LEAKED: Japan’s Mega-Pension Fund Plows into Stocks, Eats $50Bn Loss, Tries to Hide it till after Election
by Wolf Richter
WolfStreet.com
July 3, 2016
Benefiting hedge funds and banks that had front-run the fund.
Abenomics is facing elections on July 10 for the less powerful Upper House.
But Abenomics hasn’t fared very well. It engaged in the biggest (relative to the economy) money-printing and bond buying extravaganza the world has ever seen. The securities the Bank of Japan has bought, now at ¥426 trillion ($4.15 trillion), amount to 85% of GDP. About $8 trillion in Japanese Government Bonds sport negative yields. Even the 30-year yield is just about zero. The JGB market, once the second largest government bond market in the world, has frozen. The BOJ’s primary dealers are in revolt. Some have already pulled out.
Savers are scared. Sales of safes to be installed at home have soared. There have been no structural reforms to speak of. Japan Inc. has benefited enormously, through various tax benefits and special stimulus packages, including foreign aid that is channeled back to Japanese companies. Government deficits are gigantic, providing additional stimulus for Japan Inc. And yet, the economy is languishing.
So Abenomics is facing its voters again. Few people on earth are as cynical about their elected officials as Japanese voters. Any remaining illusions have been wrung out of them years ago. In polls, voters have explained that they have not benefited from Abenomics. Yet, Prime Minister’s Shinzo Abe’s position remains strong, mainly because the opposition is so flimsy.
His conservative Liberal Democratic Party (LDP) has been in power since its beginning in 1955, except for an 11-month stint in 1993/94, and from 2009 to 2012. At the end of 2012, Abenomics was installed.
But there’s something that makes the Japanese nervous: how politicians handle their pensions. Particularly older voters. They make up a big part of the electorate. So the government decided not to rub the effects of Abenomics in their faces and rile them unnecessarily just before an election.
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