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Japan Quake Means Increased Spending

From an inscrutable Reuters:

Japan quake sparks economy fear, budget plan mooted

By Osamu Tsukimori And Stanley White
March 11, 2011

TOKYO (Reuters) – Auto plants, electronics factories and refineries shut across large parts of Japan on Friday after a powerful earthquake rocked the country, triggering a tsunami, buckling roads and knocking out power to millions of homes and businesses.

Leaders of the ruling and opposition parties pushed for an emergency budget to help fund relief efforts after Prime Minister Naoto Kan asked them to "save the country," Kyodo news agency.

The Bank of Japan, which has been struggling to boost the anemic economy, said it would do its utmost to ensure financial market stability as air force jets roared toward the northeast coast to assess the damage from the biggest quake to hit the country in 140 years.

Reportedly the nation of Japan already faces a deficit that is 200% of their annual GDP. Unlike the US, however, Japan holds most of its own debt.

Disasters like this simply remind us of the need for fiscal responsibility. So that when we are faced with a real crisis, we will have the money to deal with it.

The 8.9 magnitude quake sent shares skidding in Japan and elsewhere, adding to a slide in global stocks to their lowest level in nearly six weeks.

Several airports, including Tokyo’s Narita, were closed and rail services halted. All of the country’s ports were closed.

Electronics giant Sony Corp, one of the country’s biggest exporters, shut six factories, Kyodo news agency reported.

"There are car and semiconductor factories in northern Japan, so there will be some economic impact due to damage to factories," said Yasuo Yamamoto, senior economist at Mizuho Research Institute in Tokyo…

A tsunami 10 metres [33 feet] high hit Sendai port in Miyagi Prefecture, about 300 km (180 miles) northeast of Tokyo, but there were no immediate reports of damage.

Miyagi and its surrounding areas include major manufacturing and industrial zones, with many chemical and electronics plants

Miyagi, the area most affected by the quake, accounts for 1.7 percent of Japan’s gross domestic product (GDP), Macquarie Research said.

"There are two basic economics-related concerns. The first is that the fragile economic cycle is not in a position to withstand significant disruption," Macquarie said in a note

Toyota Motor Corp said it had halted production at a parts factory and two assembly plants in the area, while Nissan Motor Co, the country’s second-largest automaker, stopped operations at four factories, media reported

The quake occurred as the world’s third-largest economy was showing signs of reviving after shrinking in the final quarter of last year. The disaster raised the prospect of major disruptions for many key businesses, at least in the short term.

The yen fell as much as 0.3 percent against the dollar before recouping its losses, while Nikkei stock futures plunged nearly 5 percent at one point

World stocks measured by the MSCI dropped 0.4 percent to their lowest level since the end of January

The financial markets being such sentimentalists.

"We still don’t know the full scale of the damage, but considering what happened after the earthquake in Kobe, this will certainly lead the government to compile an emergency budget. We can expect consumption to fall. This could temporarily pull down gross domestic product," Yamamoto said.

With Japanese interest rates already near zero, analysts said the central bank and the government had few options but to inject more money into the economy, even if it risked swelling the already bloated deficit

The 1995 quake that devastated Kobe caused $100 billion in damage, though industrial production and financial markets bounced back fairly quickly.

For comparisons sake, the Kobe quake was ‘only’ a 7.2 on the Richter scale.

"The government would have to sell more bonds, but this is an emergency, so this can’t be avoided," Yamamoto said.

"Given where the Bank of Japan’s benchmark interest rate is now, they can’t really lower rates. The BOJ will focus on providing liquidity, possibly by expanding market operations."

But, again, this is why responsible governments put money aside for a ‘rainy day.’ But that seems to be an old fashioned concept that no one much bothers with nowadays.

Hokuriku Electric Co said all of three reactors at its Onagawa nuclear plant Japan shut down automatically after the quake, but no radioactive leaks were reported

Primearth EV Energy Co Ltd, a joint venture between Panasonic Corp and Toyota making batteries for environmentally friendly vehicles, said its Miyagi battery factory had halted production because of power cuts. The extent of any damage was not clear, but a spokesman said it did not appear to be major

Well, that’s a relief, anyway. Notice, though, that nowhere in this article does Reuters ever actually deign to mention what "budget plan" has been "mooted."

We are left to assume that the Japanese government was considering an austerity budget. And that they will instead have to go further into debt and ramp up spending to deal with this catastrophe.

Still, this is what passes for journalism in the 21st century.

This article was posted by Steve on Friday, March 11th, 2011. Comments are currently closed.

14 Responses to “Japan Quake Means Increased Spending”

  1. River0 says:

    We’re seeing the fruits of collectivism/socialism in Japan. It’s a highly regulated, insular, incestuous, and hide-bound society. They don’t allow bankruptcy because of the devastaing social stigma which they attach to it, so billions in assets are still on life-support as zombie companies; remnants of the last boom-bust cycle from the ’90’s.

    They’re extreme racists who consider themselves superior to all other Asians, so they’re never open to real debate and reasoning as we know them in the West. Women refuse to have children because they’re treated so badly as wives, so of course the birth rate has plummetted below the bare minimum needed to sustain their socialistic system.

    It will be fascinating to see how they extricate themselves from this catastrophe. their plight is a clear warning to us in the West, since we’re already half-way down that hellish collectivist road as well.

  2. Reality Bytes says:

    Yup & Katrina, Fannie & Freddie were good for the economy too! I bet John Keynes spent a lot of time in his gym locker too.

  3. tranquil.night says:

    Never let a crisis go to waste.

    • tranquil.night says:

      Speaking of which, leave it to our warlock to use this disaster to get control of the entire West Coast airwaves for 30 minutes to spout his oil and drilling propoganda. What a tool.

    • canary says:

      Well, as they said San Fran CA area was at risk last night, I thought of how for decades, California and lately, Arnie, crying their levees are weak, yet they do nothing. Problem is now California only biodegradable bags to fill with sand. California lucked out, as they continue to ruin the rest of the country.

      Will this make Japan’s autos in the U.S. less expensive or go up in prices.

    • tranquil.night says:

      Don’t worry, Canary. We’re a hotbed of sin and selfishness. No divine miracle is going to save us from sheer odds at this rate. We’re due for ours any time. It could just come in any number of a form of disasters. Most of them have already been played out in Hollywood movies. Especially alien invasion. We’re very ready for aliens and zombies. Heh.

  4. jambon says:

    It’s going to take a very long time to recover the farmland that was ruined by the tsunami and the debris brought with it.

  5. proreason says:

    Easy prediction:

    As the death toll mounts in Japan (might end up over 100K), the marxists in the US (i.e., the democrats) will call for a War on Natural Catastophes, which will of course, require massive new government powers and huge new taxes to develop the capablity to prevent such disasters. The lava dome under Yosemite will be cited as evidence of the impending mega-disaster that is inevitable and for which preparations MUST be begun now..

    Obviously, we can’t let a crisis like that happen in the United States.

    Special Presidential powers to allow him to declare martial law without congressional approval, and at his sole discretion, will also be necessary.

    • proreason says:

      Oh, one other thing.

      This is the final death knell for nuclear power in this country.

      That goes without saying.

    • tranquil.night says:


      Right on cue, a few within the envirofascist community rushed to capitalize:

      From The Daily Caller:

      Hours after a massive earthquake rattled Japan, environmental advocates connected the natural disaster to global warming. The president of the European Economic and Social Committee, Staffan Nilsson, issued a statement calling for solidarity in tackling the global warming problem.

      “Some islands affected by climate change have been hit,” said Nilsson. “Has not the time come to demonstrate on solidarity — not least solidarity in combating and adapting to climate change and global warming?”

      “Mother Nature has again given us a sign that that is what we need to do,” he added.

      Quite a vengeful goddess.

      When contacted by TheDC, Dan Weiss, Director of Climate Strategy at the Center for American Progress, also expressed skepticism at the link between global warming and the earthquake in Japan.

      “I am not a scientist,” said Weiss, “but I have never heard of a link between global warming and earthquakes.”

      Hmm, apparently Soros’ Center for American Progress hasn’t gotten the word about Fracking then. He must not have his fraudulent science finished on the issue yet.

      And while perhaps Fracking isn’t directly a cause to Global Warming, it’s still part of the even bigger problem. Those evil oil industries hurting and pissing off Mother Gaia.

  6. tranquil.night says:

    It’s important to revisit this now that the number-crunchers have seen the initial Japanese response and had a chance to assess the impact somewhat.

    Chriss Street at Big Government has the full details. As anyone who was familiar with Japan’s economic situation before the disaster (the lost decades) understands, the next imminent tsunami and radioactive meltdown could be the country’s financials.


    – Total Public Debt stands at 225% of national GDP
    – Deficit spending has averaged 7% for 20 years, about what we’re averaging under Bam.
    – 95% of it has been financed domestically, through round after round of Quantitative Easing.
    – S&P had just downgraded their debt rating to AA- in January
    – Japan is either #2 or 3 in US Treasury holdings (depending on what the Fed actually owns now) at 886 billion, with another 3 trillion estimated in US equities.

    That alone should provide the insight needed into the volatile risks associated with the markets right now. If Japan’s debt gets downgraded to junk, there will be a run for funds which will trigger abroad like Dominoes.

    Now, I try not to be inclined towards panic, just report on the battle between fear and greed in the marketplace. As money flees Japan, it seeks relative stability here and abroad. And as Rush rightfully reported, this will lead to further Quantitative Easing on our part, which sad to say may be the only option for reestablishing stability if the current circumstances continue to erode.

    If there’s ever been the historic and physical evidence for how crucial it is that we disengage from the endlessly reckless Keynesian deficit spending and currency leveraging – even more clear than Greece – we’re looking at it. First off, we aren’t going to buy twenty years worth of wasted time playing these games with the world’s reserve currency, the circumstances are more or less immediate. Second, come crisis time it’ll be the difference between recovery and collapse.

    • tranquil.night says:

      Given this knowledge, it is very suspicious that US officials are either fully manipulating, exaggerating and propogandizing the Fukushima situation, or the Japanese are. I personally trust our Statist Complex less, and we downright know how the Left works at times like this, which is the scariest fact of all.

    • proreason says:

      Maybe I’m just a rosy eyed optimist, but the way I look at the overall situation in Japan is: there are only five modern countries that have demonstrated the national will, capability and innovation to overcome obstacles that would shatter every other country – the US, Great Britain, Germany, Israel, and Japan, and among those, Japan may be the most extraordinary for several reasons. Japan tranformed itself from a medieval empire to a modern state in three generations. Because of the density of population, they are the most disciplined country in the world, even more disciplined than Germany. And because of their long heritage, the Japanese people seem to be the able to rejuvenate themselves from within (not to downplay the US’s assistance after WWII).

      I think that the Japanese will use this catastrophe to renew that spirit and rebuild the country, not so much from an infrastructure perspective, since that isn’t the biggest problem; but from the perspective of a functioning society, since they have been on a slow decline for decades.

      It’s hard to imagine them giving up, and although they have some difficult demographic conditions to overcome, I suspect that the older generations will do what they have done many times before….which is to make the sacrifices necessary to make the country great again.

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