"Japan Creates World's Biggest Bond Bubble"

"Kuroda's shock-and-awe stimulus move on Oct. 31 delighted markets and won him plaudits as a monetary virtuoso.

...But what happens when a central bank buys up an entire bond market?

We're about to find out as Kuroda, like some feverish hedge fund manager, corners Japan's. Neglected in all the celebrating: To reach a 2 percent inflation goal that's both arbitrary and meaningless, the BOJ is destroying Japan's standing as a market economy.

...the central bank has just added further fuel to the most obvious bond bubble in modern history -- and helped create a fresh one on stocks.

...because Japan's interest-rate environment is so warped, investors won't have the usual warning signs of market distress.

...When a nation that needs 16 digits in yen terms to express its national debt (it reached 1,000,000,000,000,000 yen in August 2013) sees benchmark yields falling, you've entered the financial Twilight Zone. Good luck fairly pricing corporate, asset-backed or mortgage-backed securities.

Considered in relation to gross domestic product, Kuroda's purchases make the U.S. Federal Reserve's quantitative-easing program look quaint.

...All this liquidity has made for surreal events in Tokyo. Take the news that Japan's $1.2 trillion Government Pension Investment Fund will dramatically rebalance its portfolio away from bonds.
...The BOJ is now on a financial treadmill that's bound to accelerate, demanding ever more multi-trillion-dollar infusions to keep the market in line.

...deflation isn't the cause of Japan's malaise, but a side-effect."

http://www.bloombergview.com/articles/2014-11-04/japan-creates-world-s-biggest-bond-bubble