What Does the Earthquake Mean to Japan’s Fiscal Future?


| 3/16/2011 10:03:15 AM


Tags: Japan earthquake, Japan tsunami, Japan fiscal future, fiscal deficit hawks, politics, New Deal 2.0, Marshall Auerback,

japan-earthquake-aftermath 

This article was originally published at New Deal 2.0  

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There is no doubt that this terrible earthquake is worse than the Kobe tragedy of 1995. Kobe was a 7.4 on the Richter scale, but the quake that hit Sendai was 8.9 — many hundreds of times more powerful. And then there was the tsunami. The devastation is so great that no one knows how catastrophic it is likely to be in the end. But the worst of it lies ahead.

Consider: In the case of an 8.9 quake, the odds are there will be one aftershock of more than eight on the scale and 10 of more than seven. So far we have only had one that has been more than a seven. Meanwhile, aftershocks are moving toward Tokyo. The quakes so far have weakened buildings far, far from Sendai, including in Tokyo, making them vulnerable to more shocks. In effect, there may be several Kobes ahead that will be hitting installations that are already now prone to collapse or malfunction.

Japan’s Prime Minister, Naoto Kan, called this the greatest tragedy since World War II. People are slowly beginning to imagine how the country will cope going forward, but it didn’t take the blink of an eye for the fiscal deficit hawks to descend in force. They suggest that Japan can ill-afford another big round of government expenditures, given what they call its looming “national insolvency.” How must it feel to people in shock to hear the news bulletins telling them that their government is broke and unable to help the population? Particularly when it isn’t true.