BOJ Goes Big; Fed Mulls Change; Corzine Gets Slapped

Receiving Wide Coverage ...

BOJ Goes for Broke: ...Or, perhaps, will go broke trying. Haruhiko Kuroda, the newly installed Bank of Japan governor, unveiled a package of easy-money policies Thursday that might make even Ben Bernanke blush. "This is an entirely new dimension of monetary easing, both in terms of quantity and quality," Kuroda said. "Our stance is to take all the policy measures imaginable at this point to achieve the 2% [inflation] target in two years." The program is "so aggressive in scale and tactics that it surprised investors," according to the Wall Street Journal's analysis of the markets' initial reaction to the announced doubling of central bank holdings of government bonds and the amount of yen in circulation. All told, the bond-buying program is 60% larger than the Fed's as a percentage of GDP. The BOJ has been facing intense pressure from the nation's new political leader, Prime Minister Shinzo Abe, to go big. Its contribution to Abenomics echoes moves by the Fed: aggressive buying of long-term securities, accompanied by clearly stated targets and bold talk of commitment from the central bank chief, the Journal said. Curiously, the BOJ is both joining other major central banks in testing the limits of the ability to stimulate an economy by firing up the printing presses and also going where no major central bank has gone before. The new territory involves the fact that, at more than two times GDP, Japan's debt is already exorbitant. That's true even by ultra-hocked-up modern measures. What's more its easy-money policy and near-zero interest rates are already long in the tooth. Risks abound for the BOJ and central banks worldwide. Asset bubbles, inflation and falling currency values are among them. The yen was down sharply on word of Kuroda's move. "Doubling the monetary base will weaken the yen and promote risk-taking such as stock buying," the Financial Times declared. Certainly the financial world's big thinkers have their doubts that the BOJ will be able to keep the bus on the highway. Currency speculator extraordinaire George Soros took to CNBC to warn that "If the yen starts to fall, which it has done, and people in Japan realize that it's liable to continue and want to put their money abroad, then the fall may become like an avalanche." Pimco's Bill Gross, appearing on Bloomberg TV, questioned whether other industrialized nations will permit Japan to pursue an export-driven, beggar-thy-neighbor cheap yen policy to the extent necessary to stoke 2% domestic price gains. "I'm not sure that other G-7 countries are willing to permit that," he said. We won't even venture a guess as to what David Stockman would say. Wall Street Journal

Fed May Zig as Japan Zags: As the BOJ goes big, signs are mounting that the U.S. Federal Reserve my soon start to tap the brakes on its own easy-money policies. Some Fed officials have suggested in recent weeks that if economic growth continues on its present trajectory, the central bank should begin to roll back its economic stimulus campaign by the middle of the year, ahead of expectations, the New York Times reports. Perhaps typifying the mixed mood within the central bank—not to mention the challenge of translating Fed-speak—the Times characterized comments on Thursday by Vice Chair Janet Yellen as "cautious" toward easing up on easy money. Bernanke, Yellen and their easy-money allies are "wary that another surprising spring will be followed by another disappointing summer," according to the Times. The FT painted Yellen's comments as more of a greasing of the runway in order to bring its stimulus program in for a soft landing. Here's the gist of what Yellen said: "I am encouraged by recent signs that the economy is improving and healing from the trauma of the crisis, and I expect that, at some point, the F.O.M.C. will return to a more normal approach to monetary policy." We report. You translate. New York Times, Financial Times