Thursday, February 22, 2007

bank of japan + savings rate

the boj has lost a lot of credibility. on the one hand they want to stop the addiction of cheap money, they want to end the carry trade, they want to implement a forward looking policy, and they have adopted the "core" rate excluding food.....(they are really serious about their inflation fighting mission....) etc.......

die bank of japan (boj) hat meiner meinung nach fast all ihre glaubwürdigkeit verloren. auf der einen seite will sie japans "sucht" nach billigem geld unterbinden, dann wollen sie den carry trade beenden, dann eine vorausschauende zinspolitik implementieren, dann haben sie in schöner us manier mal eben die "kern" rate adoptiert ( man sieht wie ernst es mit der inflationsbekämpfung ist.....

thanks to barry ritholtz

the full article (headline) gets to the usual carry trade ( better sources at the label) and deflation issue. i want to focus on the savings rate. this number is really surprising.

der ganze artikel (überschrift klicken) geht auf die üblichen sachen wie carry trade ein. empfehle dazu eher unter dem label zu lesen. ich finde die sparrate am interessantesten. und die ist in der tat ne echte überraschung!

.....The BoJ has been held back until now by the choppy state of the Japanese economy. After a particularly bleak third quarter, when it eked out annualised growth of just 0.3%, the fourth-quarter numbers announced last week came as welcome relief. For the three months to December, the economy grew at an annual rate of 4.8%, its fastest pace in three years. Much of the gain was thanks to stronger personal spending, which was up by an annualised 1.1%. This was mainly a rebound from the previous quarter, when spending fell by much the same amount. ......

The bank is counting on consumption, which accounts for 55% of Japanese GDP, to become the locomotive of the economy. Households are certainly spending what they have. According to the OECD, Japan's household saving rate has fallen by over eight percentage points since 1998, a deeper plunge than America's. The country's households now fail to dispose of just 2.9% of their disposable income.........(wow!!)

at least they have not an official "strong yen policy"............. like the us :-)

here is one example of how widespread the carry trade is (thanks to russ winter )

Last year, the surge of short-term external debt was engineered by South Korea’s commercial banks, which were anxious to increase profits by borrowing yen to expand domestic household credit. In many instances, Koreans used very low-interest yen credit offered by South Korea’s commercial banks to finance speculative mortgages in the country’s real-estate market. This has left Korean households with large unhedged exposure to the Japanese yen and South Korean banks facing the prospect of widespread mortgage default in the event of the yen’s reversal. South Korea’s commercial banks also have enormous unhedged exposure to the yen through massive carry trades on their own balance sheets.”

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