I’ve got to be the least qualified member of this site to talk about economics, but I’m thinking that the dollar cost, current and future, of the disasters in Japan has got to be just about incalculable. Doubtless their economic growth will be stunted.
Even on a personal level, many there who still have homes are being forced to leave them, or some may have homes, but no job, not to mention personal expenses of dealing with such crisis times, even if they weren’t personally affected–like inflation of food and energy prices.
What can such a large scale economic disaster mean to Taiwan and greater Asia? We’ve had one new member already talking about moving here from Japan because he has no job left. There will be many to follow.
Anyone more qualified to speculate, or even think out loud, about this stuff feel like sharing your thoughts?
I’m qualified to … um … press buttons on my computer. But there might be something in the McClatchy thing. I’d also say the quake/tsunami shows how dreadfully dependent we are on certain centralised services (primarily power and transport) and that even a relatively modest disruption can cost lives. Also, the nuclear incident demonstrates an engineering reality: you design something to withstand a certain predetermined level of damage or shock, and there is always some finite probability that those design parameters will be exceeded. A major advantage of renewable generation is that failure is benign even in worst-case (it just stops working); and because the system is distributed, total failure is much less common than a graceful degradation. You can make similar arrangements for transport. It would be nice to think that when Japan rebuilds, they might give a more prominent place to that kind of technology.
It’ll be interesting to see how the markets react tomorrow morning. After all, the insurance companies are going to be hit with a very big bill, and they’ll have to sell a lot of assets to pay for the reconstruction.
Lots of jobs and opportunities will be created in the coming months, although a lot of companies will be offline for a long time if not totally wiped out.
Lower oil price: already happening. Japan’s a major importer, and it’s going to be busy with other things for a while.
Higher steel and concrete prices: lots of reconstruction to be done.
Maybe a boost for BC’s lumber industry (yay): the old man works in a mill that feeds into the Japanese and US housing markets. It’s been real slow for a long time.
Politically, Japan’s been acting like it’s Italy for a good long while. It’s had how many prime ministers in the past decade? The gov’ts are habitually tied to the construction industry, and the guy bozo was already in trouble and looking to be ousted over funding. This isn’t going to help clean up that mess.
Yes, foreigners. I doubt many Japanese will leave Japan.
In that article i noticed this assessment:
Further comments of note:
[quote]“The Japanese are basically going to have to do a big Keynesian public works program. They needed some kind of stimulus for their economy, and now they’ve got it,”
[…]
Japan’s ratio of public debt to the size of its economy is now more than 200 percent and will surely rise as it incurs more debt to rebuild after Friday’s disaster.[/quote]
Hm… so we will increase the GDP and incur even more debt for that - sounds like progress (in a perverse way).
And anyway, by that logic, wouldn’t the best stimulus and largest growth in GDP be achieved by bombing the whole country flat and force us to rebuild from scratch?
Couldn’t agree more…
More agreement. But i am afraid the only realistic idea i can find right now is “fat chance”: big money will flow to big companies for big projects, as always - unless we get rid of the current crop of politicos. If you ask me, much more important than any (perverse) growth in GDP would be a real revolution in thinking, and by extension in our political system. But i am not holding my breath (Japan is not Tunisia)…
[quote=“Jaboney”]A few likely ripples.
Lower oil price: already happening. Japan’s a major importer, and it’s going to be busy with other things for a while.[/quote]
If the country can rebuild while concurrently using less oil, would that not be a valuable hint for all of us? (Rhetorical question: i believe that future modern humans will have to live with much less energy consumption per capita; the current life style is wildly unsustainable.)
It’s been weakening for the past week or two already as speculators pull out hundreds of billions. I guess you and I can armwrestle since I want a weaker NT and you a stronger. May the most self-interested man win.
I think there is bigger problems on the horizon now with this earthquake.
One of the largest holder of US treasury bonds is Japan. The US recently is just printing billions of dollars from thin air (QE) just to float the what should already be dead economy a little bit further. (see, the big boys won’t be the ones to lose here)
Now that Japan needs the $ for rebuilding, they will ask the US for some money back. Then we will see the real man behind the curtain (or lack thereof) IMO of the US ability to pay back debt.
[quote=“dan2006”]I think there is bigger problems on the horizon now with this earthquake.
One of the largest holder of US treasury bonds is Japan. The US recently is just printing billions of dollars from thin air (QE) just to float the what should already be dead economy a little bit further. (see, the big boys won’t be the ones to lose here)
Now that Japan needs the $ for rebuilding, they will ask the US for some money back. Then we will see the real man behind the curtain (or lack thereof) IMO of the US ability to pay back debt.
Essentially, I predict a world of hurt shortly.[/quote]
I had this kind of thing in mind earlier. All the building will create jobs, yes, but how do they pay for materials and wages? And where do insurance companies get the capital to cover all the damages? Where does the money come from in the first place.
And yes, in the US these days, it comes from thin air. I’ve no idea how many times I’ve heard that in the last few months. I don’t know that much about Japan, just that they are (were) the third largest economy on the planet. That’s a huge player to take out of the game. That made me think about how much it might cost to rebuild a first world country.
I don’t think that very much about it can just get back to normal. Life as Japan knew it is surely over in many ways? And they were so huge that that has to make a difference to the rest of the area/world?
And yes, Yuli, foreigners leaving Japan, not Japanese. But we already had a huge influx of English teachers here when whatever big cram school chain it was went bust last year. Our own (Taiwanese) English teaching market is shrinking, too, so more teachers will have a negative impact here on jobs and wages. Not nearly the largest factor in all this, but one that is local, and that I can understand!
[quote=“housecat”]I had this kind of thing in mind earlier. All the building will create jobs, yes, but how do they pay for materials and wages?
[…]
And yes, in the US these days, it comes from thin air. I’ve no idea how many times I’ve heard that in the last few months. I don’t know that much about Japan, just that they are (were) the third largest economy on the planet. That’s a huge player to take out of the game. That made me think about how much it might cost to rebuild a first world country.
[…]
And yes, Yuli, foreigners leaving Japan, not Japanese. [/quote]
Japan’s debt-to-GDP ratio (200%) is twice that of the US, but, Japan borrows that money locally, selling gov’t bonds to Japanese citizens. And, as you said, they’re not going anywhere.
The quake and tsunami are bad, but advanced countries usually bounce back from disasters very quickly. In terms of impact on the economy, this probably pales in comparison to Japan’s as poor governance (this slump, and the bumbling from one party hack to another, has been going on for a very long time), and aging. Japan does not welcome immigrants, it is getting old fast, and women are under-utilized in the workforce. On top of all that, there’s the same to-the-cities migration that’s underway everywhere, which results in hollowing out a lot of towns (even cities) off the beaten path. Those things work slowly, but do an excellent job of erasing economic gains, and you can’t simply watch them pass then rebuild.
Out of thin air - meaning our money will lose in value, prices will go up, social services will get squeezed, the quality of life all around will go down…
You mean the Nova collapse at the end of 2007 (was there another problem like that last year)? I hadn’t considered that a problem for Taiwan before (and from a general perspective i am sure it would not be considered a problem but a blessing), but i can see that such a situation would cause problems for you (and many other Forumosa users who work in the same industry).
Trying to learn more about the situation you described i found this on the NOVA related Wikipedia page:
But i think this time the effect on Taiwan will be much less immediate, meaning and you and other likely affected foreigners in Taiwan have much more time to prepare for possible changes in your situation. After all, the fully devastated areas are relatively low in population, and i think it is safe to assume that people who feel they want to leave the affected prefectures near Tokyo will mostly try to move to other parts of the country (Taiwan is not exactly an obvious choice for many of the people who have become acculturated to Japan or have specific reasons to be in Japan). As regards the long-term effect, general belt-tightening in Japan will probably lead to a steady outflow of young foreigners from Japan for maybe a year or two, some of whom will likely consider the neighboring countries. And in that context i suspect that more of the foreign men will try to stay in Japan or more likely move to Korea or Taiwan while more of the foreign women will return to their home countries. You have definitely sensitized me to an economic issue that i hadn’t considered before, and i’m sure as time goes on related information will emerge here on Forumosa…
Yes, Yuli, I meant NOVA in 07, sorry. Time flies sometimes, I guess! I wasn’t here in 07, but followed events and listened to a lot of friends moan about all the extra teachers from Japan.
And I don’t teach in Buxibans now, but did for years and looked for some cram school work between jobs late last year. I’m still teaching here, though and have friends who teach in the cram schools. It’s already a very tough market!
Your points are good. I suppose the same kind of thing happening in the States will happen, or worsen (as I think that things have been that way in Japan for a good long time already). Japan will lose a lot of economic migrant type expatriots, like English teachers, if there is no place left for them in the economy. But maybe there will be a surge of people studying English to get better skills and look for new jobs once things start moving again?
If the whole world goes broke, at some point do you not just give up and starg again from zero everywhere?
Two major effects are going to be that Japanese investors are going to sell foreign holdings (especially U.S. bonds). That will have two immediate effects.
Firstly, it will mean a greater demand for Yen, which will drive the Yen up relative to other currencies, unless the relevant authority in Japan starts printing tons of money.
Secondly, because of the sell-off of investments abroad, those investments are going to become cheaper. Japan is one of the major holders of U.S. debt. As has already been asked, where will the U.S. government get the money to pay that debt back to Japan? Furthermore, even if the U.S. can get that under control (which it won’t so easily or cheaply) and deal with whatever debt Japan wants to liquidate now, there’s going to be a continuing problem in that with Japan out of the market so to speak (it’s hardly going to have cash sloshing around to buy U.S. debt), who is going to take up the slack? What this means is that for the U.S., borrowing money is probably going to get more expensive, deepening its present woes.
All of this is precisely why the U.S. really needs to sort this shit out ASAP. It’s not a matter of making predictions based upon this foreign government or that foreign government doing this or that. Japan, a major player in financing the U.S. government, has had its hand forced here by something that was completely unpredictable and completely unable to fully prepare for. In other words, the U.S. government, and by extension, the standard of living of millions of American citizens, is at the mercy of such things all because it can’t get its financial house in order. A similar thing could happen to the U.S. if major oil producing nations suddenly went into revolution, which is even less of a black swan than a major earthquake in Japan. The entire U.S. economy is a massive house of cards. I’d really hate to be living there right now simply because seemingly no one at the top (and a good deal of people below the top, based upon the past few years’ financial woes) is exercising any prudence at all.
I’d say not the economy, but the monetary system is a massive house of cards. There is a real part to any economy: people who work and produce something or provide a service. But the monetary system is rotten to the core - worldwide. And, like before, it is bound to spectacularly fail - like a major earthquake in Japan, the question is not if but when (a more refined view is that it is in the process of failing right now - what seems like a long time to an individual, 2, 5, or 10 years, is just a moment in terms of history; what seems like random individual earthquakes turn out to be the pre-shocks of “the big one”). Also China (not only Japan) will suffer the effects of the ensuing economic tsunami like everybody else. The world as we know it is ending right before our eyes…
Hm… if you survive the tsunami, isn’t that what you do - isn’t that what’s built into all living beings (not just humans)?
(And wouldn’t someone who is a mother know that perhaps better than anybody else?)
