A depressing read on the longer term impact of the Japanese Quake:
Twin Threats of Japan and Gulf Stalk Global Recovery.
Although I'm of the opinion that the 'recovery' was bogus.
As catastrophe at home prompts Japan to repatriate chunks of its vast wealth, it is pulling the rug from under stock and bond markets thousands of miles away.
We are discovering once again that the country is the world's top creditor by far with nearly £2 trillion of net assets overseas.
The risk is doubly dangerous when combined with the fast-escalating conflict in the Persian Gulf, where Saudi Arabia's use of troops to suppress Shi'ite dissent in Bahrain risks a showdown with Iran.
"People had thought global recovery was self-sustaining and now equity markets are starting to ask whether it might be snuffed out," said David Bloom, currency chief at HSBC.
HSBC said appetite for "Uridashi" bonds of countries such as Brazil, South Africa, and Australia has "collapsed", cutting off a key source of fresh funding. The bigger effect is liquidation of global assets built up during the "carry trade", when Japan's insurers, funds and famed housewives ("Mrs Watanabe") fled zero rates to chase yield abroad. These assets include UK equities, US municipal bonds and commodity funds.
This is why an earthquake in a region covering 6pc of Japan's economy – or less than 0.5pc of global output – has set off a global rout.
Other dangers abound. CreditSights said Japan's three top banks hold $1 trillion (£62bn) of local equities. These holdings are underwater once the Topix index falls much below 800, hence the worries over the 16pc drop to 767 over the past two days.
The Bank of Japan keeps a close eye on equities and the yen. It has intervened with 21 trillion yen (£168bn) of liquidity and doubled bond purchases to 10 trillion yen to boost confidence.
Hans Redeker from BNP Paribas said the "pressure point" is the $3.9 trillion portfolio of government bonds held by the banks. The fiscal strain of the earthquake comes at time when tax revenue already covers less than half the budget, public debt is 225pc of GDP, and pension funds are becoming net sellers of bonds to meet payouts to the elderly.
The Bank of Japan may have to print money lavishly if the "deflationary equilibrium" of recent years breaks down, but this risks loss of confidence in Japan's $12 trillion debt stock, worth a fifth of global GDP. The central bank must walk a tightrope.
At some point the Japanese will have to pull equity out of the global markets to fund rebuilding - it's unavoidable.