Japan's currency collapse is bad news for Japanese people and businesses, and could drag down US stocks and bonds if Japanese money rushes home.

• The yen keeps falling against the dollar, making imported food and energy expensive and squeezing ordinary Japanese people.
• Household spending has dropped six months straight, and business bankruptcies tied to the weak yen are climbing fast.
• Japan is stuck: raising interest rates would crush already-weak companies, but doing nothing lets the yen keep sinking.
• Japanese government bonds are also falling, pushing yields to levels not seen since the 1990s as the government plans heavy new spending.
• The big danger for Wall Street is the "carry trade" unwinding — over $2 trillion in Japanese money could leave US stocks and bonds and flow back home.

Outlook: If Japan is forced to defend the yen or investors pull money home, US stocks and bonds could take a serious hit in the months ahead.