Tuesday, March 15, 2011

Japan Experiencing the Unimaginable, making all other matters trivial

3/15/2011 Portland, Oregon – Pop in your mints…
As nearly everyone with a television, radio, computer or smart phone is aware, within 72 hours the main island of Japan suffered a major earthquake, a major tsunami, and a nuclear disaster which has evoked comparisons to Chernobyl.  All of these events continue in a drama that is unfolding as the aftershocks, tsunamis, and associated consequences for the nuclear power plants continue.
We respectfully ask our readers to observe a minute of silence in honor of those perished and those who continue to be affected.
Silence is powerful.
We have a second cousin who lives in Japan and is sending regular updates.  He and his family are safe and He appears to generally be amazed at how the media there initially was minimizing what had happened.  He is now marveling at the indestructible Japanese spirit.
Perhaps it has something to do with Japanese culture and/or national pride.  Japan is one of the most modern societies, in terms of technological advances embraced as part of everyday life, in the world.  Their society appears to run flawlessly on a scale and at a pace that is unparalleled.  On Friday, this society was blindsided by the twin natural disasters.
For us personally, the unfolding nuclear disaster immediately brought to mind the song "Red Rain" by Peter Gabriel.  For those who are unfamiliar, "Red Rain" was inspired by a recurring dream that Gabriel had in which he was swimming in a sea of red water.  While Gabriel himself does not appear to have linked the dream to a nuclear holocaust, others have and the imagery has stuck for us here at The Mint.

Imagery aided by the great Japanese Film maker Akira Kurosawa's depiction in "Dreams" of "Mount Fuji in Red":
These events serve as powerful reminders of the humility with which each of us must live.  No matter how powerful a person or company may be or how many disaster preparedness plans a government may have in place, they are no match for the natural forces which we are all subject to.
The Bank of Japan injected $15 Trillion yen, the equivalent of roughly $184 Billion dollars, in a vain attempt to prop up the various money markets that capitulated on the news.  While this, along with what will surely be a coordinated effort by G8 Central Banks to "provide liquidity" (read "get major insurers out of their debt and equity positions so that they can make good on their policy claims") may stave off the inevitable rout on global markets, it will not get things back to normal any time soon.
Will the Central Banks bankrupt themselves in the process?
While an investor would be wise to steer clear of Japanese and most G8 stock markets as the giant insurance companies are forced to become net sellers to meet policy claims, we would not be surprised to see that the Japanese stock market, and the Japanese in general, quietly leading the way in terms of economic growth for the next decade.
We suspect that this event has shaken the national psyche of the Japanese people and that things in the land of the rising sun will never be the same.  We also suspect that the people of Japan will rise from the ashes of these disasters like a phoenix.
Stay Fresh!
P.S.  If you enjoy or at least tolerate The Mint please share us with your friends, family, and associates!
Key Indicators for Tuesday, March 15th, 2011

*See FED Perceived Economic Effect Rate Chart at bottom of blog.  This rate is the FED Target rate with a 39 month lag, representing the time it takes for the FED Target rate changes to affect the real economy.  This is a 39 months head start that the FED member banks have on the rest of us on using the new money that is created.