Like the rest of the world, we’ve been following the tragedies in Japan with great concern and sorrow. We know people with many connections in Japan, and they’re still unable to reach some of their friends to learn if they’re okay.
Even for those in Japan who were not immediately affected by the earthquake or tsunamis, life has changed. My brother received an email from a Japanese colleague as follows:
Well this is a really disaster. I was in a queue for gas over one hour, but that was sold out. At shopping center bread foods, all sold out. I just got a few peach cans. One nuclear and five oil power plants stopped in Tokyo area. Also North Japan two nuclear power plant is almost blowing up. Power allocation system will start from this morning. Because of that power failure, train water stops. Tokyo mid town and hospitals will be prioritized. My company locates in Yokohama......I will take a day off tomorrow in the bed without heater cause of PC stops at office is no meaning. It seems tough days has just started.
I was reading an article this afternoon which spelled out the current events as they unfolded, and it included this line: “For Japan, one of the world's leading economies with ultramodern infrastructure, the disasters plunged ordinary life into nearly unimaginable deprivation.”
This struck me as profound because it echoes our situation here in the States. If the bleep were to hit the fan as swiftly and tragically as it has in Japan, our ordinary lives would be instantly plunged into nearly unimaginable deprivation. Chew on those words for a few minutes.
Right now the scale of rescue in the Land of the Rising Sun is, well, off the scale. Nearly two million people are without electricity, and 1.4 million people have no water. Hundreds of thousands of survivors are huddled in emergency centers which have no heat or electricity or (probably) food or water. All those emergency centers can offer to survivors right now is shelter since most are cut off from rescuers because roads and airports are impassible.
And this doesn’t even touch those who have died, those missing, and those injured – many of whom cannot receive medical care. And don’t forget the meltdowns and explosions at the nuclear power plants. And don’t forget the destruction of the infrastructure means food distribution is interrupted.
In short, Japan is a mess. God help them.
What kind of impact can Japan’s situation have on America? At first glance, little to nothing; but that’s incorrect. We may not be facing the physical tsunami Japan has endured, but we cannot forget the potential economic tsunami. Japan is the second-largest foreign holder of U.S. Treasuries, behind China. In Dec 2010 they held about $890 billion worth. They need money to repair their infrastructure. What will happen if they suddenly try to sell those Treasuries?
The market would be flooded with Treasury notes, that's what. The value will go down. The U.S. government will do everything it can to keep the value up, including printing more money to buy them. Our dollar tanks.
Could this actually happen? I don't know. Maybe. It's a scary thought.
To change subjects just a bit, the Lewis household just made the difficult decision to take some of our meager savings and buy more storable food. We have a seasonable business, and it’s important that we salt away as much money as we can during our fat times to get us through our lean times (which are now). But with gas prices already up before this tragedy, our concerns are that food will become prohibitively expensive and/or scarce. Once more we are trying to purchase a commodity (food) when it’s still fairly inexpensive and readily available.
This decision to use some of our savings to buy food and other supplies is not just difficult, it’s scary. But you might say we see a tsunami on the horizon and are trying desperately to reach high ground. Preppers a lot savvier than us are doing the same thing.
Is this the flashpoint for our economy? Will this be the Archduke Ferdinand moment? Who knows? Who could have foreseen that a poor fruit seller in Tunisia would be the trigger that sent the Middle East into turmoil? Can an earthquake and tsunami in Japan truly impact our economy?
I don’t know. But I’m scared. Remember that old saying “A bird in the hand is worth two in the bush”? I’d rather have one bird (food) in hand than two birds (money) in the bush.
I hope you'll do the same.