I emigrated to Japan in 1995. Interesting times. I spent the first evening in Tokyo with my new boss - a gregarious Englishman and an authority on Asian markets after many years of living in Japan.

I was eager to learn and bombarded him with questions regarding the Asian markets, the Japanese people, the economy etc. He stopped me straight in my tracks and told me this story.

"As you know Paul the Japanese do not celebrate Christmas - it is a normal working day. Well, last year the largest department store, equivalent of Harrods in UK, decided it wanted to market Christmas to boost sales so decided to have an elaborate window display. They assembled a huge domestic media pack and asked the US ambassador to unveil the window live on the main national news.

"He pulled the cord - and there for everybody to see was a huge cross with Santa Claus nailed to it. The Japanese clapped and the westerners present were appalled. That's Japan."

For many years Japan and the Japanese economy was much admired by those with very little knowledge of it before the illusion was finally shattered and reality prevailed. The country plunged into a 25-year depression, the Nikkei falling from 38,000 to 8,000. Endemic corruption, protectionism and unwillingness to make meaningful structural reforms are the main causes for its longevity. Just like Europe right now, the inability to deal with its bankrupted banks was another contributing factor.

In Japan, insiders prevail, and insularity dominates.

Above all if you have ever lived there it is perfectly clear that the Japanese have no idea what they are doing.

And the Japanese economy is still a basket case. Their GDP just fell for the second consecutive quarter, making it official that Japan has entered a triple-dip recession. The government's second estimate for Jul-Sep (3Q) 2014 real GDP came in at -1.9pc quarter-on-quarter annualised - a downward revision to the original numbers. The budget deficit for the current year is projected to be more than 7pc of GDP - the latest in a string of huge annual deficits.

Japan's debt now stands at a staggering 250pc of GDP on the government account, and upwards of 600pc of GDP when the debts of business, households and the financial sectors are included.

On top of that there is Japan's inexorable demographic bust - a force which will shrink the labor force and squeeze even further its anemic growth of output. Indeed last week Moody's downgraded Japan.

Japan Inc plans to save itself through Abenomics - a string of economic policies named after prime minister Shinzo Abe (who is expected to be returned later today in a snap election called just two weeks ago).

Abenomics is the latest and most extreme form of quantitative easing and perhaps the most radical experiment ever attempted in modern global finance.

The Bank of Japan will escalate its bond purchase rate to $750bn a year - a figure so astonishingly large that it would amount to nearly $3 trillion per year if applied to a US-scale GDP.

That comes on top of a central bank balance sheet which had previously exploded to nearly 50pc of Japan's national income, more than double the already mind-boggling US ratio of 25pc. Specifically, in order to go on a stock-buying spree, Japan's state pension fund (the GPIF) intends to dump massive amounts of Japanese government bonds which the BOJ will buy. This will enable it to reduce its government bond holding - built up over decades - from about 60pc to only 35pc of its portfolio. The GPIF will then buy $90bn of Japanese equities and $110bn of foreign stocks to lift its weighting to 25pc for each category. The policy can be summed up as "dog eats own vomit". They are monetising national debt.

Its goal among other things is to weaken the yen and cause inflation .The Yen has plummeted 40pc against the Dollar and Euro since 2012, even more against the Chinese yuan. This they hope will drive nominal GDP higher. The dramatic currency depreciation shift is causing ripples throughout the globe and echoes of the Asian financial crisis of 1997.

So it may surprise readers to know that Japan's Nikkei index has been Sommerville Advisory Markets' most favoured index to buy for many years. Even during the financial crisis we advocated parking money here, and every year since we've made it our most preferable world index 'buy'.

Our reasoning was not that we were confident in Japanese economic policy - but rather the opposite.

The economy was such a mess and stocks so lowly valued they were bound to try something radical. The Nikkei has moved from 8,000 to 18,000. As the yen plummets, the index goes higher and it is totally conceivable the currency could completely disintegrate.

This is now a dangerous game and not for the faint hearted. A total Yen collapse cannot be ruled out and could propel the Nikkei towards 25,000 and beyond, but a currency move of that magnitude would likely sap confidence, so our central thesis is while we expect the Nikkei to go higher, we also expect extreme volatility and tests of downside for 2015.

Despite the Japanese government paying a mere 1.5pc on its bonds, interest payments amount to an eye-watering 27pc of tax revenues. Including rolled government bills takes the share to a jaw-dropping 57pc. Any meaningful reprising of Japanese sovereign risk would push yields to a level the government would be unable to pay.

Among the largest industrialised welfare states, Japan is the one that is closest to government bankruptcy. Even with interest rates at record lows, the proportion of debt growth caused by mounting debt servicing costs has begun to rise, due to the sheer size of the public debt.

Mr Abe is likely to be returned to office today and with him will come a renewed vigour to carry out this most insane central bank policy of all time. Ultimately I expect it to be an abject failure.

It may be some way off - but when that point comes, it will not just be Santa but also investors in anything Japanese that will be nailed to the cross.

Paul Sommerville is chief executive of sam.ie. His 2015 market newsletter is free to Sunday Independent readers who register at www.sam.ie

Sunday Indo Business