BOJ and Bonds

http://the-japan-news.com/news/article/0001876940

The ECB took the step of buying bonds to inject more funds into the EU economy as a strategy of more loans and more profits for companies who export. Some might say its too little too late, and or it will only help a little, more needs to be done by central governments beside the ECB.

The BOJ recently used similar strategies to help the 98% of companies that are small and medium sized, injecting more funds at low interest rates into the economy with the strategy of getting more money flowing through the economy, more for investments and more for wage growth.

However, the challenge seems to be whether SME's will feel any benefits from the increase of extra money moving through economy, enough as an incentive to invest and increase wages as needed.

Also as stated in a earlier blog, business, small and large have to feel there is enough demand for them to increase investments and wages. A lot remains to be seen.

Other sources have stated that a 1% increase in real wages is needed for the economy to see real increases in inflation. Again will SME's and the Toyota's feel demand is good enough to increase wages.

If there is very little or no movement in the labor force there will be very little incentive for companies to increase wages as labor is reluctant to move as they might continue to be weary of the economy.

The final question might be, what needs to break or change before green shoots of economic growth become enough for all stakeholders to start moving, for an increase in growth acceleration.

The BOJ seems to be doing as much as it can but is waiting on industry and business to start making some moves also.


© 2015 Tom Metts,  all rights reserved