Corporate bond buyers in Japan today are a lot like investors in subprime mortgage-backed securities during the housing bubble, hedge fund manager Richard Perry said at the Delivering Alpha conference.
Perry Capital is shorting Japanese corporate bonds, looking to profit on a decline in the price of the bonds.
"People don't do the credit work," Perry said. "People rely on credit agencies."
Perry said that one indicator that the market was not paying enough attention to risk in the Japanese bonds was the fact that bond prices had held steady while the equities had declined sharply.
Perry said that Japan's policies had badly damaged the competitiveness of its companies. Because of misguided policies, Japan's advantages in engineering are now being eclipsed by competitors from around the world, including German and U.S. companies.
—By CNBC's John Carney. Follow him on Twitter