Is the Bank of Japan creating the biggest pyramid scheme in history?
In recent weeks Haruhiko Kuroda has been the toast of the financial world, winning plaudits from Nobel laureates Paul Krugman and Joseph Stiglitz. The move by the BOJ governor to end deflation with large bond purchases has been cheered by International Monetary Fund Managing Director Christine Lagarde, Asian Development Bank President Takehiko Nakao and the Japanese business establishment.
Yet markets are raising troubling questions about Prime Minister Shinzo Abe's revival plans — dubbed Abenomics — of which Kuroda's bond-buying is a critical part. On Thursday, the Nikkei 225 Stock Average plunged more than 5 percent. The broader Topix lost 3.8 percent, after a 6.9 percent drop on May 23, its biggest one-day decline since the March 2011 tsunami and nuclear disaster. It's now down 11 percent since May 22. That officially puts Japan in correction mode.
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