Source: | McClatchy-Tribune Information Services |
Wordcount: | 1177 |
Now, as it begins the costly process of rebuilding,
Photos: Scenes of earthquake destruction
“Interest rates may go up; investors may refuse to take on more Japanese bonds, like Greek and Irish bonds,” said
Potentially adding to the problem,
That’s a real possibility as
Beyond purely financial impacts, the damage to
Even though most of
On Monday, for example, countless workers found it impossible to return to work because of the prospect of rolling power outages, as well as transportation problems. And evacuations and other steps taken in response to the nuclear power plant problems could have an even larger economic impact in the weeks and months ahead.
“There could also be an adverse psychological impact on consumers from the power cuts and the nuclear plants that are in danger of melting down — not just in the region that sustained damage, but also
Although difficult to assess at the moment, he said, “it could affect other regions across the country.”
Across the globe, too. For one thing,
In the short term, many analysts believe that the world’s third largest economy will face an immediate slowdown in activity, and begin to bounce back in a matter of months as rebuilding takes hold, just as it did after the
The prospect of a slowdown in foreign demand for U.S. Treasury bonds comes at a delicate moment for the American government, especially the Federal Reserve, which has been buying massive amounts of Treasuries to hold down rates and stimulate domestic economic activity.
Fed policymakers, who are meeting Tuesday, aren’t expected to announce any major changes in short-term interest rates or its
Some analysts said it was too early to predict that
“If they don’t buy Treasuries the yen is going to go through the roof,” said
Other experts said
“They’re going to have to borrow money from somewhere,” said
Historically, the advantage the Japanese government has had is that its own people and institutions have bought nearly all of its debt. That’s critical because it’s unlikely the rest of the world would accept the country’s rock-bottom interest rates. But
The potential problem for financing U.S. government debt lies at least some distance down the road. On Monday, rates fell on U.S. Treasury bonds amid fresh worries about the global economy. The yield on five-year U.S. T-notes fell to a six-week low of 1.98%, down from 2.05% on Friday.
The dollar weakened slightly against the yen on Monday, to
Although the quake’s fury bypassed
In addition to
Even if Japanese engineers avert a meltdown of nuclear reactors, the problem is likely to send economic ripples throughout
“To the extent the Japanese grid is effected, that may put a drag on the economy longer term,” said
“That’s a challenge,” said Hoshi, the UC San Diego scholar. “
Photos: Scenes of earthquake destruction
Times staff writer
To see more of the Los Angeles Times, or to subscribe to the newspaper, go to http://www.latimes.com.
Copyright (c) 2011, Los Angeles Times
Distributed by McClatchy-Tribune Information Services.
For more information about the content services offered by McClatchy-Tribune Information Services (MCT), visit www.mctinfoservices.com, e-mail services@mctinfoservices.com, or call 866-280-5210 (outside the United States, call +1 312-222-4544)
More Articles