*Not a great time to be rebuilding Japan

As we all know, natural disasters often lead to massive public works projects that help spur growth. But Japan's debt burden is so severe - 200 percent of annual economic output.- that it's unclear how much the nation will be able to do this time around. The government does have an emergency fund of about $2.4 billion to handle this kind of disaster. From the WSJ:

Moody's Investors Service, which recently assigned a negative outlook to Japan's bond rating, said it saw little likely impact on the government's finances. "Wealthy economies tend to absorb these things better than smaller economies... so that would be our point of reference but of course we are trying to assess exactly what happened," analyst Tom Byrne said in a telephone interview. "The bottom line is it is very unlikely it will have any big consequences on the government's rating."

The cost of insuring Japan government debt was higher in early London trading in reaction to the news, according to data from Markit. Japan credit default swaps were trading at 84 basis points, or hundredths of a percentage point, five points wider than the close the day before. Some economists said they expect the Bank of Japan to announce measures to loosen monetary policy at the central bank's meeting next week, in a bid to boost confidence in the financial markets following the powerful quake.

*They're now saying that it was a magnitude 9.0 earthquake, which would be Japan's largest quake ever. (New Scientist)