We noted in yesterday’s sketch that it is best for clients to expect more resiliency in recovery, not less, highlighting the Kobe disaster and response, as an example. No one agrees with us, not even the Japanese, the Nikkei off nearly 11% today. Still, if we are to error in our judgement, let it be in this direction. This is the course-of-least resistance, our view. This is to serve as an anchor for clients as the event continues to unfold. Best to anticipate these headlines as they surprise the rest.
We have already seen projected recovery-cost figures, something on the order of 1% of Japan’s GDP, perhaps to go to 1 ½ %. The Telegraph put this figure in context this am, noting such a package is less than a third, by scale, of the US fiscal stimulus plan. The two are also differentiated by impact - the US plan was a wash, a waste, a tragedy; Japan’s plan will impact immediately.
Resources for recovery will come from savings, both individual and now especially, corporate. The gov’t can spend like crazy because almost all its borrows comes from within Japan, from domestic savers, not from offshore. That’s how they will get away with it.
Next, the Bk of Japan’s response to the crisis was/is a perfect one, flooding the mkts with cash with no hesitation. They want to keep the yen down too so as not to discourage exports (a mistake made after the Kobe crisis - they waited too long).
Finally, to nuclear. The media cannot disguise their glee in reporting on this issue. Best to distance oneself from these lepers, tossing out the headlines.
The nuclear experts we have spoken to or listened to agree that the nuclear portion of this crisis is in the end likely to be more similar to Three Mile Island than to Chernobyl, Chernobyl being the equivalent of 1 million Three Mile Islands. Toxicity in the worst case would be contained in Japan (risk is “quite low” according to the World Health Org) and according to Columbia’s David Brenner even in that worst case - complete meltdown of the core(s) - exposure on the west coast of the US would be next to nothing.
Robert Craven
We have already seen projected recovery-cost figures, something on the order of 1% of Japan’s GDP, perhaps to go to 1 ½ %. The Telegraph put this figure in context this am, noting such a package is less than a third, by scale, of the US fiscal stimulus plan. The two are also differentiated by impact - the US plan was a wash, a waste, a tragedy; Japan’s plan will impact immediately.
Resources for recovery will come from savings, both individual and now especially, corporate. The gov’t can spend like crazy because almost all its borrows comes from within Japan, from domestic savers, not from offshore. That’s how they will get away with it.
Next, the Bk of Japan’s response to the crisis was/is a perfect one, flooding the mkts with cash with no hesitation. They want to keep the yen down too so as not to discourage exports (a mistake made after the Kobe crisis - they waited too long).
Finally, to nuclear. The media cannot disguise their glee in reporting on this issue. Best to distance oneself from these lepers, tossing out the headlines.
The nuclear experts we have spoken to or listened to agree that the nuclear portion of this crisis is in the end likely to be more similar to Three Mile Island than to Chernobyl, Chernobyl being the equivalent of 1 million Three Mile Islands. Toxicity in the worst case would be contained in Japan (risk is “quite low” according to the World Health Org) and according to Columbia’s David Brenner even in that worst case - complete meltdown of the core(s) - exposure on the west coast of the US would be next to nothing.
Robert Craven
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