Think The Japanese Disaster Is Just What The Keynesian Doctor Ordered? Mo Says No

Tyler Durden's picture

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The Axe's picture

Dollar Destruction  = Markets UP!!!   thats all you need to know

curbyourrisk's picture

Dollar Destruction  = Markets UP!!!   thats all you need to know


Well, that and Buy The Fucking Dip.....


NOTW777's picture

market talk of us bank buying eur/usd

NOTW777's picture

wild eyed simon of cnbc preaching euro strength - things are great

ebworthen's picture

Yeah - he was bug eyed and almost jumping out of the screen - phew!

Dear Simon was totally oblivious to the guest comment that the Irish do not feel like swallowing austerity to bail out German and French banks - and that the German and French citizens don't want to bailout out the Irish banks - and this is what the politicians are dealing with. 

The comment went right over Simon's head who then reverted to an emotional appeal that the Euro was "a part of their lives" that they wouldn't let go of. 

Yeah, sure Simon.

asteroids's picture

Then how about dropping a 10KT device on the secondary capitals of the US, UK, France, Germany. Surely the loss in GDP will be small and the stimuative effects massive if Japan is any example. Of course, the loss of life and property are unfortunate. Can we finally put our thinking caps on and admit there's nothing good to come from Japan. To do so defies logic.

Josephine29's picture

I had read this type of thinking a week ago Tyler on the Notayesmanseconomics blog where he pointed out that many were claiming a solution when we didnt even know the problem yet!

The news media has had various forecasts over the last 48 hours of the scale of the crisis and many of these also try to tell us the scale of this catastrophe and come with a promise of a recovery which is fast. I will leave you with one thought, exactly how do they know that?

DonnieD's picture

Now I'm confused. I thought the slow poisoning of by far the largest metropolitan area in the world would lead to a worldwide economic boom.

johnQpublic's picture

Spokespeople for Nissan, Honda and Ford all said those automakers are making no plans to shut down their plants at this time.

U.S. automaker General Motors has already had to stop production of a truck plant in Shreveport, La. and a related engine plant in New York State due to shortages of parts from Japan.

Oh regional Indian's picture

As it turns out, the global Auto industry is one of the most incestuous of them all. The degree of part-supplier commonality would shock those who don't know. Given that and th epre-ponderence of Japanese parts in some critical parts (Engine Management, tires, batterys, wire harnesses).... the shock wave is probably just beginning to travel through th esystem. It will be a supply shock, demand shock, supply shock, demand shock.... an flurry of 1-2's on the nose of a JIT system. Watch for new car prrices the world over to SPIKE and used cars become a lot more desirable. 


prophet's picture

Would a reduction of JIT be good for the economy and bad for profits?

NotApplicable's picture

So Mohamed knows of Bastiat, I take it.

lizzy36's picture

I can hardly wait for oil to hot $125 and pundits to come out and say oil won't matter until it hits $150.

One believes that nothing will change, and dow 36,000 is in play until we see a failed bond auction. Then and only then will all hell break loose.

NOTW777's picture

$5 chairsatan gas is good - its not like people have to drive to work

PY-129-20's picture

People don't have to drive to work. They can use a Mule instead.

PY-129-20's picture

People don't have to drive to work. They can use a Mule instead.

mirac's picture

Not the last big quake to hit Japan, there will be more.  Two big quakes hit Thailand this morning.  No way out of this...the Pacific plate specifically is on the move.

kaiserhoff's picture

Hell yes.  Shake and bake season is on.  Before we worry about recovery, let's see what, if anything, is left.

Humpty Pundit's picture

I believe the thing most people are overlooking is the timing of the stimulus provided by reconstruction spending in Japan could be just what the global economy needs in H2/2011. Also, according to the FT all of the Yen printing taking place right now could restart the Yen carry trade and give a boost to all risk assets.

Mercury's picture

Yeah, least wait until Japan is done falling down the stairs before you deliver a prognosis on her injuries...

(cue Eddie Murphy's Aunt Bunny fell down the stairs routine)

RobotTrader's picture

As of right now, looks like the correction was merely a shakeout.

Back above both the 11-day and 22-day.

Amazing how this has happened with all that is going on in the world.


Snidley Whipsnae's picture

Amazing or amusing?

I find nothing amazing in a rising stock market backed by POMO operations to the moon... If equities failed to respond it might be amusing... in the sense that benny would have to come up with some real tall tales by way of explaining what went wrong.

Jim in MN's picture

Finally found a nice chart of the 'afterheat' problem in reactor cores.  Anyone who needs to understand why this emergency isn't going away needs to look at the chart on page 890 of this ancient tome (extra credit for reading the 2-3 page text starting on page 888):





a large reactor of the 1,100 MWe class, that is still about 3.5 megawatts of thermal power being generated by fission product decay a month after reactor shutdown."

For the Fukushima reactors it's about 2 MW each.  You can boil a lot of water with 2 MW of energy.  A month after shutdown. 

If they stop cooling any of these units for even a couple of hours it goes right back to hothothot.  No 'cool and forget' allowed.

Byte Me's picture


and tnx Jim. Also shows why you wait years when decomissioning them.

.. They've lost a lot of inventory from at least the coolingponds it seems..

serotonindumptruck's picture

Jim in MN,

Your comments and insight on this issue have been some of the most informative and educational at ZH, and I wanted to thank you for that.

As a hazmat guy and former firefighter, I have worked around radioactive fields and I am comfortable in that setting so long as I have my survey instruments and proper dosimetry. I can not say in good faith if I would feel the same way about working in a true "hot zone" like these guys from Japan are. I can think of very few (if any) worse ways to die, and the concept of such an accident in the USA terrifies me.

I read the entire thread about these Fukushima Fifty last night with great interest, and although I felt the urge to comment more than once, I chose not to. Having worked in the industry that I have, I honestly DO NOT believe that American firefighters and first responders would line up to sacrifice their lives in a similar manner. At least, not out of any sense of "patriotism" or blind nationalism.

Speaking just for myself, if TEPCO agreed to pay my survivors a sum of not less than 50 million in physical gold, at current spot price, I would strongly consider taking this job under contract and sacrifice my life for the future benefit of my family.

Jim in MN's picture

I hear ya.  Pretty sure my family would veto that arrangement.  But I hear ya.

davepowers's picture

thanks, Jim

I'd again suggest it would be nice if you (or someone for you) could post your posts on some website for ease of access. I've had several people ask if I knew of a site where they could get info from a person who was knowledgeable, but who doesn't try to claim they know more than what they know, talk out of their backside or scream and yell like they belong in a straight jacket.

I tell them it's a bear market if that's their standard.  :)


Snidley Whipsnae's picture

Mo is right about this...

"Japan's disasters will add to the global economy’s headwinds – be they the impact of the initial fall in consumption in the world’s third-largest economy, or disruptions to global supply chains (particularly in technology and autos)."

The bobble heads on MSM are not telling people that the 'just in time' inventory chain has some broken links... right now, not in a few days or weeks.

Jim in MN's picture

Not like anyone was buying any Sony Bravia TVs....or waiting for the Prius station wagon...or whatever GM was making....or....

Snidley Whipsnae's picture

But lots of people need parts to fix their autos...even if they fix their own autos. No auto, no way to get to work.

Not to mention parts for aircraft, trains, buses, et al...bearings for motors gas/diesel/electric...Look around you and see how many parts are made in Japan or assembled in Japan from other Asian manufacturers.

There is a need to shift production to somewhere out of the danger zone of radiation...and reestablish supply lines.


doomandbloom's picture

7.0 magnitude earthquake near myanmar

redpill's picture

Golden Triangle region, pretty remote (and pretty looking).  Might impact opium production, so BTFOD

KenShabby's picture

Geez - The broken window fallacy was debunked oh - 200+ years ago.

BearOfNH's picture

Regrettably it seems to surface, zombie-like, from the carnage of whatever disaster happens. It's one of those convenient ways to avoid thinking.

ss123's picture

CNN is reporting that the number dead/missing now surpasses 27,000 and that the number of foreigners arriving at the airport has plummeted 60%.

redpill's picture

IMHO it'll be 50k by the time all is said and done.

Cleanclog's picture

The resources and energies that must be diverted from regular activities in order to deal with their multiple emergencies, horrible sufferings of their people, and an eventual rebuild equates to an enormous loss of productive capital and labor.


Japan will continue to consume and import but much of that will be replacing things lost.  Not “growth”.  It won’t have substantial onward production value, it will be getting back to where it was.  (Yes, some other companies and countries may benefit from supplying needed products, services, and labor)

kaiserhoff's picture

Mo's lithp ith getting worth.  Maybe he should athk Bahnie Fwank about it.

alangreedspank's picture


Bastiat tackled this myth of prosperity trough destruction that war and natural disasters cause with the analogy of the broken window.

It might be tempting to think that by breaking the window, it activates the economy by providing business to the window manufacturer, but truly, the word is poorer after that window has been broken.

Before the broken window, World = Given ammount of capital (that includes the worth of that windows)

After the window has been broken, World = Given ammount of capital - capital needed to replace the window.

NotApplicable's picture

Jim Willie has a new article out concerning the Japan disaster. A must read (as always).

Zer0henge's picture

The PIMCO gang may be on a string of bad calls so I take Mo's prediction with a grain of salt...or sand.  Since the day they finished selling their 30 year bonds the market has reversed to the upside...and the Japanese are far more resilliant than most think...the will go to work regardless of the consequences...

NumberNone's picture

Bullish.  El-Erian uses too many words and no pictures.  Makes my head hurt to read it.  Chipotle makes great burritos and Netflix is soon to be cable company to the world.  Market +150 today. 

chet's picture

Anyone read that old book "Economics in one lesson"?  Despite it's title its actually illustrates a bunch of lessons from economics in two or three pages each.

One such illustration is why war and/or destruction doesn't really provide a Keynesian stimulus.  Mainly because you're spending money to replace things that you already had instead of investing in new productive capacity.  The money you would have used to buy a new thing is now spent on replacing something that, while perhaps a bit outdated, was still working just fine.  Furthermore, you're doing it with debt.

three chord sloth's picture

The trouble with the "this will be good for Japan" crowd is their slavish devotion to the flawed economic concept called "GDP". The thing to understand about GDP is it really measures nothing, and does it badly.

If you just look at GDP in the weird way it is currently defined and measured, then selling wildly overpriced homes to people who cannot afford them is good for the economy. Importing millions of day laborers and then jacking up deficit spending to pay for their needed government services and their kids K-thru-dropout educations is a boon. Living large and sticking your grandchildren with the bills builds wealth faster than living responsibly and saving. And of course creating several hundred trillion in free-floating derivative debt is "doing god's work".

HedgeFundLIVE's picture

seriously with all this going on, the market is rallying.  this is def. a shorting opportunity!: