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Strategies & Market Trends : Mish's Global Economic Trend Analysis
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To: russwinter who wrote (3285)4/1/2004 11:15:10 AM
From: Wyätt Gwyön  Read Replies (1) of 116555
 
In each of the last two fiscal years (ending today 3/31), this ceiling was raised by Y10 trillion. I don't know what it is for the now starting FY 2004, but if it's only Y10 trillion, that's only two months worth at the current pace.

i am trying to find out more info on this. i assume there is a separate (larger) budget for FY05 but i don't know what it is.

i ran across a very interesting article on the subject in the Yomiuri (http://www.yomiuri.co.jp/atmoney/special/47/naruhodo131.htm) he quotes one "chief economist" at a research house who says intervention is a form of public works (!), because it raises GDP by 0.5% per quarter or something according to his calculations.

the author notes that the funding for intervention comes from short-term bills (probably your FEFBs), and in the event that interest rates rise (in Japan), the interest burden will rise immediately and they will no longer be able to intervene.

according to a Mizuho Securities economist, losses as of the end of the fiscal year were predicted to be JPY8 trillion (at the time of the article), but would expand to JPY14 trillion at an exchange rate of 105 (so it would be even worse than that now).

however, the govt claims they have a cumulative profit of JPY28 trillion, due to rate differences between US and Japan. they say they will hold their USTs till maturity and not book interim losses.
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