Cooler but still well above normal this week

MPR News helps you turn down the noise and build shared understanding. Turn up your support for this public resource and keep trusted journalism accessible to all. 

Turn Up Your Support


      TOKYO (AP) - Japan's central bank injected a record 7 trillion
yen ($85.5 billion) into money markets and the Tokyo stock market
nosedived Monday on the first business day since an earthquake and
tsunami devastated the country's northeast and raised dire worries
about the economy.


      The benchmark Nikkei 225 stock average dropped 464.88 points, or
4.5 percent, to 9,789.55, extending losses from Friday. The
earthquake hit shortly before markets closed for the weekend.


      Worries about the economic impact of the disaster triggered a
plunge that hit all sectors. The broader Topix index was down 5.4
percent. Shares of several major companies were overwhelmed with
sell orders and had yet to trade.


      Among those, the Tokyo Electric Power Co. was set to fall by
double digits as it struggled with malfunctioning nuclear reactors
and a power shortage that led the company to announce rolling
blackouts in parts of Tokyo and its suburbs. Toyota Motor Corp.,
the world's biggest automaker, slid more than 7 percent.


      The Bank of Japan moved quickly to try to keep financial markets
stable. By flooding the banking system with cash, it hopes banks
will continue lending money and meet the likely surge in demand for
post-earthquake funds. A one-day policy meeting was scheduled for
later Monday.


      "The Bank will continue to grasp the situation of the financial
markets and business operations of financial institutions, and to
stand ready to respond and act as necessary," it said a statement.


      Preliminary estimates put repair costs from the earthquake and
tsunami in the tens of billions of dollars - a huge blow for an
economy that lost its place as the world's No. 2 to China last
year, and was already in a fragile state.


      Japan's economy has been ailing for 20 years, barely managing to
eke out weak growth between slowdowns, saddled by a massive public
debt that, at 200 percent of gross domestic product, is the biggest
among industrialized nations.


      "In the short term, the market will almost surely suffer and
stocks will plunge. People might see an already weakened Japan,
overshadowed by a growing China, getting dealt the finishing blow
from this quake," said Koetsu Aizawa, economics professor at
Saitama University.


      The nation's big-three automakers, meanwhile, said they would
halt all production in Japan due to widespread damage to both
suppliers and transport networks in the region.


      Tens of billions of dollars are expected to be needed to rebuild
homes, roads and other infrastructure - requiring public spending
that will add to the national debt.


      "The impact on Japan's economy will be devastating," said
Sheila Smith, senior fellow for Japan Studies at the Council on
Foreign Relations, a New York-based think tank. "The long-term
economic blow to a country already struggling to lower its budget
deficit ... will be significant."


      Noting the 1995 earthquake in Kobe cost $132 billion and was the
world's most expensive natural disaster, she said it was too early
to say whether the losses from Friday's disaster would be on that
massive a scale.


      Four nuclear plants were damaged in the temblors, causing
widespread power outages. In a frantic effort to prevent meltdowns,
nuclear plant operators ruined at least two reactors by pumping sea
water into them.


      In an unprecedented move for tech-savvy Japan in recent decades,
Tokyo Electric Power Co. rolled out blackouts of three hours per
day to parts of suburban Tokyo and other cities, starting Monday.


      And Tokyo trains, which usually run like clockwork but stopped
for nearly the entire day after the quake, will be on a reduced
schedule starting Monday, to conserve electricity.


      "It looks like we are going to be running on reduced
electricity for a long time. That is a definite risk to industrial
production," said Carl Weinberg, chief economist at New York-based
researcher High Frequency Economics.

      "For Japan, a nation that lives by the sea, food comes in by
the sea, energy comes in by the sea, exports go out by the sea.
Everything stops if a quarter of the coastline has been wiped
out," said Weinberg who teaches at New York University.


      Profits at both Tokyo Electric and Tohoku Power utility are
likely to plummet because of recovery costs for the nuclear power
plants damaged by the quake, according to Shigeki Matsumoto,
analyst at Nomura Securities Co.


      Toyota Motor Corp., the world's top automaker, as well as Nissan
Motor Co. and Honda suspended production at all their auto plants
in Japan, starting Monday.


      When production will resume is uncertain. The area hit by the
quake is a major center for car production, complete with a myriad
of parts suppliers and a network of roads and ports for efficient
shipments.


      "There is no way to get our products out, even if we make them,
with the roads and distribution system damaged," said Honda Motor
Co. spokeswoman Natsuno Asanuma.


      Honda said the production halt will cost it about 4,000 vehicles
a day.


      Nissan said the tsunami damaged 1,300 vehicles bound for the
U.S., including its Infiniti luxury brand, at Hitachi port in
Ibaraki state in the northeast, and 1,000 vehicles stored at
another center.


      Among the plants being shut down is one Toyota had just opened
in Miyagi prefecture, within the region hardest hit by the quake.


      The factory, Toyota's first new Japan plant in 18 years, had
been proudly shown to reporters last month as a welcome development
in an otherwise stagnant Japanese auto market. It was set to start
producing the Corolla for both the Japanese and North American
markets in April.


      Electronics plants in the northeast were also temporarily
closed, including those owned by Sony Corp. and Toshiba Corp.


      But Aizawa, the economics professor, warned against too much
pessimism.


      A giant disaster can get Japan to pull together and even provide
opportunities for construction and jobs as the recovery gets under
way, he said.


      "There can be a blessing even in misfortune," he said.
"Recovery is about regaining a livelihood for people. No one is
going to blame Japan or lower its debt ratings for working on a
recovery. This is about lives."


      Associated Press writer Tomoko A. Hosaka contributed to this
report.
      

Gallery

Second explosion at stricken Japan nuke plant

Soldiers warn of tsunami threat in NE Japan

Photos: Japan earthquake and tsunami aftermath

For battered Japan, a new threat: nuclear meltdown

Scenes of destruction after Japan's tsunami, quake

Tsunami sweeps 5 to sea, rips out Calif. docks

Business and Economic News

Disasters

Japan's central bank injected a record 7 trillion
yen ($85.5 billion) into money markets and the Tokyo stock market
nosedived Monday on the first business day since an earthquake and
tsunami devastated the country's northeast and raised dire worries
about the economy.

Japan central bank injects funds as stocks plunge

Go Deeper.

Like this?

News you can use in your inbox