Conditions in Japan

Japan's Grim And Bear It 2009 Outlook

Perhaps they could sell some of their holdings of Treasuries? Setser today details how private and government investors have been flocking to Treasuries...the BoJ could cash in without causing a shock to the market, possibly. Of course, I presume the net debt figures in the linked post are net of those Treasury holdings, so it is a facetious suggestion.

Another possibility would be to follow Bernanke's proposition and "helicopter drop" cash in some fashion directly to consumers. That would possibly stimulate domestic consumption and conceivably weaken the yen versus the dollar; both desirable for Japan's financial leadership.

I spoke with Japanese coworkers about why Japanese don't loosen their pocketbooks given their high savings rates, and the answer was the force of habit and memory of hard times kept people's wallets in their pockets.