There is only a minuscule chance that Japan’s Fukushima Daiichi nuclear plant will turn into a new Chernobyl. The markets are doing a terrible job of trying to price the tiny risk of that disastrous outcome, as they always do for so-called “black swans”.

In the run-up to the US subprime crash, outcomes seen as highly unlikely were ignored. In Japan, the market has done the opposite, reacting as though total disaster was the base case. As Japanese equities plunged, European shares completed a correction, a fall of more than 10 per cent from their recent peak in mid-February, while US shares are down more than 5 per cent over the same period.

Société Générale points out that with $288bn knocked off the value of Japanese shares, the market seems to have assumed that companies, rather than the government, will pay for the earthquake clean-up.