Central Bankers More Powerful Than Earthquake

• Posted by DynamicHedge
• on March 13th, 2011

My heart goes out to anyone affected by this massive tragedy.  I wish the people of Japan a speedy recovery.

To summarize the events in Japan (world’s third largest economy) over the last few days in the wake of the massive 8.9 magnitude offshore earthquake:

• At least 10,000 are estimated dead with more unaccounted for;
• Whole coastal towns washed away by the resulting tsunami;
• Oil refinery capacity gutted;
• Full-scale nuclear emergency as several reactors are close to meltdown;
• City of Tokyo facing rolling blackouts;
• Nikkei index plunges over 5%

Yet the S&P futures are trading off a mere 7 handles.  Granted, the fallout, especially the nuclear variety, could take several weeks or months to unfold.  I’m very surprised that the market is not discounting this further.

One key appears to be the fact that the Bank of Japan immediately assured markets that it would add “massive” amounts of liquidity to stabilize the system.

 

 

Japan Adds $86 Billion to Stabilize Markets After Quake (Bloomberg)

Rolling Blackouts Begin Monday in Tokyo (Digital Journal)

Tokyo power blackouts to start later than planned; trains reduce services (Japan Today)

Quake Toll May Top 10,000 as Japan Battles to Prevent Nuclear Meltdown (Bloomberg)

After the tsunami, the nuclear threat: Radiation fear as two more N-plants are hit by failures (Daily Mail)

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