Sorry to stick to a Japanese theme but the 2013 Japanese money tsunami is engulfing everything financial to the extent that many new questions are now being asked. Here are some of them.
If you are a Japanese central banker do you -
a) Retire to the mountains having done your job.
b) Read the story of "Pandora's Box" that someone has just handed you.
c) Wonder if leaving out the "capital controls" part of the Japanese 1932 Great Depression rescue plan policy you are trying to reuse, might be causing all your fresh money to fund other people's recoveries rather than your own.
d) Resume normal policy - Do nothing and say nothing.
If you are the FED do you -
a) Give praise that BoJ policy provides you with an exit route to QE via Japanese UST purchases.
b) Suggest the BoJ also looks at buying US Munis.
c) Wonder how long it will be before someone realises that Abe is a CIA asset orchestrating (a) and hopefully (b)
d) Write your CV and try and get out on a high to the private sector before you have to fire-hose real inflation and get engulfed in the flames.
If you are US Congress do you -
a) Vigorously support Japanese actions by signing new trade and defence agreements (but ask not to be paid in Jpy).
b) Kick up a rumpus over Japanese currency manipulation and introduce trade sanctions.
c) Blame the other side and praise yourself ( business as usual).
d) Ask where Japan is and ask why they ain't speaking English.
If you are a French politician do you -
a) Point to the rally in OATs and say it reflects confidence in French policy.
b) Point to the rally in OATs and say it reflects confidence in French policy and so raise taxes.
c) Blame Gerard Depardieu for eur/usd's rally which is solely responsible for the demise of your oh so competitive export industries.
d) Go back to lunch as it's the Germans running Europe not you so why bother.
If you are a Swiss central banker do you -
a) Welcome continued large inflows of private money which you can use to fund local industry.
b) Worry like hell about why anyone in their right mind still wants to buy the Chf.
c) Get ready to cut rates and protect the eur/chf floor
d) Wonder if you intervened by selling chf/jpy there would be some sort of financial logic loop explosion.
e) Make all foreign deposits in Swiss institutions junior to locals.
If you are a Eurogroup member do you -
a) Send a large hamper of Italian luxury goods to Abe with a bouquet and thank-you note.
b) Slap yourself on the back and issue press statements linking periphery rallies to confidence in your policies.
c) Say the rally is a template to recovery, but Japan is not a template, neither is Cyprus (but bank reforms are) HOWEVER - you may use any of these as templates as mercilessly as hip hop artists use 70s funk bass lines.
d) Ask the Troika for a report on Japan and eye their haircuttable deposit base with envy.
e) Ask Germany.
If you are the Bundeathstar do you -
a) Follow the master plan ignoring all other external influences.
b) There is no plan b.
If you are a European Utility with structural demand decline but with a sudden source of cheap Japanese funding do you -
a) Delever, take it like a mensch and show some regard for shareholder returns.
b) Go bananas building wind farms and other renewables on the cheap.
c) Help the Saudis build nuclear facilities. I mean, what possibly could go wrong?
If you are a Japanese REIT now valued at a 3.5% cap rate do you -
a) Build more condos and sell them to..err..... your declining population.
b) Build more condos and lobby for immigration in order to have customers.
c) Screw it, buy a bunch of assets in Brazil, Australia and anywhere else with vaguely positive carry.
If you are an Australian miner staring at what Japan has done to AUD/USD do you -
a) Cry to the RBA and make a fuss.
b) Lie on your back while your creditors have their way with you and think of England which long ago gave up inflation targeting.
c) Try not think about the topical debate about Thatcher and the history of the UK mining industry.
d). Mortgage your jet skis and V8s.
If you were a struggling Greek Region facing all the grim reality of uber-austerity do you -
a) Knuckle down and get the olive presses going again, Japan and its effects are just too far away from the daily struggle.
b) Pray for a miracle involving finding a huge deposit of Gold under your feet which will transform your lives.
c) Have all your prayers answered and find a huge deposit of Gold under your feet but then argue with your neighbours to the extent that no one ever digs it up and you lose all your friends. (for clue click here)
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