The catastrophe of March 11th is unlikely to damage the country's ability to continue in a curious sovereign-risk limbo. Japan's public finances have already deteriorated far beyond what would be sustainable for most countries. Yet the government has easily avoided a sovereign-payments crisis, and can finance itself at very low rates of interest. This partly reflects the composition of public debt, roughly 95% of which is domestically held, and the fact that low interest rates and a sluggish economy over the years have limited alternative investment options. Nonetheless, the catastrophe will hurt Japan's fiscal position. Given that the budget deficit (based on OECD definitions) was already high, at 7.7% of GDP in 2010, owing to the after-effects of the 2008-09 global financial crisis, this is a bad time for fiscal policy to be expansionary. Assuming that the crisis at the Fukushima Daiichi nuclear plant is contained, the Economist Intelligence Unit now forecasts the fiscal deficit at 7.9% of GDP in 2011, 7% of GDP in 2012 and around 5.7% in 2013-15.