Japan’s debt to the tune of 200+% of GDP will finally begin to have a negative impact on the economy. The fiscal crisis will start off imperceptibly mid-Spring with a whimper but will deteriorate and become full-blown as the year wears on. In response the Japanese government will begin monetizing debt and injecting liquidity into the system. Therefore Japanese equities will likely outperform in nominal terms, but not in “inflation-adjusted” terms.
