A very nice bounce in Japanese
equities yesterday. The Nikkei had been weighed down by fear (one assumes) that
the Bank of Japan would do something silly, but the market got cheerier as the
day wore on and boomed after the BoJ’s decision.

The Economist commented: “With
deflation apparently conquered, the Bank of Japan is at long last to stop
flooding the financial system with free money. Japan’s monetary
policy is starting to look almost normal.”

Now virtually all the world has a
tightening bias for monetary policy. New
Zealand may be an exception, and Australia is
apparently aiming for the nirvana of never again changing its apparently perfect
monetary policy. Great pity about the current account deficit, rapidly rising
international debt and sale of assets to foreign

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Peter Fray

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