Japan’s Government Pension Problem – The Case of Too Many Bonds

http://www.tradethenewsroom.com/japans-government-pension-problem-the-case-of-too-many-bonds-1752

The idea behind the reallocation is to get other financial institutions and institutional investors to jump into the equity markets to keep plugging the holes in what is looking like a sinking ship more and more. But these banks and institutions cannot do this due to regulatory requirements and liability setups in their own programs.
Plus who is the buyer of these bonds? Japanese banks hold 90% f their tier one capital in government bonds. And Japan’s largest bank said unwinding this exposure would be market disruptive. Bank of Tokyo-Mitsubishi’s CEO Nobuyuki Hirano told the FT that there was little his bank could do to unwind their position in an orderly way. The pension fund is the net seller at this point and all they can do is watch.
So while the BOJ and government officials implore the masses to jump into equities, their House of Bonds is quickly becoming a House of Cards. And there is little anyone can do about it.