BOJ’s Shirakawa: Fully Committed To Asset Purchases To Meet 1% Inflation Target

Right, they’ve only been doing it for a couple of decades, monetary policy works with a lag…

BOJ’s Shirakawa: Fully Committed To Asset Purchases To Meet 1% Inflation Target

By Chana R. Schoenbergrand and Stephen L. Bernard

April 18 (Dow Jones) — The Bank of Japan remains determined to purchase more assets to meet its 1% inflation target, the central bank’s governor, Masaaki Shirakawa, said Wednesday night in New York.
“The Bank of Japan is fully committed to continuing powerful monetary easing through various measures, including maintaining the policy interest rate at practically zero and purchasing financial assets, until the current goal of year on year CPI inflation at 1% is deemed to be achievable,” Shirakawa said in his speech to the Foreign Policy Association.

But Shirakawa warned of the potential mismatch between what markets expect and what central banking policies can deliver.

EU slams governments for not enacting growth laws

Like this would fix it all:

EU slams governments for not enacting growth laws

April 18 (Bloomberg) — “It is incomprehensible that member states are still not fully implementing growth-friendly legislation we have in place,” European Commission President Jose Manuel Barroso told the European Parliament. The EU’s internal market “is probably the largest engine for growth within the European Union,” Barroso said. It has to become easier to transfer pensions from state to state and the way cross-border workers are taxed needs to be simplified, the Commission said Wednesday. Job seekers should be able to receive their unemployment benefits for up to six months while they are looking for a job in another country and states should start hiring non-nationals for jobs in their public service, it added.

Bad headline day for eurozone

Euro-Area Construction Declines for Third Month Led by Germany
Bundesbank Says Euro Nations Must Set Aside Growth Concerns
Merkel Gives Spain No Respite, Says Debt Cuts Key to Yields
Germany wants IMF funding raised to $1 trillion
IMF Lowers Additional Funds Target To $400bn-Plus: Lagarde
Spain weighs financing options
Spain Reduces Flexibility of Labor Reform, Expansion Reports
Bank of Spain Questions Budget Forecasts, Calls for Prudence
Spain Is Back in Recession, Central Banker Warns
Spanish Banks to Set Aside $71 Billion for Real Estate Cleanup
IMF’s Lagarde Sees Scope for ECB Monetary Easing, FAZ Reports
IMF sees Italy missing budget deficit targets
Italy Probably Shrank 0.7% in First Quarter, Bank of Italy Says

Comment by the Fed Chairman

From a comment on Mike Norman’s blog.
This helps to ensure a wide output gap.

From Bernanke’s testimony from a couple of weeks ago:

“Having a large and increasing level of government debt relative to national income runs the risk of serious economic consequences. Over the longer term, the current trajectory of federal debt threatens to crowd out private capital formation and thus reduce productivity growth. To the extent that increasing debt is financed by borrowing from abroad, a growing share of our future income would be devoted to interest payments on foreign-held federal debt. High levels of debt also impair the ability of policymakers to respond effectively to future economic shocks and other adverse events.

Even the prospect of unsustainable deficits has costs, including an increased possibility of a sudden fiscal crisis. As we have seen in a number of countries recently, interest rates can soar quickly if investors lose confidence in the ability of a government to manage its fiscal policy. Although historical experience and economic theory do not indicate the exact threshold at which the perceived risks associated with the U.S. public debt would increase markedly, we can be sure that, without corrective action, our fiscal trajectory will move the nation ever closer to that point.”

Full prepared remarks

US crude rises on US pipeline reversal plan

This could be it- watch for WTI crude to converge to Brent.
My guess is that WTI rises to meet Brent at around 120+

The pipeline was scheduled to open June 1.
This moves it up to May 15th or so.

NYMEX-US crude rises on US pipeline reversal plan

By Randy Fabi

April 1 (Reuters) — U.S. crude oil prices rose above $103 a barrel on Tuesday in response to news that a plan to drain off a glut of oil from the Midwest could be implemented two weeks ahead of schedule.

FUNDAMENTALS

* NYMEX crude for May edged up 28 cents to $103.20 a barrel by 2306 GMT, adding to a 10 cent gain the previous session.

* Enterprise Product Partners and Enbridge plan to reverse the flow of the Seaway oil pipeline by mid-May pending regulatory approval, allowing the line to start draining the glut of crude from the U.S. Midwest two weeks ahead of schedule.

* Iran is ready to resolve all nuclear issues in the next round of talks with world powers if the West starts lifting sanctions, its foreign minister said on Monday.

* U.S. commercial crude stockpiles were forecast to have risen 1.6 million barrels last week after data showed the largest three-week build in more than three years due to higher imports, a preliminary Reuters poll showed on Monday. The American Petroleum Institute will release its report later on Tuesday.

Sheila Bair quote, former FDIC chief

You’d think the former chief bank regulator would know the banks they regulate and supervise aren’t allowed to do this, and that it’s up to the FDIC to see they don’t:

Sheila Bair:

“For several years now, the Fed has been making money available to the financial sector at near-zero interest rates. Big banks and hedge funds, among others, have taken this cheap money and invested it in securities with high yields. This type of profit-making, called the “carry trade,” has been enormously profitable for them.”

Pound Strength Is ‘Crippling’ Britain’s Recovery, Civitas Says

Actually just another symptom of overly tight fiscal policy:

Pound Strength Is ‘Crippling’ Britain’s Recovery, Civitas Says

By Svenja O’Donnell

April 12 (Bloomberg) — Britain’s exchange rate is “crippling” the economic recovery, and devaluing the pound by as much as 25 percent could push growth back to an annual 4 percent, research group Civitas said.

The pound’s “significant” drop since 2008 hasn’t been enough to make U.K. exports competitive on world markets, and a future decline in the currency is inevitable, according to John Mills, the author of the Civitas report published in London today. A devaluation of as much as 15 percent would balance the U.K.’s trade deficit, he said.

“The exchange-rate policy which we have pursued for decades has made it much more expensive to run most manufacturing operations here than in other parts of the world,” Mills said. “Getting the exchange rate down is a matter on which, in the end, we will have no choice.”

Data yesterday showed the U.K. trade deficit widened to the most in three months in February as exports of cars and heavy machinery fell, especially to the U.S., China and Russia. British manufacturing has become less competitive as some Asian countries devalued their currencies, boosting their competitiveness and hurting the U.K. economy, Mills said.

Spanish Law Aims To Rein in Budget

Institutionalizing death by 1000 cuts:

Spanish Law Aims To Rein in Budget

(FT) Spain’s plan to toughen the central government’s control of regional finances passed its first legislative hurdle in a parliamentary vote Thursday. “This is a law that will serve as the foundation for policies to make Spain’s budget deficit disappear, so that Spain goes back to being a reliable European Union partner,” Budget Minister Cristóbal Montoro said after the bill passed the lower house of Parliament. The law will now go to the Senate, where it also is expected to pass. The new law will require that all levels of Spanish government have balanced budgets by 2020 and that the government lower its debt-to-GDP ratio to 60% by that year as well. The government has forecast its debt-to-GDP ratio will rise to around 80% this year.