Yet Hong Kong proved the Nobel prize-winning economist wrong by burning speculators, exiting elegantly and making a mint in the process. The government steamed into the market with a $15bn cheque, equivalent to 30 days' turnover at then-prevailing levels. To match that today, based on January's turnover, Japan would need to spend about $450bn. Hong Kong also used the time it bought to bolster its defences. It beefed up the currency board backing the peg to the US dollar, increased liquidity in the banking system and tightened stock market rules.

Japan, by contrast, has given no clue that it has a plan to improve the investment environment. Nor is it clear how the government would fund these purchases (although it would presumably just issue more bonds). The Bank of Japan has already earmarked $11bn to buy shares held by banks, itself a repeat of operations launched earlier in the decade. Tokyo could also resurrect the share-buying agency it set up in the mid-1960s. That body claimed some success, but the dynamics were completely different – Japan back then was a fast-growing economy. The Topix's 0.7 per cent slide yesterday suggests investors believe the share buying will either fail to materialise or fail to work – a brutal but perfectly reasonable assessment.