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Jon Talton

Analysis and commentary on economic news, trends and issues, with an emphasis on Seattle and the Northwest.

Category: Japan earthquake
March 14, 2011 at 10:05 AM

More questions than answers in assessing the economic toll in Japan

In the face of the unfolding tragedy in Japan, it seems grotesque to turn to the money, but that’s the beat I walk. The story is rapidly changing, so at this moment we’re faced with more questions than answers.

  • What will be the affect on the world economy? Disasters in advanced countries, especially, bring immediate costs but longer-term opportunities in the rebuilding. Japan is a rich nation with a high savings rate. So rebuilding is likely to be highly stimulative (this happened in Miami, for example, after Hurricane Andrew), including for American exports. Will it offset the lost production from the nation’s high-tech industry? Sony, for example, has several plants in the hard-hit region. Or does the earthquake only act to further deepen Japan’s other longstanding economic and political doldrums?
  • How badly will the insurance sector be mauled? According to the Wall Street Journal, Moody’s says the sectors likely to face the heaviest losses are Japanese domestic insurers, Japan Earthquake Reinsurance Co. and international insurers, as well as global reinsurers, catastrophe bonds and retrocessionaires (the reinsurers of the reinsurers).
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