Japanese Bonds Crater After PM Takaichi Prepares To Issue Much More Debt To Pay For Gasoline Subsidies
“The about-face by Takaichi, who had been ruling out an extra budget all along, is making markets jittery and triggering a JGB selloff across the curve”
While it may seem like every government these days – not just Emerging but certainly all Developing countries too – has become a banana republic in light of the increasingly more idiotic fiscal and monetary policies adopted to kick the can at least until the next election, nobody is quite as cartoonish as Japan, the place where all modern-day central bank experiments started in the late 1980s.
One reason, besides all the other “usual suspects” such as soaring energy import costs, an grotesque inability to hike rates and contain inflation, not to mention relentless capital flight, is that as Reuters reported overnight, Japan’s government is likely to issue even more debt as part of funding for a planned extra budget to cushion ?the economic blow from the Middle East war.