Japan Faces Multiple Challenges In Aftermath of Earthquake and Tsunami
This interactive map from the New York Times of key cities in Japan before and after the earthquake and tsunami is one of the more horrifying things I’ve seen in recent memory. You can scroll the bar back and forth and just see towns eaten alive by the onrush of water. I think we’re only beginning to understand the level of devastation here, as evidenced by the fact that the death toll rose ten-fold over the weekend.
The disaster has left more than 10,000 people dead, many thousands homeless and millions without water, power, heat or transportation.
Japanese officials are trying to manage a host of cascading crises all at once. You have the rescue and relief effort, with a search for bodies and provisions of shelter, clothing and food to the homeless. Fully half the Japanese military has been summoned for that purpose. You have the effort to get power back on line, which could disrupt supply lines and industrial production in areas relatively unaffected by the earthquake and tsunami.
And at the same time, TEPCO (Tokyo Electric Power Company) engineers are trying to save the Fukushima Daiichi nuclear plant from meltdown. A second hydrogen explosion occurred overnight, and if anyone tells you they understand the extent of the danger there, I’d say they’re wrong. My mind keeps flashing back to the Oscar-winning film The Cove, and how nobody on the street in Tokyo knew that the Japanese government was putting whale meat in children’s lunches for years. I just am unconvinced that events are exactly as they seem there. If 200,000 have been evacuated, that’s enough to tell you we’re dealing with serious danger, and there’s no guarantee when any of those residents will be allowed to return.
And then there’s the financial impact of all this on the world’s third-largest economy. The Nikkei Stock Average dropped 6.4% in the first day of trading since the disaster. Note this sentence: “Shares of Tokyo Electric Power—operator of the damaged power plant—were ask-only, meaning the gap between buyers’ bids and sellers’ offers was so wide no trades were being done.”
In order to try and contain the economic damage, Japan’s central bank added $183 billion into the economy. That’s a major injection of liquidity, designed to relieve anxiety from the financial markets. So though the first-day stock report looks bad, maybe the loose monetary polict will make Larry Kudlow’s dream of less economic damage than human damage come true. Fingers crossed!
These kinds of crises would be perhaps too much for even a stable government to bear; currently Japan is working on its fifth Prime Minister, Naoto Kan, since September 2006. As the meme goes, pray for Japan.