On Valentine's Day, the Bank of Japan said that it would add $125 billion to its asset buying program after the economy contracted y 2.3% in the fourth quarter and announced its first trade deficit since 1980. The major cause of the deficit was the earthquake last March, but the Japanese realize that a strong yen and poor growth does nothing to improve the prospects for an aging population that no needs to drawdown savings and wealth. When the trade deficit goes negative, the BOJ will take notice. We may not see a conservative BOJ in 2012. Their action has placed downward pressure on the yen so we are now at 80 form the record low of 75.30 last July.
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