Friday, March 18, 2011

Getting Japan back on its feet

On of the more interesting things about a childhood spent around Mennonites was watching how they reacted to natural disasters.  Here in the midwest we have essentially two kinds of disasters that damage infrastructure--flooding and tornadoes.  Of course there are others such as hail, ice storms, or blizzards but these rarely do damage to structures.  Because flooding is somewhat predictable, the response to flood areas can involve long-term planning including rebuilding away from flood plains.  That leaves tornado damage as the disaster most responsive to outside emergency assistance.  So some Mennonites I knew had organized themselves into emergency response teams that would swoop down on a tornado-damaged town and do amazing amounts of good in a short period of time.

While organizing emergency response for tornado victims started out as an act of Christian virtue for my Mennonite neighbors, the reason folks were happy to see them show up had little to do with their religious beliefs.  No, the reason folks in the surrounding area didn't really feel like recovery was under way after a tornado until the Mennonites showed up was because those folks actually made things better when they arrived.  The Mennonites were good neighbors because they showed up with skills, organization, and a willingness to work.  Dangerous trees got felled, roads were cleared, emergency supplies got delivered--along with the notion that recovery was possible.  Watching this coordinated effort was like watching a demonstration that once in a while, virtue is its own reward.

Watching the Japanese organize the recovery from the Kobe earthquake of 1995 convinced me how much larger and more organized than the efforts of the good neighbors of my childhood needed to be to cope with such a mega disaster.  Damn, these guys are good!

Even so, Japan has a real mess on its hands.  Fortunately they have enormous resources to bring to these catastrophes--most emphatically including skills and organization.

Rescuers look for survivors in Iwate Prefecture (more)

An interesting take on the problems facing Japan from the POV of a Russian emergency planner.  Not only does Russia have enormous experience with disasters--especially the destruction of a Nazi invasion--she has the relevant experience of Chernobyl.
Of course, the damage to Japan will be felt in ways large and small by the rest of us.  How could it be otherwise--their economy is SO important!
World energy crunch as nuclear and oil both go wrong
The existential crisis for the world's nuclear industry could hardly have come at a worse moment. The epicentre of the world's oil supply is disturbingly close to its own systemic crisis as the Gulf erupts in conflict.
By Ambrose Evans-Pritchard 8:28PM GMT 16 Mar 2011
Libya's civil war has cut global crude supply by 1.1m barrels per day (bpd), eroding Opec's spare capacity to a wafer-thin margin of 2m bpd, if Goldman Sachs is correct.
Now events in the Gulf have turned dangerous after Saudi Arabia sent troops into Bahrain to help the Sunni monarchy crush largely Shi'ite dissent, risking a showdown with Iran.
Russia's finance minister Alexei Kudrin warned on Wednesday that the confluence of events in Japan and the Mid-East could push oil to $200 a barrel in a "short-lived" spike, which would snuff out global recovery. more
And then there are the shocks to the world of global finance as the speculators rush around trying to find a way to make a killing off this disaster.  It is UGLY!  Even worse are the Japan-bashers who hope that this will be the disaster to bring down her economic power.

What the Japan doom-sayers fail to understand is that Japan's economic power comes directly from her skilled workforce.  Japan is rich because she is so good at making things--NOT because she was endowed with large deposits of economically valuable natural resources.  And so when there is a crises like the current one, Japan's currency actually goes up in value because there is a diversion of her primary resource (skilled workers) into disaster recovery.  Add to this the very real need for Japan to repatriate some Yen for the massive shopping spree ahead, and we see the Yen spike in value.  In fact, it has taken coordinated action by the G7 to halt the Yen's rise.  All of this makes Japan's shopping budget that much larger.
G7 rallies behind Japan in bid to curb soaring yen
Group of world's richest countries agrees to its first co-ordinated currency market intervention since launch of euro
Dan Milmo, Friday 18 March 2011 09.49 GMT
There are fears a mass repatriation of Japanese yen could destablise the global economy. 
The world's richest nations have rallied behind Japan in the latest bid to calm markets over the devastating earthquake and its aftermath.
The G7 group, whose members include the United States and the UK, has pledged to join the Bank of Japan in stepping into the currency markets tocurb the soaring yen. Recognising the damage that a rising national currency could do to an export-dependent economy, the Bank of England, Germany's Bundesbank and the Bank of France were among the central banks that joined the BoJ on Friday morning in the first co-ordinated intervention by the G7 since the launch of the euro a decade ago. The US Federal Reserve and the European Central Bank are also expected to participate.
The BoJ reportedly bought $25bn (£15.5bn) of US currency in the wake of the G7 announcement late on Thursday.
The French finance minister, Christine Lagarde, said the G7 move was intended to support Japan and lower the yen. "The aim is obviously to support our Japanese partner, express our solidarity and to halt the yen's rise," she said on French radio station Europe 1. Having reached a price of ¥76.25 against the dollar, the yen has now weakened to ¥81.71. more