no money comes out of japan or foreign money goes to japan to buy JGBs, then less liquitidy for overall risk on
Right Polemic, but the Japan are up against the wall and if they don't want to peddle all those JGBs (cat bonds anyone ;)) to foreigners they need the BOJ to bid.
Basically, the flow of savings and deposits in Japan are close to a systemically shortfall vis a via the flow of JGBs as there simply isn't enough stock of wealth that can be shifted into JGBs. 75% of the big Japanese banks' securities portfolios are already parked in JGBs and although this leaves 25% there is a visible end of the line here.
But of course, we may see 78 before and indeed, that would be painful, very painful indeed ;).
Claus
