Sadly, it has been anything but that the past several mornings in and around the world’s largest city. Metropolitan Tokyo’s population is approximately 35,000,000. For comparison, that is more than three times Ohio’s population in roughly one-seventh the space.
So what is going to be the economic impact of all the events occurring in Japan, especially for Ohio?
No one knows for sure partly because events there are still unfolding. But here are some things to watch for:
1) Interest rates to stay low and money supply to be at least ample in much of the Western world including the U.S. and Japan.
2) More jobs, at least for a while, in Honda’s Marysville, Ohio plant as well as in the other Japanese car manufacturers’ plants located outside of Japan. Honda, Toyota, Nissan, and others incurred major damage to some of their manufacturing facilities in Japan.
3) More jobs and profits for those firms involved in professional clean-up efforts. Not all these are American. Britain, France, Russia, China, and other countries also use “nukes” to generate electricity so have some needed expertise.
4) However, some firms such as General Electric (GE) that “make” nuclear reactors have seen their stock prices drop significantly since all this started.
5) Even more pressure on the price of commodities used in construction.
6) More upward pressure on the price of petroleum and hence gasoline. Japan has the world’s third largest economy and needs to replace the good chunk of the nearly one-fourth of its electrical production that was nuclear. Prior to last week’s earthquake and tsunami, oil accounted for the production of half of Japan’s electricity, so may be used to help make up the new shortfall.
7) Much of the world will be reviewing its use of nuclear power plants. The results could have little to substantial impacts on what we pay for energy.
8) The world’s supply of anti-radiation products will be depleted even in the U.S. Hence, prices here and abroad will rise in and scarcities occur in accordance with basic supply and demand. There are already signs of that on the U.S. west coast. These products include plastic sealing for windows, duct tape to hold the sealing materials, breathing masks, and iodine based chemicals such as potassium iodine to protect the thyroid gland from absorbing radioactive iodine. The latter is common to many forms of radioactivity.
Of course these measures are only good for short periods and are not complete but are presumably better than nothing. Readers are encouraged to do their own research, especially if clouds of radioactivity seem to drifting in a path that includes Ohio.
9) Even if these events are insured by the Japanese government, insurance companies are likely to try to raise rates. A main reason for this is what is known as Reinsurance Reinsurance usually involves insurance companies in many countries including America. and 10) Over the longer term (years) most disasters in developed countries lead to more economic growth than would likely have been case without the disaster.
It is important to remember a few things about these nuclear “events” (Nuke industry's word). This event is currently rated a 5 on a scale of 0 through 7. Five is about as high as localized “events” get. For comparison Three Mile Island was a 5 and was localized. Chernobyl was ranked a 7, the only 7 to date. Radiation was detected in Sweden.
*At least that was what a Japanese professor of marketing to this Examiner some years ago, when we met each other at a market research conference.