By Daniel Petrey
How much can a country endure? Japan was hit by a one of the largest earthquakes ever recorded resulting in a devastating tsunami and causing a nuclear plant to fail emitting radiation. With all the news some people forget they also had a volcanic eruption shortly after the earthquake. Although the destruction from the earthquake and tsunami were bad enough, the nuclear plant failure remains the wildcard. There have been conflicting reports and opinions about the level of damage and leakage of radiation.
I have always admired Japanese people and their culture. Seeing what I have from news reports confirms my personal belief that they are a very stoic, civil, prideful, genuine, gracious, and industrious people. Since the catastrophe is affecting global financial markets, I have been even more tuned to the news recently and saw a report of cars waiting to fuel up for gas. Since resources are scant the average waiting time was calculated to be many, many hours. People politely waited their turn and there was no chaos or impatient belly aching. This would be impressive in itself, but under the threat of possible radioactive fallout it was even more inspiring. While no one I know of questions the ability of the Japanese economy to eventually recover from the earthquake and tsunami, it is the threat of a nuclear catastrophe that makes the inevitable recovery much more uncertain.
It is no secret that the developments in Japan are affecting financial markets. Japan is a big global economy and anything that disrupts that machine will have an impact. Analysts seem to differ on the type of impact; I have heard both deflationary and inflationary arguments and even heard differing opinions on resulting oil prices. Japanese officials have agreed to pour trillions of yen into their financial system in hopes of stabilizing their financial markets. This has many ramifications. Will they still be able to buy our debt? Will they sell the treasuries they currently own to help finance the rebuilding?
Since the only current way I know of to determine the extent of the damage is to measure how much radiation is leaking from the reactors. We have been getting kind of vague reports such as the radiation levels are stabilizing or not at dangerous levels. Certain people have created live internet feeds showing Geiger counters. I have to confess I have been viewing this type of site the past couple of days and checking it periodically to determine the direction of radiation levels. Unfortunately, I have no idea if this Geiger counter or internet site is accurate, authentic, or even located in Tokyo as it claims. Seems somewhat bizarre that monitoring radiation levels and Japanese wind patterns is currently very important to financial markets, including ours.
My heart goes out to Japan as they attempt to recover from these disasters. My admiration for the country has only increased as I watch the news and hope for the best. Here is some data as I previously promised. As I write this the Dollar Index is approximately 76.61. Two weeks ago as I wrote that article it stood at 76.56 and two weeks prior to that 78.27. Amazingly after all the continued chaos in the Middle East and the devastating natural disasters in Japan, the index has only slightly risen. This relative weakness does not bode well for the Worlds Reserve currency in my opinion. As I conclude, I sincerely hope the Land of the Rising Sun navigates through these disasters as quick as possible and without further damage. Seems to me they deserve no less.
Written By: Daniel Petrey, CFO, MBA
I have always admired Japanese people and their culture. Seeing what I have from news reports confirms my personal belief that they are a very stoic, civil, prideful, genuine, gracious, and industrious people. Since the catastrophe is affecting global financial markets, I have been even more tuned to the news recently and saw a report of cars waiting to fuel up for gas. Since resources are scant the average waiting time was calculated to be many, many hours. People politely waited their turn and there was no chaos or impatient belly aching. This would be impressive in itself, but under the threat of possible radioactive fallout it was even more inspiring. While no one I know of questions the ability of the Japanese economy to eventually recover from the earthquake and tsunami, it is the threat of a nuclear catastrophe that makes the inevitable recovery much more uncertain.
It is no secret that the developments in Japan are affecting financial markets. Japan is a big global economy and anything that disrupts that machine will have an impact. Analysts seem to differ on the type of impact; I have heard both deflationary and inflationary arguments and even heard differing opinions on resulting oil prices. Japanese officials have agreed to pour trillions of yen into their financial system in hopes of stabilizing their financial markets. This has many ramifications. Will they still be able to buy our debt? Will they sell the treasuries they currently own to help finance the rebuilding?
Since the only current way I know of to determine the extent of the damage is to measure how much radiation is leaking from the reactors. We have been getting kind of vague reports such as the radiation levels are stabilizing or not at dangerous levels. Certain people have created live internet feeds showing Geiger counters. I have to confess I have been viewing this type of site the past couple of days and checking it periodically to determine the direction of radiation levels. Unfortunately, I have no idea if this Geiger counter or internet site is accurate, authentic, or even located in Tokyo as it claims. Seems somewhat bizarre that monitoring radiation levels and Japanese wind patterns is currently very important to financial markets, including ours.
My heart goes out to Japan as they attempt to recover from these disasters. My admiration for the country has only increased as I watch the news and hope for the best. Here is some data as I previously promised. As I write this the Dollar Index is approximately 76.61. Two weeks ago as I wrote that article it stood at 76.56 and two weeks prior to that 78.27. Amazingly after all the continued chaos in the Middle East and the devastating natural disasters in Japan, the index has only slightly risen. This relative weakness does not bode well for the Worlds Reserve currency in my opinion. As I conclude, I sincerely hope the Land of the Rising Sun navigates through these disasters as quick as possible and without further damage. Seems to me they deserve no less.
Written By: Daniel Petrey, CFO, MBA
