Japan Earthquake to shake the U.S. Economy

The devastation to Japan is unimaginable.  Most of us have been riveted to our news sources, seeing horrendous photos of damage and destruction.  But one angle some economists are beginning to ascertain are the ramifications of that disaster to us here in the U.S.

I’m not talking about radioactive fallout from the nuclear plants, I’m talking about the economic shake-up it is sure to deliver to our already weak and struggling economy.

John Talton of the Seattle Times (March 21, 2011) wrote an article titled A devastated Japan overwhelms conventional economic expectations where he states, “Exports will slow. Japan will not be the big buyer of U.S. Treasurys it has been in the past, and may indeed be forced to sell some of its holdings to pay for reconstruction.”  He goes on to say that “This could have a destabilizing effect on the continuing trade and debt imbalances between America and Asia, and complicate the Federal Reserve's delicate effort to stimulate the economy without seeding dangerous inflation.”

USA Today (March 15, 2011) article Devastation in Japan could affect economies worldwide by By Gary Strauss, Mike Snider, Paul Davidson and Matt Krantz, states that “Already, the turmoil in Japan is affecting U.S. companies, investors and consumers, threatening disruptions in the flow of products and parts used to manufacture everything from Apple iPads to Sony televisions.”  The article states that the Toyota plant in Kentucky has begun cutting overtime shifts over concern of supplies from Japan.

We truly are linked to nearly every nation on earth, some more than others.  When disaster strikes, in whatever form it takes (terrorism, political/civil unrest, natural disasters, etc) it affects us.  We can no longer sit back and watch, but there will certainly be some damage to ourselves.

The world is smaller now than it used to be.

The Big One–Are You Ready?

The earthquake in Japan is a disaster of epic proportions.  One cannot even grasp the magnitude of wreckage that this 8.9 monster is leaving behind.  Not only did the earthquake shake and destroy, it brought a friend: Tsunami which did its best to annihilate everything the earthquake did not, in many northern coastal areas.

Of course the news is full of the details of the catastrophe and the ubiquitous follow-on question they all ask, “could it happen here?”  Most Pacific Northwest residents are aware of the potential for “The Big One” that has been prophesied by scientists for years, but seeing it unfold before our eyes paints an eerie and dreadful picture that should make us think hard about our comfortable way of life. Our lives can change in an instant.

AP reporter, Jay Alabaster wrote in an article Scenes of Devestation at Heart of Japan Disaster, that “Hundreds of people lined up outside the few still-operating supermarkets in Sendai, stocking up on drinks and instant noodles, knowing it would be a long time before life returns to anything like normal.”  He goes on to share, “At an electronics story in the city, workers gave away batteries, flashlights and cell phone chargers. Several dozen people waited patiently outside.”

In watching the devastating file footage for the last two days, one thought came to mind: be prepared.  What would I do if a similar event struck our region?  How can I plan for the multitude of risks that would face our family? Do we have food and water to last for weeks in case there are food shortages, fuel, and electricity disruptions? Clearly the recommended three day supply will not suffice for the Japanese. I sure don’t want to be waiting in a long line at a grocery store to grab the last loaf of bread and having to make-do with a bag of stale Cheetos. 

However, even the most prepared of families can’t mitigate all the possibilities.  If your home is totally destroyed and in heap, it would be very difficult to access your water and food supply if it were buried under the rubble.  If a Tsunami or lahar swept the entire neighborhood away, then clearly all of the preparation supplies in your home would be gone. So, do you prepare anyway hoping that the worst-case-scenario isn’t what you’ll face?  Or, do you assume the worst-case-scenario and give up and not prepare at all?

Please think of this as a wake-up call and prepare your family and prepare FOR your family.  Be smart. Be vigilant.  Be wise.

Image: Salvatore Vuono / FreeDigitalPhotos.net

FEMA Stores up on Food?

We have been puzzled as to the availability of freeze dried foods of late, but we finally might have gotten our answer.  Sara Reardon (Feb 1, 2011) wrote for Science Insider and shared what she uncovered.  FEMA is buying up food storage for 420 million meals!  She writes, “.. the Federal Emergency Management Agency issued a request for information (RFI) to vendors last week for 140 million meals ready to eat (MREs) for a projected 7 million survivors in the event of an NMSZ earthquake. Then they pulled the request, saying it was a bureaucratic error.” You can still view it at the link, but it does say “cancelled.”

So, at about $10 per meal, we’re looking at a total of around 1 1/2 billion dollars.  That’s a lot of food and a lot of tax payer money.

It looks like this food is in preparation of a possible earthquake in the greater Mississippi area called the New Madrid Seismic Zone (NMSZ).  However, later in her article she mentions talking to USGS officials and puts the purchase for this purpose in question.  They said “their 2008 hazard map is still current. The risk, he said, is "small, not negligible, but certainly not what you'd be buying meals for."

So are they, or are they not buying up meals?

Another article in a more obscure site called the Beaufort Observer (a Tea Party publication stated that a major provider of these dehydrated meals has cut off 99% of their dealers and distributors in order to meet the FEMA demand. Now where they got that information, I don’t know, they didn’t cite their resource.

That said, if the above request by the government is still active, though hidden, and if the manufacturers really are scrambling to provide the huge order, then the supply of dehydrated foods to us regular folks would most definitely be impacted.

Kinda makes you go hmm….

Image: xedos4 / FreeDigitalPhotos.net

Let Them Eat Cake!

This famous quote attributed to Marie Antoinette during the French Revolution showed her ignorance of the plight of the poor and hungry citizenry of France. That astounding obliviousness is looking more like a prevalent reality in our world these days. 

The riots in Algiers in January were over food prices and rising unemployment (officially around 14%).  An Associated Press (AP) article in Yahoo News on January 6, 2010 stated, “Riots over rising food prices and chronic unemployment spiraled out from Algeria's capital on Thursday, with youths torching government buildings and shouting "Bring us Sugar!”  It goes on to say, “It came after price hikes for milk, sugar and flour in recent days, and amid simmering frustration that Algeria's abundant gas-and-oil resources have not translated into broader prosperity.”

The Wall Street Journal reports that inflation is on the rise in Latin America with food prices being the main culprit.  Miriam Marcus Reimer writes (2/1/110) in  an article in The Street that food prices have helped fuel the unrest in Egypt. She says that “…but food inflation -- a major catalyst to the region's instability and call for change -- is unlikely to go away anytime soon.”

A Miami Herald article by Hannah Allam and Nancy Youssef (3/1/2011) says that Gadhafi is now blocking food and medicine shipments. It states, "Residents reached by phone said pro-Gadhafi forces had set up checkpoints on the city's east and west sides, halting the flow of food and medicine. 

"A Zawiya resident who gave only his first name, Tarek, for his own protection, told McClatchy Newspapers by telephone that baby formula and other vital items were in short supply. "

"They're trying to starve us to death," he said.

"Aid workers also reported dismal conditions at Libya's borders, especially among migrant workers stuck at the western border with Tunisia. TV footage from the Libyan-Tunisian border Tuesday showed hundreds of weakened refugees clamoring for handouts of high-energy biscuits from the U.N.'s World Food Program."

Christiane Amanpour reports for ABC This Week (2/28/11), that Gadhafi, in an effort to quell dissension in Libya, is dolling out money to citizens. She reports that “The leader was giving each family 500 dinars, the equivalent of about $450. For most people here, that covers salary for a month or two.”  Maybe that’s why Gadhafi swears that his people love him and there isn’t any problem.  Christiane interviewed Gadhafi on February 28, 2011 for ABC News, where she captured his words "They love me. All my people with me, they love me," he said. "They will die to protect me, my people." 

Oh, really?