Brief thoughts on the economic consequences of the Japanese earthquake and tsunami.

1. Intelligent Investments, Unbiased Advice
Investment notes on Japan
Our thoughts and prayers are with the people of Japan as they continue dealing with the earthquake and
tsunami after effects.
The Tōhoku earthquake and tsunami caused significant destruction in Northern Japan while the on-
going nuclear crisis threatens wide environmental contamination. Because the news situation is fluid,
we’ve restricted our comments to longer-term observations and how it may affect the global economy.
1. U.S. Treasury Yields Increase
Because of the 2008 financial crisis, treasury yields are historically low. With Japan being pushed in to
the global debt market to refinance rebuilding, upward pressure on treasury yields will increase.
2. Reduced Reactor Electricity
Nearly 12% of Japan’s electrical capacity is offline. Worse is that 6-9% is not expected to return once the
nuclear crisis is over. It will take years to restore capacity to pre-quake levels. Electricity availability will
directly affect manufacturing capacity.
3. Diminished Manufacturing Capacity
Japan is a tier 1 manufacturer of automobiles, semi-conductors and electronics which can’t be quickly
replaced elsewhere. This supply interruption will certainly affect Japanese companies along with global
firms.
Japan will overcome the challenges it faces and emerge from this crisis. Its central bank has pumped
700 billion dollars worth of liquidity into the market over the past week to head off any concern over
financial stability. The resilience and work ethic of the Japanese people will bolster their nation as once
they begin the rebuilding process.
Keep a steady hand on the till and don’t let today’s market fear drive your investing behavior.
Visit Direct Relief If you would like to make a donation to Japan.
Sources: Reuters, Bloomberg, Google Fiance, Fidelity, TD Ameritrade
© Wesban Financial Consultants, P.C.
www.wesban.com
Eric@wesban.com
205.995.7778