What It Looks Like When A Central Bank Just Fails

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		Tech Entertainment Wall Street Markets Strategy Sports Lifestyle Politics Law International Video Latest Tuesday, June 5, 2012 What It Looks Like When A Central Bank Just Fails The Fed and the ECB take a lot of lumps, but the world's worst central bank might be the Bank of Japan. Jefferies' Naomi Fink has a big report looking at the macro situation in Japan, and she has no kind words for the BoJ. Essentially, the bank has a big habit of overpromising and underdelivering when it comes to its goals. Here's Fink's commentary on the latest out of the BoJ, which nicely captures the lack of credibility held by the bank: Because overcoming deflation is as much about giving rise to expectations of future growth as buying assets – accompanying rhetoric from Gov. Shirakawa instantaneously killed any nascent reassessment of BOJ commitment. Shirakawa claims that "the levels of interest rates in Japan -- whether they be interest rates on loans or issuance rates of corporate bonds -- are at least as low as those in the United States... whether... nominal interest rates or real... adjusted for inflation expectations". This claim simply withers in the face of greater scrutiny. . .. the BOJ uses 1% and 2% for respective Japanese and US "inflation expectations". This comparison is unfair. The US has already achieved this rate (also the Fed’s target) but even the BOJ itself is reluctant to put a timeframe around this target. Neither markets nor politicians buy the claim that real rates are “low by any measure”. This chart shows how consistently Japanese inflation has undershot the target. The red line is Japanese inflation, and the light red horizontal line is the target. Total whiff. Read » Also On Money Game Today: New York GDP Vs. New Jersey GDP LaVorgna: The May Jobs Report Might Have Been The Bottom House Prices Stall MORGAN STANLEY: These Are The 10 Best Mega Cap Stocks In The World Advertisement CHART OF THE DAY: Here's The Real Reason Obama's Re-Election Odds Are Plunging CHART OF THE DAY: The Scariest Jobs Chart Ever UPDATE IV: CHART OF THE DAY: 1.53760% Share this: Facebook Twitter Digg Reddit StumbleUpon LinkedIn The email address for your subscription is: dwyld.kwu.jobhuntportal11@blogger.com Change Your Email Address | Unsubscribe | Subscribe | Subscribe to the Money Game RSS Feed Business Insider. 257 Park Avenue South, New York, NY 10010 Terms of Service | Privacy Policy

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