the second-highest volume day ever for the New York Stock Exchange, with 9.28 billion shares traded, 311.2 million of them being Morgan Stanley shares.

Sources told the Wall Street Journal that Morgan had held preliminary merger talks with Wachovia and at least one other bank, as it looked to shore up its shares. Also, the paper said Washington Mutual was readying to put itself up for sale, with interest from Wells Fargo and Citigroup.

CNBC meanwhile reported Morgan was in talks to possibly be acquired by Chinese bank Citic.

Worries about the health of financial companies were spreading: The Wall Street Journal reported that UK bank Lloyds TSB Group agreed to buy troubled mortgage lender HBOS PLC.

In Australia, Standard & Poor's affirmed its ratings on Macquarie Group but revised its outlook to negative; its shares dropped 20%.

Worries remain not just about the financial sector but the broader U.S. economy, after some downbeat housing data overnight. "Sightings of Big Foot seem more credible than sightings of a bottom in the U.S. housing sector," said analysts at RBC Capital Markets.

The Nikkei 225 was recently down 3.2%; Shinsei Bank was ask-only, as was Aozora Bank.

Korea's Kospi Composite, which had already fallen 6.7% so far this week, dropped another 3.3%; the FTSE group upgraded Korea's market status to Developed from Advanced Emerging Market as widely expected.

New Zealand's NZX 50 was down 3.3% while in Australia, the S&P/ASX 200 was down 3.5% to its lowest level since December 2005; Commonwealth Bank of Australia was down 4.4% and National Australia Bank 8.7% lower.

In currency markets, the U.S. dollar was down at Y104.40 from Y104.91 late in New York, while the euro was at Y149.70 from Y150.50; the euro was at $1.4344, not much changed from New York.

Westpac chief currency strategist Robert Rennie said the dollar/yen was set for more declines as global investors bring "capital home as quickly as possible."

"The move in gold is giving us a very clear sign here that the market is reaching desperately for any safe haven...the very clear and obvious message here is we should expect the U.S. dollar to fall," he said.

The Australian dollar was on the backfoot, at US$0.7921 with all eyes on a potential break of US$0.78 in the near term. "Being the leader on the way up, it's going to be the leader on the way down," said Easy Forex senior dealer Francisco Solar.

With banks increasingly gun-shy about lending to each other and funding costs rising, central banks continued to pump cash into money markets.
The Bank of Japan injected another Y1.5 trillion and the Reserve Bank of Australia A$3.02 billion.


Japanese government bond futures ticked higher after a rally in U.S. Treasurys, adding 0.08 to 138.81 after rising as far as 139.09.

Front-month Nymex crude, after a $6.01 jump in New York, was 29 cents higher on Globex at $97.45 a barrel, amid tight U.S. supplies due to Hurricanes Gustav and Ike.

Spot gold, which spiked more than 10% overnight, was up another $3.90 at $866.80 a troy ounce.

[Buraku]

Russian stock market shuts down

[pheyton]

Buraku, I think this article you posted should be cross posted here and the FUcked Yen thread because it gives us a glimpse outside of the US media and the effect on companies other than US.

http://tinyurl.com/4f5r7n

I put my money in commodities in 06. Glad I did.

[Buraku]

[pheyton]

Closing figures:

DOW 30 Indu
-777.68 (-6.98%) Biggest single day point drop ever.

NASDAQ COMP
-199.61 (-9.14%)

SP 500

-106.69 (-8.80%)

Yen

- 104.18 (as I write)

Tomorrow should be interesting. It will either be a buying bonanza or another massive drop.

[Buraku]

Aso pledges 27 trillion yen to fire up economy

http://www.asahi.com/english/Herald-asahi/TKY200810300472.html

[FG Lurker]

Playing Politics With Japan's Money Supply
The Wall Street Journal (Opinion), January 19, 2010

With deflation again threatening the Japanese economy, policy making appears as dysfunctional as ever. Politicians and the Ministry of Finance say falling prices are a monetary problem that must be solved by the central bank, while the Bank of Japan claims the fiscal authorities should reflate the economy. The BOJ is wrong. It has chosen yet another inappropriate moment and manner to demonstrate its independence from the government.

The Japanese central bank has a long record of failure in its primary duty of maintaining price stability, which most economists define as an annual increase in the consumer price index of 1% to 2%. Since gaining its statutory independence from the Ministry of Finance in 1998, the BOJ has never attained that goal. The economy languished in deflation from 1999 until 2006, when the global economic bubble pushed up the cost of oil, metals and other imported goods. Then two years later the bubble imploded, international prices started decreasing, and Japan's CPI descended again into negative territory.

[...]

The BOJ cannot in today's circumstances reasonably resist political demands for looser monetary policy. The likelihood of inflation rising to 1% to 2% in the next couple of years is negligible. Recent BOJ surveys find that more households expect deflation now than at any other time on record. Such deflationary expectations discourage consumption and investment in the expectation of lower prices in the future, even as the appreciating currency generates additional deflationary momentum.

[...]

Central bank independence is not an end in itself. The BOJ was given autonomy because Japan wanted better monetary management. Today responsible policy means bolder attempts to generate inflation. This may be demeaning to a central bank that wants to appear tough. But if the BOJ fails again to fulfill its duty, the government may need to reconsider the agency's statutory independence.

(Full Story)

It's just an opinion piece but it does highlight some of the friction between the MOF and BOJ. It will be interesting to see how it plays out over the next few months and which side ends up with the upper hand.

[wuchan]

Playing Politics With Japan's Money Supply
The Wall Street Journal (Opinion), January 19, 2010

It's just an opinion piece but it does highlight some of the friction between the MOF and BOJ. It will be interesting to see how it plays out over the next few months and which side ends up with the upper hand.

If things play out in the usual nippon way, the BOJ will ignore the government's reques... er... demands until the over paid j-gov cronies decide that the BOJ should be a part of the central government again.

The economy of this country has been on a crash course since the war. Making a government based on the US model and trying to incorporate the social classism of old japan was, at best, a temporary solution. The bubble was a total accident based on the cheap factory labor available in the late 70's and early 80's. China came in and did the same thing for less money and the bubble exploded. Since then Japan has been trying to figure out how to get back to the bubble peak without adapting to modern times. Part of the problem is the large number of people over 50 in the workplace trying, and succeeding, to keep the status quo. Who knows what the real solution is but in my humble opinion the only option available for a country that has almost zero natural resources is to become the manager of asia. To pull it off the current political system of third generation diet members has to be abolished to gain trust from the other asian countries. But TIJ and it won't happen until china invades.

[Number11]

You're right about it being just an opinion piece. It's not a very good or learned opinion, but the WSJ is only interested in publishing opinions that sing the glories to the temple of inflation.

(I laugh every time I read your signature, FH Lurker. The irony of the lying, hypocrite bastard Keynes saying such a thing is laughable. )

The BOJ has a single function in its charter. Its sole function is to "maintain price stability." That's it. Nothing more. Period. Deflation in Japan is a result of market forces, not monetary policy.

[nottu]

[Uhhuh35]

[nottu]

[nottu]

[Number11]

You couldn't find a smaller image?