Bond Investors Bet on Japan's Day of Reckoning

Some hedge funds are starting to wager on painful times ahead for Japan, the world's second-largest economy, The Wall Street Journal reported. These investors, including some who made successful bets against risky mortgages and financial companies in recent years, anticipate trouble for Japan's financial system. Their concern: Government borrowing continues to climb while demand for the nation's debt could taper off. Betting against the debt of various nations such as Greece and Ireland has proved a popular move during the past several months as worries have mounted over deteriorating government finances in the aftermath of the financial crisis. But a selloff in Japan's bonds would be much more worrisome than woes in some other countries, because of the size of Japan's bond market, 694.3 trillion yen, or about $7.543 trillion, and the role Japan plays in the global economy. Read more. (Subscription required.)