Just as observers initially underestimated the impact of the 9.0 earthquake that struck Japan last week, they are probably also now underestimating the aftershocks of this event for the global economy, and wrongly see this as solely a domestic matter for Japan.
Indeed, while Japanese stocks rebounded from their third worst crash in history yesterday, it is still far from certain what the fall-out from the earthquake will be. Chinese and French nationals have been the first to evacuate from Tokyo.
What will the panic be like if a city of 20 million decides to runaway from radiation clouds? And the probability of that happening is now very high. Radiation levels in Tokyo are rising and the wisest folk got on a plane yesterday. Workers have just abandoned the failed nuclear reactors ‘temporarily’.Goldman Sachs admitted it got the earthquake wrong last week, and said that if the blackouts last to the end of June, GDP will shrink at an annual two per cent rate in the second quarter and if this continues for the year the economy will carry on shrinking......read on