The trills would most likely have sold for a very high price in 1990, perhaps with a dividend yield under 1 percent. After all, people in 1990, witnessing recent high growth rates, would have expected Japanese GDP to grow rapidly in subsequent decades. In 2010, when GDP was still only 479 trillion yen, the same trills would pay a dividend of 479 yen, not much larger than the initial yield and no doubt disappointing many investors. So, with lower growth expectations, the trills would likely have a much lower price now. That lower price would be a bane to investors but a boon to Japanese, compensating them for the losses that they have suffered.
When considering today's concern about Japan's high public debt-to-GDP ratio, now at 202 percent on a gross basis, one needs to remember that the ratio would most likely be profoundly lower if Japan had in the past financed more of its deficit spending with trills instead of conventional debt, and issued them to investors around the world. A lower debt burden would certainly help Japan deal with its economic slowdown.
There is nothing we can do now to compensate for failures to manage risks in the past. But disasters and economic crises can have a silver lining if they spur fundamental innovation by forcing us to think about how to manage risks in the future.
This article comes from Project Syndicate.