Financial Times: Japan Short Sellers are Still Waiting

“It seems seismic engineers weren’t the only people to underestimate the effects of an event such as the great eastern Japan earthquake. Some of the best informed fixed income speculators had been growing confident that the moment had come for the great Japanese debt repudiation. After all, the country’s demographic profile could prove that ageing households would soon need to be net liquidators of their savings. There was no escaping the cold fact that Japan’s huge state debt, and continuing deficits, would crash with default or inflation, and certainly devaluation. . . . Japan will be hurt by imported inflation, in particular higher oil and liquefied natural gas prices. According to Poten & Partners, the LNG consultancy, the country will be importing about 7m more tonnes of LNG this year, and will probably continue annual imports at that rate in the future. Reconstruction will require huge quantities of other imported materials.”