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The Japanese yen stabilized a bit today after the massive selloff earlier this week.
Finance minister Jojima said that the current prime minister Noda had instructed the government
to compile a fiscal stimulus package by the end of the month, including a possible supplementary
budget.
However, it's thought that compilation of the extra budget would be difficult with the
house dissolved.
Economy minister Maehara said that stimulus using reserve funds is insufficient to support
the economy.
Noda is expected to dissolve the lower house today which will trigger an election, which
would be held on December 16th.
And it's believed that the Bank of Japan might hold off from additional stimulus before the
election.
Nonetheless, the likely winner of the election, L-D-P leader Abe, would push for more aggressive
policy to bring Japan out of recession, including unlimited easing, sub-zero interest rates
and increase in public investment.
A key focus today will be U-S president Obama's meeting with Republican and Democratic leaders
of Congress at the White House on the issue of the fiscal cliff.
Obama and the Republicans remain divided over ways to resolve the fiscal cliff.
Obama blamed the Republicans for objection to his proposal on a tax hike and predicted
if they continued like that, "middle-class families are all going to end up having a
big tax hike... That's going to be a pretty rude shock for them, and I suspect it will
have a big impact on the holiday shopping season."
Dallas Fed Fisher criticized that the Congress "has behaved disgracefully in discharging
their fiscal duty".
And he warned that only the Congress could save the U-S from "fiscal perdition", not
the Fed.
Meanwhile, Fisher also noted that the Fed cannot be "endlessly purchasing U.S. Treasury
and agency debt".
Philadelphia Fed Plosser questioned if the open-ended Q-E-3 would encourage investors
to take excessive risk on the impression that the Fed would also rush to save the housing
industry.
Plosser warned that the bigger the Fed's balance sheet is, the more difficult for the Fed to
exit in a way that meets our inflation objective, without creating instability in the real economy,
thereby undermining our credibility and reputation."
Overall, Plosser said it's a "fairly risky monetary policy".
Richmond Fed Lacker also urged the Fed to stand pat now "rather than easing policy further"
as "It's not clear whether monetary policy, by itself, can bring about any material improvement
in economic growth right now."
Nonetheless, Fed chairman Ben Bernanke continued his pledge to use all policy tools to support
the economic recovery.
In Europe, Italian Finance Minister Grilli said that there are "several options" for
Greece to fill the funding gap resulting from the two year extension of fiscal adjustment
granted.
And he's optimistic that E-U finance ministers would come to a decision next week.
I-M-F chief Lagarde will cut short his Asian tour to attend the Eurogroup meeting in Brussels
on November 20th.
Lagarde said that it's important to focus on the "same objective" and that is to make
sure Greece can "operate on a sustainable basis" and "reaccess markets as early as possible".
Lagarde has openly dissented the E-U finance ministers' decision to loosen up the target
of lowering Greek debt to 120% G-D-P until 2022, rather than 2020.
On the data front, Euro current account and trade balance will be released in the European
session today.
And Canadian international securities transactions, U-S T-I-C capital flow and industrial production
will be featured in the U-S session.