Japan's Creeping Socialism

[TedKord]

Did anyone see this article the other day? I didn't know that the JCB had been buying this much equity:

 

http://www.bloomberg.com/news/articles/2016-08-14/the-tokyo-whale-s-unstoppable-rise-to-shareholder-no-1-in-japan

 

The article focuses on the reduced float in the market, but I'd be more worried about corporate governance. I worry that once the central bank has so much control it will be hard for elected officials not to meddle with the companies. It will be hard to let go. What's also worrisome is that the Japanese didn't vote for this, nor did they lose a war. This is just happening without a lot of public discussion. I realize that this kind of rant probably belongs on a gold bug blog rather than a value investing message board but I think this is pretty important. I'm surprised I'm not seeing more people talking about it.

[Ballinvarosig Investors]

Not just the Japanese.

 

http://www.fuw.ch/article/the-fed-is-now-hostage-to-wall-street/

Obviously, the financial markets like this cautious mindset of the Fed. Earlier this week, US stocks climbed to another record high.

Isn’t that a funny thing? The stock market is at record highs and the bond market is acting as if this were the Great Depression. Meanwhile, the Swiss National Bank is buying a great deal of American equity.

 

Indeed, according to the latest SEC filings the SNB’s portfolio of US stocks has grown to more than $60 billion.

Yes, they own a lot of everything. Let us consider how they get the money for that: They create Swiss francs from the thin alpine air where the Swiss money grows. Then they buy Euros and translate them into Dollars. So far nobody’s raised a sweat. All this is done with a tab of a computer key. And then the SNB calls its friendly broker – I guess UBS – and buys the ears off of the US stock exchange. All of it with money that didn’t exist. That too, is something a little bit new.

 

Other central banks, too, have become big buyers in the global securities markets. Basically, it all started with the QE-programs of the Federal Reserve.

It is a truism that central banks do this. They’ve done this of course for generations. But there is something especially vivid about the Swiss National Bank’s purchases of billions of Dollars of American equity. These are actual profit making, substantial corporations in the S&P 500. So the SNB is piling up big positions in them with money that really comes from nothing. That’s a little bit of an existential head scratcher, isn’t?

Genius really :o

[vox]

Does anybody see an end game for Japan that does not involve default of Japanese government bonds or massive inflation?

[TwoCitiesCapital]

Not just the Japanese.

 

http://www.fuw.ch/article/the-fed-is-now-hostage-to-wall-street/

Obviously, the financial markets like this cautious mindset of the Fed. Earlier this week, US stocks climbed to another record high.

Isn’t that a funny thing? The stock market is at record highs and the bond market is acting as if this were the Great Depression. Meanwhile, the Swiss National Bank is buying a great deal of American equity.

 

Indeed, according to the latest SEC filings the SNB’s portfolio of US stocks has grown to more than $60 billion.

Yes, they own a lot of everything. Let us consider how they get the money for that: They create Swiss francs from the thin alpine air where the Swiss money grows. Then they buy Euros and translate them into Dollars. So far nobody’s raised a sweat. All this is done with a tab of a computer key. And then the SNB calls its friendly broker – I guess UBS – and buys the ears off of the US stock exchange. All of it with money that didn’t exist. That too, is something a little bit new.

 

Other central banks, too, have become big buyers in the global securities markets. Basically, it all started with the QE-programs of the Federal Reserve.

It is a truism that central banks do this. They’ve done this of course for generations. But there is something especially vivid about the Swiss National Bank’s purchases of billions of Dollars of American equity. These are actual profit making, substantial corporations in the S&P 500. So the SNB is piling up big positions in them with money that really comes from nothing. That’s a little bit of an existential head scratcher, isn’t?

Genius really :o

 

Not genius. Counterfeiters have been doing this for ages. What's new is that somehow central banks have been able to sell the idea that counterfeiting is what will save economies...

[TedKord]

They can't default, The JCB has the right to print money. "Money" in a modern sense isn't tethered to anything. Boy, I really am dragging this board into gold buggy whining. State owned industry, devalued currency, prominent American politicians bemoaning free trade, last time this sort of thing was going on my grandfather had to cross the Atlantic to sort it out.

 

[wachtwoord]

You're not dragging the forum into anything. You're merely stating facts.

[petec]

I'd be more worried about corporate governance. I worry that once the central bank has so much control it will be hard for elected officials not to meddle with the companies. It will be hard to let go.

 

A good point I hadn't considered.