Japan's 'wall of money' proves elusive for global markets

Japanese investors are repatriating funds from around the world at an accelerating pace, dashing hopes that stimulus from the Bank of Japan will flood global asset markets with newly-printed money.

Fresh data from Japan's finance ministry showed that large banks, insurers, and pension funds sold a net $8.7bn in foreign bonds and stocks last week, bringing the total to $35bn over the last six weeks.

einarbb: ""We have looked at the flow data and contrary to high hopes our clients have not bought a single Italian or Spanish bond," said an analyst at one Japanese bank." So the gamble is working. The BoJ. Through deliberately raising domestic asset prices meanwhile it's raising inflation towards 2%. Is thus succeeding in directing flows into domestic assets. That's the point of the exercise. To increase investment inside Japan. In the hope that this will create the long sought after growth.

Theuselessone: You can see what is going to happen some time in the future but no one at present wants to admit it !!

petethai: They have not bought a single Spanish or Italian bond… And why would they? It would be a crazy thing to do. Plus edit. It is only natural they want to take advantage of a 20 percent drop in the value of the yen. This will shortly move the yen back higher and then they can take advantage of the better exchange rate as they move into foreign assets. In this age of sophisticated investors and the ease with which money can be moved around the world it is not surprising they will take any advantage they can.

damicol: Its all getting lined up nicely. The Japanese have had two decades to learn to be smart with cash.  First they Print money… So the Japanese get cash home… Very sensible. Inflation takes time to pick up so take advantage of gains…  And the thought of buying anything in Europe is just laughable, it is only in the insanity of syphilis ravaged brains that such a stupid idea  could even occur. Second stage… Everyone is wring footed, and foreign assets plunge as the the Japanese  get into their stride,  and they can afford to  do it steadily and  not set off a panic. It is working perfectly well so far. As foreign assets finally wake and the markets are starting to crash, then the Japanese will moving all that cash into gold, physical gold, as they know peerfectly well that the likes of benwanke and  king and his cronies and insufferable half wits at the ECB will also start printing again like no tomorrow. Result. Big Gold bounce back, debt in the West spikes ever higher,  Japanese Yen strengthens and then  move from safe haven of gold back to cheap overseas assets. Result,,  massive gains by Japanese Investors as the half wits at the central banks fall for it every time and   more risk of hyperinflation in the West and  trillions more ponzi garbage floating around that is worth less than ass wipe.  And the EU gets taken to the cleaners again. Motto,,   Follow the the Japanese, they are smarter than any number of cretins in the western  Central Banks. They had to be, They have more than 20 years in a declining economy and still managed to stay one of the richest nations on Earth.

tom_archer: A ludicrously contrived theory in support of gold…

ghosofmaggiepast: So smart, they have had 20 years of declining economy.

Otsuka Duojinshi: Declining Economy? Uh no. In the 20 year MITI  marketing campaign that promulgated the fanciful 'lost decades' meme, Japan has become the center of worldwide manufacturing and avoided attendant trade protectionism.  Toyota grew at pace far in excess of any car manufacture in the world. In advanced materials, silicon packaging, electronic components, ceramics and on and on Japan has no equal. Leica cameras are powered by Fujitsu processors; Apple Ipads and Iphones have dozens of miniaturized components only available from Japan; yes I know, the screens are Korean - mainly because that is a low margin business that Japan outsources as need be. The Chinese add about ₤6 of value added labor assembly - the Japanese ₤100 - reflected in being one China's largest largest trading partners. Japan has built more skyscrapers than any other country in the last ten years and every luxury goods maker in the world have located flagship operations in Japan because of the incredible wealth disposable for self-same. Decline? Rubbish. 

Terry: Otsuka Duojinshi: - 'Decline? Rubbish' Demography?  No Japanese babies, no Japanese future…

paulweighell: ye gods. I bet you still have stock in horse buggy whip makers.

Pheasant_Plucker: They have more than 20 years in a declining economy and still managed to stay one of the richest nations on Earth.@damincol:twitter  Check your facts. After 20 years of economic decline Japan has the worlds highest debt/GDP at 230%. This makes Greek debt look restrained at 156%.

Otsuka Duojinshi: Ah, the false idols of the GDP altar. GDP is a meaningless construct subject to vast manipulation, particularly with Japaneses trading companies that can and routinely offshore production to avoid high taxes at home. Trillions of assets and investment offshore. Japan has carefully masked GDP in obfuscatory accounting tricks for decades in support of the 'lost decades' meme. And the debt/GDP construct is not comparable for country comparisons when much of the debt is accounting contrivances amongst government ministries. And comparing Japan & Greece is the height of sophistry. The simple reality is that the world will continue to loan Japan all the capital they desire at virtually no premium because it is one of the strongest economies in the world - I haven't noticed any M&A activity for Grecian 'industry' for a decade - a corrupt kleptocracy.

chungkwoyan: Good post. Japan looks great to me too. But why the double deficits looming for so long? Why the national debts are piling every month? Are the Japanese manipulating the data to play poor to delude the world again? When you say about Japan built many more skyscrapers than any country in the world, do you define 10 storeyed buildings  as skyscrapers?

Trueofvoice: Japan's budget deficits (more accurately the government's negative balances and the non-government sector's positive balance) are simply the accounting record of the Bank of Japan funding the Treasury's spending beyond what it collects in revenue. The public debt itself is a fiction. There is no one to pay back.

chungkwoyan: … There is no one to pay back… Not even those extremely real old aged pensioners living in the country side? Are you saying they are cooking the books since day one? Great!  No wonder everybody is doing it!

Trueofvoice: The Japanese, like the Americans and the British and the Australians have imposed a rule that the central bank cannot purchase securities directly from the Treasury. They get around this by supplying reserves to what are called "primary dealers", banks that purchase those securities with CB supplied reserves and then sell them on a seconday market. This is why those countries listed above never have spiking interest rates or difficulty selling their debt; they do an end-run around the rules so the Treasury always has whatever funds are required, indirectly funneled by the CB, which can create reserves at will.

chungkwoyan: … Treasury always has whatever funds are required, indirectly funneled by the CB, which can create reserves at will… So great! There is no more worry on the deficits then!

$3277770: Hi Otsuka Welcome back. Good to see you're still around. Always a pleasure to read your posts.

Otsuka Duojinshi: Thank you for your kind words. I have been relocating, remodeling and rearranging my life and am glad to be back. I do so enjoy the quality of debate here and value the discussion immensely. Even the trolls.

rustigjongens: Nice story unfortunately the facts don't support your fanciful conspiracy theory. 

damicol:  The facts do not support my fanciful theory… Well I did predict that the Japanese wouldn't invest in worthless EU crap…  Seems I got that one right. As the rest haven't happened yet , buying gold,   then foreign assets on the cheap as I suggested, that's for tomorrow, so that means then time will tell if I am right. Then come back next year and tell me the "facts"

Gordon__Gekko: Not so sure I'd punt gold at this stage. 1,100 tonnes of gold futures (paper) entering the market (by whom?) backed by nothing more than…well… paper, certainly not real gold it would seem, which reduced the (real) gold price by 25%.   Whose is to say that won't continue to happen?, thus reducing the gold price further. Someone, some country/territory it seems to me is out to distabalise gold as a store of value in a time of global termoil and high risk. I prefer land and buildings to either currencies or gold at this point in time. But here is my tip…  "Blue Horseshoe loves Annacot Steel". Pass it on !.