Impact of Japanese Earthquake on Domestic and World Economy

The world is in the process of recovering from the GFC, and Japan’s domestic economy has had more than its fair share of difficulties (including as I understand it very low growth and interest rates around zero).

What will be the likely effects of the earthquake? Will reconstruction stimulate demand and so economic recovery domestically? Will it negatively impact on the country’s balance of trade current account? And how will these two forces impact world economic recovery?

This sounds like homework.

Afraid not! Just rampant self-interest! 49 year old unemployed MBA here wondering whether this is going to cause a contraction in job opportunities.

Like I said, rampant self interest…

Why are you even wondering about this, then? The tsunami in SE Asia a few years ago killed 250,000 people. What was the impact of that tsunami on the global economy? Such events are too small to cause a discernible or measurable effect on a global scale.

The most probable thing is that some Christian lunatic televangelist will blame Japanese for not being Christians and that’s why the Christian god punished them with a tsunami.

I’m concerned because the Japanese economy is the third largest in the world and a significant trading partner with AUS where I live. The Boxing Day tsunami tended to impact less advanced economies, with consequently fewer global economic effects.

…and I’m just interested in how this might play out.

Well… you can follow reconstruction and/or building related industries in Japan that have economic relationships with non-Japanese corporations and get involved with them somehow.

Off topic question ;

Which area in Aussie-land is the ocker accent most prevalent? I’m following Queensland, Gold Coast and other east coast police and fire radio stations some times in the hope I hear someone speak like that but haven’t had much luck.

Get on www.bloomberg.com.

  1. Insurance is going to pay out big time and this could lead to a liquidation of US treasuries.
  2. construction industry in Japan will boom…may push up demand for timber some
  3. Stimulous is limited because it’s like burning down your house to get the economic benefit of building new.
  4. nuclear power gets shut down in Japan - increased demand for petroleum and increased global prices
  5. Japanese exports will decline as will GDP
  6. some of the big Japanese corporates like Sony may make less components, PC’s, finished goods, etc.

#1 may have the biggest potential impact globally. I hope it does in the very near term as I need to lock on my mortgage this month.

The Japanese GDP is the fourth largest in the world. As I write this, there are news reports of an unprecedented mass exodus Tokyo. The ongoing nuclear event may be “deadly for decades.”

Playing with simple death numbers directly caused by a tsunami as a valid comparison, let alone the defining the game, illustrates a lack of understanding beyond words.

There will likely be an impact on the worldwide manufacture of digital electronics products:

No wafers -= no chips; no chips = no electronics (cell phones, computers, TVs, etc.)

Holy shit.

I hate the American media right now. It’s almost like they’re actively trying to do all they can to make the situation worse.

WTH? Why do you hate this topic so much? Your responses in this thread are just bizarre.

Can you explain your reasoning here? In the US at least, a liquidation of US treasuries would tend to make treasury yields, and therefore mortgage rates, rise. Is there some other mechanism you’re relying on (are you really in China? Would rising US rates cause Chinese rates to drop?)?

Japan exports 22% of all car engines assembled elsewhere in the world, and 50% of all transmissions. Expect slow downs at US manufacturing plants because of parts shortages.

Japan exports 20% of all semiconductor parts, including 40% of all flash memory chips.

As an observation, the majority of the media coverage to date has focused on the nuclear catastrophe, along with the utter devastation of seaside towns especially on the east coast. I wonder the extent to which productive infrastructure (factories, transport systems, etc) located inland and on other islands has been damaged. Clearly the issue with the powerstation being down will have an impact on the ability to provide power to industry, but it’s just one of what I would imagine to be a number of power generation facilities, so I would expect the impact to be minor.

The effects on the insurance industry will be a function of the level of penetration of quake/flood related insurance in Japan. I would have thought that in high risk areas the cost of insurance would be sufficiently high to discourage most from taking it. The result might be reduced impact on global re-insurance markets but reduced capacity to rebuild devastated areas in the short term. Perhaps?

Baci - check out this oped from Michael Lewis: http://www.bloomberg.com/news/2011-03-17/just-imagine-big-tokyo-quake-23-years-later-commentary-by-michael-lewis.html

I bet you are baffled when you see the yen go up… aren’t you?

Stock markets – see: gamblers – are a wild but a predictable bunch of lunatics.

I said my question was “off-topic” already.

Can’t a guy have a legitimate interest in linguistic expressions of cultural characteristics?

Gee.

I think the economic effects will actually be discernible, especially as we are just scraping our way out of recession. That makes it even more amusing to imagine people in California worrying about radiation. But, only just barely because it wasn’t funny to begin with.

It depends on how you define “economic” and “discernible”.

We don’t know much yet about the intense drive for human beings to gamble.

We can suck in those drones and make money out of them, if we are a Las Vegas Casino, but we have no idea how they will respond faced with such existential events like an earthquake that kills hundreds of thousands of people.

Not that numerous deaths of others can influence the human ego… not at all.

The gamblers are just worried how such a level of destruction could affect their bank accounts.