Michael Lewis Discusses His Prophetic 1989 Article on a Japanese Earthquake

Others here at iBC have mention that Japan may be selling some US bonds in the near future…

“Japan’s economy was already in bad shape before this catastrophe—their public debt totaling almost 200 percent of their G.D.P. How can they recover, and who will be footing the bill?

I wouldn’t be surprised if this event calls into serious question the Japanese government’s ability to service its debt. But I would be surprised if anyone wound up footing the bill other than the Japanese people, as they are both rich and famously poorly insured. A friend in the catastrophe-insurance market points out that the last big Japanese earthquake, in Kobe, generated roughly $100 billion in losses, only $3 billion of which were insured. The nature of Japanese society is to share the burden, and so the losses, I assume, will be socialized. I wouldn’t be shocked if the Japanese government, to cover the losses, will need to sell off at least some of their 800-and-something billion dollars in U.S. treasury bonds. And I wonder: if the Japanese become big net sellers of our bonds, who will step in to buy them?”

Read the entire Vanity Fair article here.