15 March 2011
Could this Japanese earthquake be a black swan event?

I mean Japan is going to collapse at some point so why not now?  My understanding is that the one thing propping it up is its inhabitants’ propensity for buying government debt.  But what if they no longer have the money?

Losing 25% of your electricity generating capacity.  That sounds a lot.

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  1. Yep, it is a lot. However, I noted with grim amusement as Niall Ferguson, also punditing on CNBC, was making the old “broken window” fallacy argument that says that all the reconstruction in Japan will boost the economy.

    Krugman claimed WW2 ended the Great Depression. Maybe Ben Bernanke and Obama are hoping for more Biblical disasters to revive global growth, or whatever.

    Posted by Johnathan Pearce on 18 March 2011 at 03:51pm

  2. It’s a lot, but I doubt it matters. It you just want to restore electricity generation capacity without worrying about geopolitical consequences and self-sufficiency, gas fired power stations are the way to go. The world is awash in cheap gas (which is a story that needs to be written about in itself) and technology is such that building gas power stations is cheaper than it has ever been. (Also, they don’t pollute much). The cost of building enough of these is tiny compared to the Japanese budget or deficit, and private capital will build them if you want it to anyway, as power stations are a low risk investment with steady cashflow.

    So the power generation issue is largely irrelevant. The overall state of Japanese finances and the total cost of rebuilding after the disaster is very relevant, though.

    Posted by Michael Jennings on 22 March 2011 at 03:10am

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