Bank of Japan officials began selling off Yen, to buy U.S. Dollars.
Besides getting a deal, the move was to prevent a negative impact on world markets. The DOW and the Dollar went up as a result.
G7 (Group of Seven Industrial Countries) also agreed to take actions that would help float international markets (buying U.S. dollars).
General Motors (GM) has announced that due to auto parts shortages, caused by the disasters in Japan, they will have to shut down some production in the United States.
A GM plant in Louisiana is the first to be closed, for a week, as a result.
Toyota had announced that it would slow production in its U.S. factories. Officials say production will not be affected at their engine plants. Instead of closing plants altogether, Toyota has eliminated overtime work.
Ford says so far their U.S. operations are not affected, Honda said the same thing.
Stock markets in Japan closed down again. Blame being put on the increase in the Yen’s value. Bank of Japan injected more cash, for the 4th day. Japanese investors are becoming disheartened with what seems like futile efforts to stop a nuclear disaster. It is predicted that trading in Japanese stock markets will become more volatile in the days to come. There are signs that Japanese authorities will intervene in the currency market.
The U.S. dollar has fallen in value against the Japanese Yen. This is because Japanese government and corporations are cashing in their chips. They are cashing in the foreign bonds they hold, in order to raise cash to help deal with the disasters. Corporations, including insurance companies which expect pay out huge claims, are trying to acquire as much Japanese Yen as they can. This is called “repatriation” in the financial markets.
The Bank of Japan will take advantage of the rising value of the Yen, by selling Yen to foreign buyers in order to bring in foreign cash to the national bank.
Japan has been one of the most prolific buyers of U.S. debt, in the form of U.S. bonds. Japan itself is in huge debt, but until now was able to continue buying U.S. bonds, helping the U.S. government. The disasters have forced Japan to sell back bonds in order to raise cash to help deal with ongoing crisis, and for rebuilding. Japanese corporations have to raise cash due to the fact that most factories have shut down, which means they’re not making anything to sell. So Japanese corporations have to sell the foreign bonds they hold.
This is the beginning of a possible economic dominoes affect on the World Economy.
For a third day, the DOW fell big, along with other U.S. stock markets. Stock markets around the world being affected. This is because Japan has become the “parts” supplier to the global economy. Auto parts to electronic chips are made in Japan. This production has come to a virtual stand still. One analyst said that if this situation lasts a few weeks (best case) consumers can expect noticeable increases in prices.
It must be remembered that the Great Depression, that hit the United States in the 1930s, was not solely caused by the investment/finance crash of ’29. What put the U.S. into a Great Depression was the loss of its main industry at the time; agriculture. Because of the quake, tsunami, and now nuclear disaster, Japan has essentially lost its main industries.
Until the Second World War, agriculture was the biggest industry in the U.S. Most Americans worked in farming, or agriculture related jobs. The industry was hit by a disaster that was a combination of Mother Earth, and man made. The plain states, and mid west, had been dealing with a major drought, and, farming techniques destroyed the top soil. This is where the term “Dust Bowl” came from.
The result was that hundreds of thousands of Americans lost their jobs and their homes, just from the collapse of the agriculture industry. Combined with the losses of the finance/investment industries (which affected manufacturing) this created the Great Depression.
The World is already in a major financial crisis, bigger than what hit the world prior to the Great Depression in the U.S. (other countries, like Germany had already experience a depression). Now we have the natural/man made disasters that could push the World into a Great Depression.
Never before have the economies of the World been so tied together. We have a dominoes situation. Japan, being a major parts supplier, could be the dominoe that starts the fall.
Toyota announced that not only is it halting operations in Japan (due to the Fukushima disaster), but in the United States as well.
This is because most of the parts used in U.S. factories come from Japan, and parts production has come to a halt.
NHK interviewed an economic official (analyst?) who said the economic situation in Japan is now a matter of national security, as a result of the Fukushima disaster.
Some Japanese companies have announced plans to re-start operations, but that is contingent upon the ongoing situation with aftershocks, infrastructure issues and nuclear problems.
Toyota announced that its Japanese factories will remain closed for another week. Toyota will not increase production at foreign factories.
Three prefectures are asking for 33,000 temporary homes. The emergency shelters are overwhelmed.
The Bank of Japan continued to flood billions of cash into the finance and investment markets.
Electronics industry analyst are warning that if parts supply from Japan is down for a few weeks it will drastically raise prices for electronic items.
Economic losses for Japan are predicted to hit $200 billion.
Trading in Japan’s stock markets fell for a second day. This is due to announcements that not only are Japan’s industries going to be shut down for longer than thought, but that Japanese consumers are pulling back on spending big time (especially now that they can’t get out because of the radiation).
For those of use dealing with high fuel prices, the fact that Japan’s industry is shut down, and Japan’s consumers are holding back, is resulting in dropping oil prices. The situation in Japan means demand for oil there could drop enough to counter the predicted increase in world demand for oil.
Another reason for the drop in oil prices is that investors are shifting to liquid assets, meaning CASH. This is an indicator that investors feel it is not worth putting their money into stocks or commodities, due to what looks like a looming world economic collapse.
Bank of Japan officials are issuing millions in cash, into the Japanese economy. This is due to the earthquake and tsunami destroying a major part of Japan’s infrastructure.
Major Japanese manufacturers have closed, mainly because employees and supplies can not get to the factories. Farm lands have been destroyed by the tsunami.
Japan must focus on financing a major recovery effort, and this will affect U.S. Treasury Bonds. Japan was one of the biggest buyers of U.S. bonds, helping the U.S. government deal with its debt, but now that money will go to rebuilding efforts. Also, Japan might be forced to sell off its existing holdings of U.S. bonds, to help pay for the rebuilding of their country. This will affect interest rates in the United States.
For all those electronic junkies out there, get ready for withdrawal symptoms. Japan is a crucial electronics supplier, but don’t expect anything now. About 40% of lightweight chips, for computers and phones, are supplied by Japan. Objective Analysis, a semiconductor research firm, said “This may cause phenomenal shortages…”. You can bet this will affect prices of goods, and trading in stock markets around the world.
Like your Blue-Ray movies? Forget it, Sony shut down operations at their Blue-Ray plant in Japan, thanks to the disaster.
Were you thinking about getting one of those gas saving Toyota Prius, or Honda Fit? They are made mainly in Japan, and production has been halted.
Speaking of gas. Expect fuel prices to go up, even more. Japan is being forced to turn to other sources of fuel to run electric generators, now that their nuclear plants are going critical. Already two tanker ships, with LNG, were diverted from their original destination in Russia, to Japan.
Japan’s NHK is reporting that Japanese car maker Toyota is extending its plant closers. Other auto manufactures are joining Toyota in closing down operation. These include, Honda and Nissan.
It is not damage to their factories that caused them to shut down, it is the near total destruction of Japans infrastructure. There is no power, and because roads are destroyed employees and supply of parts can not get to the factories.
The near total lose of infrastructure, in the northern half of the state of Honshu, guarantees that there will be no economic recovery for Japan, in the short run. The northern area of Honshu is home to many of Japan’s major factories. This include factories that are for other products, besides automobiles. If they can not operate, they can not sell anything. Don’t forget that the area’s agriculture industry has been wiped out.
The only way Japan can recover quickly is with economic help equal to what the United States provided after World War 2, and the U.S. is not able to do that now.