Has The Tsunami In Japan Destroyed The Japanese Economy?
The entire world is in a state of mourning today as details regarding the horrific damage caused by the massive tsunami in Japan continue to trickle in. The magnitude 8.9 earthquake that caused the tsunami was the largest earthquake that Japan has ever experienced in modern times. Waves as high as 30 feet swept over northern Japan. The tsunami waters reached as far as 6 miles inland, and authorities have already recovered hundreds of dead bodies. Those of us that have seen footage of this disaster on television will never forget it. But this nightmare is not over yet. There have been dozens of aftershocks, and many of them have been quite large. In fact, there have been 19 earthquakes of at least magnitude 6.0 in the area over the last 24 hours. So what is this disaster going to do to the 3rd largest economy in the world? Japan already had a national debt that was well over 200 percent of GDP. Could this be the “tipping point” that pushes the Japanese economy over the edge and into oblivion?
It is hard to assess the full scope of the damage to Japan at this point, but virtually everyone agrees that much of northern Japan is a complete and total disaster area at this point. Many towns have essentially been destroyed. Some are estimating that the economic damage from this disaster will be in the hundreds of billions of dollars. Others believe that the final total will be in the trillions of dollars.
Fortunately, major cities such as Tokyo came through this event relatively unscathed and most of the major manufacturing facilities are not in the areas that were most directly affected by the earthquake and the tsunami.
But let there be no doubt, this was a nation-changing event. Japan will never quite be the same again.
Also, it isn’t just Japan that will be affected by this. The truth is that economic ripples from this event will be felt all over the world.
An economist from High Frequency Economics, Carl Weinberg, told AFP the following about the economic consequences of this disaster….