"Thanks for your continued, reasoned analysis in times of crises and dislocations. Aside from the nuclear crisis in Japan, which is and will become a tremendous burden on its economy, the impact on general industry is troubling for the world economy, as highlighted in this link from Reuters:


"I wonder how this will play against the expected demand increase in construction machinery, material and raw materials Japan will need to rebuild. If Japan cannot export, and its partners cannot source components, a large dislocation is imminent. It seems the long term question is, how and who will pay for the needed reconstruction, and will this be resolved by more money key-stroking (printing is passe)?"

David Fuller's view Thanks for your comments, the link and these important points.

I think markets have already priced in a significant economic dislocation for Japan over the next quarter or two and a far smaller one for its export clients who face some temporary shortages of high-tech components.

As a behavioural observation, I think many people tend to overestimate the economic damage from natural disasters for a large economy such as Japan, while initially underestimating the knock-on effects of manmade credit crises. A possible reason for this is that the former unifies and can even energise the people most affected while a man-made financial debacle is inevitably highly divisive.

I do think the BoJ will print (key-stroke) money, although it may not advertise this policy.