Thread: BOJ Injects Unprecedented 7 Trillion Yen In Money Markets As

BOJ Injects Unprecedented 7 Trillion Yen In Money Markets As Tokyo Stock Exchange Circuit Breakers Activated

Submitted by Tyler Durden
03/13/2011 19:27 -0500

Contrary to expectations that the BOJ would injected "only" JPY2 trillion in its emergency operation earlier, Shirikawa came out with a stunner, putting in a whopping 7 trillion yen into Japanese money markets. From Reuters: "The Bank of Japan on Monday injected a hefty 7 trillion yen ($85 billion) into the money market in a same-day market operation aimed at soothing market jitters after a massive earthquake and tsunami hit northeastern Japan. This was the central bank's first so-called same-day operation since last May, when the Greek debt crisis roiled the global financial markets. BOJ Governor Masaaki Shirakawa said on Sunday that the central bank would provide huge amounts of liquidity to the banking system on Monday, reinforcing the bank's determination to keep markets stable in the wake of the disaster." In the meantime, after the Nikkei has plunged over 5%, and the Topix down by 7%, circuit breakers have been activated on the Tokyo Stock Exchange. Elsewhere, the US plunge protection is hard at work, sending futures surging from the overnight drop, after reality threatened to impose itself. Another masterful showing by Sack Frost.

http://www.zerohedge.com/article/boj-in ... t-breakers

Doomsday: Japan Facing 10,000+ Dead, Potential Nuclear Meltdowns, Economic Collapse

Saturday, 12 Mar 2011 06:05 AM

SENDAI, Japan – The estimated death toll from Japan's disasters climbed past 10,000 Sunday as authorities raced to combat the threat of multiple nuclear reactor meltdowns and hundreds of thousands of people struggled to find food and water. The prime minister said it was the nation's worst crisis since World War II.

Nuclear plant operators worked frantically to try to keep temperatures down in several reactors crippled by the earthquake and tsunami, wrecking at least two by dumping sea water into them in last-ditch efforts to avoid meltdowns. Officials warned of a second explosion but said it would not pose a health threat.

Near-freezing temperatures compounded the misery of survivors along hundreds of miles (kilometers) of the northeastern coast battered by the tsunami that smashed inland with breathtaking fury. Rescuers pulled bodies from mud-covered jumbles of wrecked houses, shattered tree trunks, twisted cars and tangled power lines while survivors examined the ruined remains.

One rare bit of good news was the rescue of a 60-year-old man swept away by the tsunami who clung to the roof of his house for two days until a military vessel spotted him waving a red cloth about 10 miles (15 kilometers) offshore.

The death toll surged because of a report from Miyagi, one of the three hardest hit states. The police chief told disaster relief officials more than 10,000 people were killed, police spokesman Go Sugawara told The Associated Press. That was an estimate — only 400 people have been confirmed dead in Miyagi, which has a population of 2.3 million.

According to officials, more than 1,800 people were confirmed dead — including 200 people whose bodies were found Sunday along the coast — and more than 1,400 were missing in Friday's disasters. Another 1,900 were injured.

For Japan, one of the world's leading economies with ultramodern infrastructure, the disasters plunged ordinary life into nearly unimaginable deprivation.

Hundreds of thousands of hungry survivors huddled in darkened emergency centers that were cut off from rescuers, aid and electricity. At least 1.4 million households had gone without water since the quake struck and some 1.9 million households were without electricity.

While the government doubled the number of soldiers deployed in the aid effort to 100,000 and sent 120,000 blankets, 120,000 bottles of water and 29,000 gallons (110,000 liters) of gasoline plus food to the affected areas, Prime Minister Naoto Kan said electricity would take days to restore. In the meantime, he said, electricity would be rationed with rolling blackouts to several cities, including Tokyo.

"This is Japan's most severe crisis since the war ended 65 years ago," Kan told reporters, adding that Japan's future would be decided by its response.

In Rikuzentakata, a port city of over 20,000 virtually wiped out by the tsunami, Etsuko Koyama escaped the water rushing through the third floor of her home but lost her grip on her daughter's hand and has not found her.

"I haven't given up hope yet," Koyama told public broadcaster NHK, wiping tears from her eyes. "I saved myself, but I couldn't save my daughter."

A young man described what ran through his mind before he escaped in a separate rescue. "I thought to myself, ah, this is how I will die," Tatsuro Ishikawa, his face bruised and cut, told NHK as he sat in striped hospital pajamas.

Japanese officials raised their estimate Sunday of the quake's magnitude to 9.0, a notch above the U.S. Geological Survey's reading of 8.9. Either way, it was the strongest quake ever recorded in Japan, which lies on a seismically active arc. A volcano on the southern island of Kyushu — hundreds of miles (kilometers) from the quake' epicenter — also resumed spewing ash and rock Sunday after a couple of quiet weeks, Japan's weather agency said.

Dozens of countries have offered assistance. Two U.S. aircraft carrier groups were off Japan's coast and ready to help. Helicopters were flying from one of the carriers, the USS Ronald Reagan, delivering food and water in Miyagi.

Two other U.S. rescue teams of 72 personnel each and rescue dogs arrived Sunday, as did a five-dog team from Singapore.

Still, large areas of the countryside remained surrounded by water and unreachable. Fuel stations were closed, though at some, cars waited in lines hundreds of vehicles long.

The United States and a several countries in Europe urged their citizens to avoid travel to Japan. France took the added step of suggesting people leave Tokyo in case radiation reached the city.

Community after community traced the vast extent of the devastation.

In the town of Minamisanrikucho, 10,000 people — nearly two-thirds of the population — have not been heard from since the tsunami wiped it out, a government spokesman said. NHK showed only a couple concrete structures still standing, and the bottom three floors of those buildings gutted. One of the few standing was a hospital, and a worker told NHK that hospital staff rescued about a third of the patients.

In the hard-hit port city of Sendai, firefighters with wooden picks dug through a devastated neighborhood. One of them yelled: "A corpse." Inside a house, he had found the body of a gray-haired woman under a blanket.

A few minutes later, the firefighters spotted another — that of a man in black fleece jacket and pants, crumpled in a partial fetal position at the bottom of a wooden stairwell. From outside, while the top of the house seemed almost untouched, the first floor where the body was had been inundated. A minivan lay embedded in one outer wall, which had been ripped away, pulverized beside a mangled bicycle.

The man's neighbor, 24-year-old Ayumi Osuga, dug through the remains of her own house, her white mittens covered by dark mud.

Osuga said she had been practicing origami, the Japanese art of folding paper into figures, with her three children when the quake stuck. She recalled her husband's shouted warning from outside: "'GET OUT OF THERE NOW!'"

She gathered her children — aged 2 to 6 — and fled in her car to higher ground with her husband. They spent the night in a hilltop home belonging to her husband's family about 12 miles (20 kilometers) away.

"My family, my children. We are lucky to be alive," she said.

"I have come to realize what is important in life," Osuga said, nervously flicking ashes from a cigarette onto the rubble at her feet as a giant column of black smoke billowed in the distance.

As night fell and temperatures dropped to freezing in Sendai, people who had slept in underpasses or offices the past two nights gathered for warmth in community centers, schools and City Hall.

At a large refinery on the outskirts of the city, 100-foot (30-meter) -high bright orange flames rose in the air, spitting out dark plumes of smoke. The facility has been burning since Friday. The fire's roar could be heard from afar. Smoke burned the eyes and throat, and a gaseous stench hung in the air.

In the small town of Tagajo, also near Sendai, dazed residents roamed streets cluttered with smashed cars, broken homes and twisted metal.

Residents said the water surged in and quickly rose higher than the first floor of buildings. At Sengen General Hospital, the staff worked feverishly to haul bedridden patients up the stairs one at a time. With the halls now dark, those who can leave have gone to the local community center.

"There is still no water or power, and we've got some very sick people in here," said hospital official Ikuro Matsumoto.

Police cars drove slowly through the town and warned residents through loudspeakers to seek higher ground, but most simply stood by and watched them pass.

In the town of Iwaki, there was no electricity, stores were closed and residents left as food and fuel supplies dwindled. Local police took in about 90 people and gave them blankets and rice balls, but there was no sign of government or military aid trucks.

http://www.newsmax.com/Headline/AS-Japa ... /id/389224

Concern Grows Over Japan's Economy

Sunday, 13 Mar 2011 02:50 PM

A triple blow of earthquake, tsunami and one of Japan's worst nuclear accidents is set to damage the world's third largest economy, possibly more deeply and for longer than initially expected.

Power outages and possible tax rises are likely to hurt companies and households and could outweigh the mild economic aftershock from the 1995 Kobe earthquake, given that oil prices and the yen are stronger and Japan's debt pile is much bigger.

Rolling blackouts will start Monday, affecting businesses and households as the country grapples with its worst crisis since World War Two. More than 1 million people are without water or power and towns have been wiped off the map.

Already saddled with debt that is double the size of its $5 trillion economy and threatened by credit downgrades, the government is discussing a temporary tax rise to fund relief work.

Japan's economic growth is in a better profile than it was when the Kobe quake struck. But many say a noticeable hit to GDP, which was only just recovering from contraction at the end of 2010, is likely to be felt over the next several months.

"When we talk about natural disasters, we tend to see an initial sharp drop in production... then you tend to have a V-shaped rebound. But initially everyone underestimates the damage," said Michala Marcussen, head of global economics at Societe Generale.

"Power supply is a critical factor. If power production output is damaged in a sustainable fashion, that could have a durable impact on the economy."

Tokyo Electric Power Co said on Sunday it may have to conduct rolling blackouts in winter, in addition to summer.

"The earthquake will bring lots of things to a halt. We are going to see quite a dent on GDP, blackouts will lead to a sharp contraction of production," said Janwillem Acket, group chief economist at Julius Baer.

He estimated the damage would be felt for two quarters, but it was not likely to knock the economy back into recession.

"We know public finances are already weak, much weaker than they are during Kobe. Pressure for emergency tax hikes is there. But I don't think the economy will go back to recession."

GROWTH IMPACT
Following the 1995 Kobe earthquake, the economy shrank by 2 percent, followed by a V-shaped recovery. Back then, oil prices were hovering around $17-21 a barrel while the yen -- key to exporters -- was at around 100 per dollar when the quake hit.

Currently with oil prices at near 2-1/2 year high above $100 and the Japanese currency at a stronger 82 per dollar, the impact from these two factors alone will be more adverse.

Japan's gross domestic product shrank by an annualised 1.3 percent in Q4. A Reuters poll published before the quake showed it was likely to expand 0.5 percent in Q1, or roughly two percent on an annualised basis.

"The Japanese economy is now likely to take longer than we expected to exit its current lull. We had projected an April-June exit but now forecast July-September or possibly October-December," Nomura said in a note to clients.

Nomura expects the largest negative impact on quarterly real GDP growth will emerge in April-June 2011.

"Based on the experience of the Kobe earthquake, we think a V-shaped recovery supported by a rapid upturn in demand driven by government-funded rebuilding work in the affected areas is also unlikely," it said.

Bank of America Merrill Lynch expects the quake-hit areas account for up to 7.8 percent of Japan's GDP, compared with 12.4 percent from the regions affected by the Kobe earthquake.

The bank expects the hit to GDP to be at least 0.2-0.3 percentage point, although a relatively large amount of spare capacity may offset the production loss.

The yen rose sharply following the Kobe earthquake as Japanese companies repatriated capital, a pattern which may gather momentum in the coming week.

However, possible measures from the Bank of Japan may bring two-way flows into the market.

The BOJ is likely to provide 2-3 trillion yen in funds through its market operations Monday morning, two to three times the normal amount, to soothe markets and keep short-term borrowing costs from spiking.

The central bank may ease monetary policy further. With interest rates virtually at zero, the most likely option is for the BOJ to top up the 5 trillion yen pool of funds it put in place last year to buy assets ranging from government bonds to private debt -- a factor that could weigh on the yen.

Nomura said the BOJ could increase the scale of its asset purchases to 8-10 trillion yen.



MORE DEBT

Another obstacle is Japan's fragile debt position, already double the size of its $5 trillion gross domestic product.

BofA Merrill Lynch expects the cost for the rebuilding could be at least 1.0 percent of GDP, while Nomura expects the size of any extra budget for rebuilding to exceed 3 trillion yen.

Brendan Brown, economist at Mitsubishi UFJ Securities, said it seems plausible that the debt costs could add between 2 percent to 10 percent of GDP to its massive public debt load.

This could hit its credit rating again. Japan was downgraded by Standard & Poor's in January given the lack of a plan to fix public finances and Moody's has warned it may do the same.

Others also suggested the government may tap into its $1 trillion-plus foreign exchange reserves -- the world's second largest -- to finance relief work.

"Normally you don't think about using foreign exchange reserves for this but it's possible," Marcussen said.

http://www.moneynews.com/StreetTalk/jap ... /id/389300