Not surprisingly following Japan’s crazy earthquake and tsunami, the financial markets are in a sate of panic. Finance leaders in the country are trying to calm the situation as the nuclear power crisis continued to worsen matters. With an estimation according to Bank Credit Suisse of a loss of $171 billion, it’s no great shock that there is this panic. But the question being asked is how much do economists really need to panic? According to Finance Minister Yoshihiko Noda said that it’s just too soon to make this kind of assessment vis-à-vis the economy.
Major Japanese Companies Close
When a country’s primary companies start to close down, there’s not likely to be a surge of confidence in the markets. Unfortunately since Friday’s travesties, Panasonic, Sony and Toyota Motor Co. have closed their production facilities. As well, nuclear power plants have shut temporarily due to the possibility of reactors overheating.
Japan’s Biggest Crisis Since WWII
The earthquake and tsunami are being hailed as the country’s largest crisis since World War II. Stock markets plummeted over 14 percent as the Fukushima nuclear power plant encountered two explosions. PM Naoto Kan didn’t have much to add, other than give out a warning that radioactivity levels had become ‘significantly’ higher. This could lead to a cost of anywhere between 3 and 5 percent of output, which is extremely significant for a country that rates as the world’s third biggest economy.
Clearly Japan is going to take a long time to recover from last week’s events. The question just remains, how much this will cost and what it will mean for the future of the country’s markets? Only time will tell.