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Ian R. Campbell  -  Mar 13 01:23 PM 66 Posts 1 Follower 0 Following
Japanese Earthquake Aftermath?

The Wall Street Journal published an article this morning titled 'Earthquake Points to Fallibility of Forecasts' - reading time 1 minute.  The important message in the article is not that "no one can forecast an unexpected event", which the article says and which is of course true.  The more important issue raised by this article is one I have been thinking about ever since I first learned of the Japanese earthquake yesterday.  The Japanese economy is an important one on the world stage (being the 3rd largest world economy), and the rehabilitation cost that will be required in the earthquake's aftermath (with another major earthquake announced this morning perhaps making things worse) will be enormous - in circumstances where Japan's public debt apparently is approximately two times its GDP.  One of the things I think will be worth watching is which countries contribute to whatever re-building fund its required.  In particular, given what I understand from my readings to be a long-term underlying antagonism between China and Japan, whether China will be a contributor to Japan's rehabilitation efforts.


The big question as I see it is:  What near and long term effect(s) will this event have on the Japanese economy going forward, and what possible effect(s) will this event have on the rather fragile developed countries economies?  The WSJ article says the same thing this way:  "Until the full extent of damage is known, uncertainty will be the key word for the Japanese outlook and perhaps the global one as well".  It seems to me this is becoming a bigger and bigger question almost by the minute, given the currently (as I write this at 10:15 ET on Saturday, March 12) evolving issues around the possible nuclear reactor meltdown(s) that have resulted in the earthquake's aftermath.  As an aside, while it is too early to know the outcome of this particular issue, under any circumstance it seems to me this 'nuclear event' will lead to much dialogue around nuclear power when things settle down - irrespective of its outcome.


I suggest it behooves all investors in equities, physical gold, physical silver, and the money markets to closely monitor the evolving Japanese situation in the context of its possible effect on:


·        the world economy and economies of individual countries - not the least of which is the Japanese economy;


·        the equity and money markets; and,


·        the precious metal markets.


You might also want to read 'Quake Aftershocks Could Hit Markets Days Later' - reading time 1 minute, 'Will The Japanese Earthquake Be The Straw That Breaks Europe's Back?' - reading time 1 minute, and in particular 'Has The Tsunami In Japan Destroyed The Japanese Economy' - reading time 4 minutes.

Topics:   Japanese Earthquake, Tsunami, forecasts, WSJ, Physical Gold, physical silver, precious metals markets, equity markets, money markets,
Disclosure of Relationships with the Company(ies) referenced in this Post:
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