Investors on Alert: Japan’s Nikkei Index Crashes 1000 Points In Less than a Week

by | Mar 14, 2011 | Headline News | 22 comments

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    Japan’s Nikkei Index, which measures the top 225 companies on the Tokyo Stock Exchange, went into an almost immediate freefall after Tsunami waves began washing up on the country’s northeast coast. The Nikkei 255 Index, which reached a high of 10,600 point on Wednesday, had tumbled to 10,250 points by Friday’s close. The earthquake off the coast of Japan hit at approximately 2:00 PM Japanese time on Friday, March 11.

    By close of business Monday, as Japanese officials struggled to maintain order amid a potential nuclear meltdown at multiple reactors, stocks had dropped an additional 650 points, wiping out over 6% of the index’s market capitalization. The country’s central bank, the Bank of Japan, has responded to the disaster by injecting some 15 Trillion Yen ($183 Billion) into the financial system in an attempt to stabilize markets and stem panic.

    Other stock markets around the world fared better than Japan as events on the ground, recovery efforts, and the Tsunami’s impact on the Japanese economy remain in question.  Japan is the world’s third largest economy after the European Union and The United States.

    With northern Japan in ruin, tens of thousands still missing, and millions without power, Japan will most certainly see negative economic growth in the short-term. If the nuclear reactors, which some Japanese officials say are under control, were to go into complete meltdown and send radiation into surrounding areas and across the Pacific, the economic effects on Japan, Asia and the rest of the world would be felt within days, with stock markets providing a forewarning as panicked investors sell off assets, especially in consumer-related industries like manufacturing, transportation, and retail.

    Most stock markets outside of Japan kept losses on Monday to under 2%, however, the legitimacy of the official news reports coming out of Japan are in question, especially with respect to the nuclear power plants. Mixed information has only added to the confusion, with some officials reporting that everything is under control, while others indicate that fuel rods are completely exposed and have melted down, or are in the process of melting down. Radiation exposure has been measured in residents on the ground, as well as on a US Naval vessel traveling through a radiation cloud, and US emergency response helicopters on which 17 members of the US Navy were treated for radiation contamination.

    News reports continue to be mixed, leading to uncertainty, but not yet complete panic, in financial markets. Gold and other precious metals, which are considered to be measures of not just inflation, but global crisis sentiment, have seen minor gains on Monday suggesting that global investors have not yet shifted capital into safe haven assets.

    With an already failing economic recovery in the US, a black swan variable such as the Japanese quake, Tsunami and nuclear crisis may very well be the tipping point that sends the entire world into a financial and economic catastrophe.


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      1. Im thinking, or feeling, that these reactors were well on their way to a melt down soon after the earthquake/ Tsunami..My gut feeling is that in these situations there isnt a dam thing they can do to avert this crisis, once this equipment becomes superheated, theres no stopping it..
        no amount of sea water, coolant regular water…nothing known to man can stop it.
        I dont really think they have thought this out in the NRC..right along with not thinking about how to dispose of the contaminated fuel rods and waste..its never been thought out completely, and they are going at this blindly.
        how can you build all these plants with no plan for thier waste? how can you build these plants with no way to control a melt down..Honestly, I think there is No possible way to stop the reaction once it starts
        at that point they have reached a no way out senario. science has not ever figured out how or what to do with the waste, or how or what to do to stop a melt down.

        i feel its quite like magnesium, once it gets burning..theres no stopping it until its burned up and consumed..uranium could be much like this, and instead of saying no we cant use this because of this threat until we find out how to stop it once it starts, they just say ,, oh well we will learn as we go, or we will just put systems in place to keep that from happining..well..not so lucky apparently 3 mile island Chenobyl..???whos next Japan?

        Now im not going to claim i know everything about this type of power generation…but one thing i do know..if you dont know how to handle a system completely..from start up to clean up..and have it all planned out and show how the contingency issues can be completely delt with..shit like these should never be built

        Melt down was eminent, and they knew this

      2. I was immediately afraid that the quake would finish off our economy around the world. I can only hope that people will start preparing for whats coming in every way possible. We can only pray now that we can survive this horrible mess made by our governments. I know ours here in the USA is intentionally distroying us. I pray we will have the fortitude to be able to take back our country and leave something for our children to be proud of.

      3. This is a truly terrible situation.  The human tragedy & property loss is unimaginable. 

        The “damage” this has done for nuclear development will be felt for generations to come.  Nuclear power is our ONLY viable alternative to gas & oil – which have a finite supply (wind & solar will never supply what we need).  What will we do in 30-40 years when oil starts running short?

        Imagine a life with no oil or gas.  4/5 of the worlds population would starve, freeze to death or be killed in the mayhem.

        This disaster has destroyed the present of hundreds of thousands but it has impacted the future of billions. 

      4. Comments…..The question more likely is: What do we do next year when oil supplies start running out?

      5. Years ago I read about a giant (and I do mean Giant) pile of tires which was burning away in the U.S. with no way of stopping it. I wonder if it still burns today? I suppose some People might use this as a justification to do away with tires altogether, maybe have only wooden wheels?

        Something tells me many of the problems the world faces have less to do with technology and more to do with government action and regulations:

        “These nuclear power plants need a license to operate. Who grants these licenses? The government, that’s who. This means that citizens who are damaged by any errors of that power plant only have recourse in taking action against that government in court should anything go wrong. Think about that. It was the government who gave the approval for that plant to be built where it is built. It was the government who gave the approval for the safety precautions of that plant. The free market was no where to be seen in these events.

        I wonder, if a power comany were liable in civil and criminal court for damages – which, because of Japanese law, they are not – would
        they be building government approved-nuclear power plants on earthquake fault lines? I doubt it…

        So the government created this situation…

        it has now been reported in the German press that the problem nuclear power plant was scheduled for decommissioning
        this month since it is 40 years old. Once again, government interference raises its ugly head. This is the second time in 29
        years that this power plant has had an accident. If the government
        would get out of the way and allow the free market to work, competitiion would allow companies to build better and safer plants…”

        Also, the following report from someone in Japan could partially be why, “…global investors have not yet shifted capital into safe haven assets.”:

        “…if you watch international news you’d think that ALL of Japan is underwater and suffering. Miyagi and Iwate are the center of it all, while we are basically experiencing minor inconveniences. This is important to remember.”

        And one final thought, I wonder how the level of radiation released from these plants compares to the radiation levels released from a volcano? It seems the planet does have ways of sorting things out so we don’t all croak from radiation, maybe the markets are factoring this into their decisions?

      6. @john coster
        no no no… that was LAST year’s question….

      7. Can you say ‘BLACK MONDAY’ For Ameri[K]a and Wall Street?
        I knew you could…
        Japan brings money home to rebuild

        Shaken by the prospect of nuclear meltdown after a devastating earthquake and tsunami, Japanese investors will dump overseas assets on Monday and bring their money home to help finance reconstruction.

      8. People with wood to burn & pv’s wouldn’t starve or freeze.  I’m waiting for the rescue & relief to end then Japan will have to start dumping many of our (their) T Bills.  Do you think they will be buying more soon?  There goes the Euro up because the dollar will go down (which our leaders want). 

      9. Sadly, the real problem with Japan isn’t the fact that they were foolish enough to situate themselves on the so-called ring of fire, nor is it their obscene debt to GDP ratio, nor ongoing meltdowns that seem to grow like mushrooms after a fall rain.
        The problem is, as a Far East nation that is over 1000 miles from the nearest US state, they had no access to crisp, new, $10 bills.  These Federal Reserve Notes, backed by the full faith and credit of the US gummermint and thus its people and their children, can be exchanged for food and umbrellas.
        I have personally tested them and found them waterproof, and thus, tsunami proof; you can dry them on a clothesline, or in a microwave set to ‘defrost.’ Or just hit the popcorn setting if your microwave supports one button corn popping.
        Take a lesson from your American forbears, who never had to worry about tsunamis or multiple reactor meltdowns; they had a supply of new, crisp, $10 bills and thus didn’t have any problems with tsunamis – and if they did, they found it so inconsequential they didn’t even bother reporting it.
        Supply yourself now with new, crisp, uncirculated $10 bills WHILE YOU STILL CAN! And you will sleep warm and dry at night, as I do.

      10. RaftermanFMJ in the house and at the mountains of madness. Many thanks. But are the crisp ones edible?

      11. RafterManFMJ, thanks for the laugh 🙂

      12. I read this Bill, and felt like I was trying to learn some ancient language with the whole letter about “fractal” stuff??
        But did find it interesting once the article got into the earth talk. However for the last two days my wife and I have been trying to learn what to take in case of radiation fallout. Even if Japan isn’t a problem, there are 3 nuke facilities just 2 hours south of me on Lake Michigan’s shoreline, that should an accident happen I would like to be prepared. We are getting many conflicting reports on what to buy and take. What the heck is the difference between Iodine, Iodide and Iodate?
        So far it seems as if the safest and best is Iodate, but wondered if anyone here had more knowledge of this than we do. I have even had a hard time doing searches and getting a straight answer?
        Many Thanks

      13. OK to all you real smart money and business people….what  “I’d be in a totally risk-averse mode for the next several weeks”  mean?
        Pull out of the market (401K) all together or just get out of anything risky? If the latter, at this point is ALL of the market risky?
        Thanks, I am just trying to help my mom out with some advice I don’t think her 401K manager will be telling her

      14. BJ, risk-averse as it applys to investing means holding investments that pay little, none, or even a negative return just because they’re “safe”. There were actually gov securities that could be bought that paid a negative return if inflation didn’t go up.

        While I’d like to give you investing advise, just understand if i was right all the time, I’d be busy applying suntan lotion to the bikini models on the bow of my yacht instead of posting here.

      15. Personally, I like SPXU, which is a 3x reverse index fund of the S&P 500.  As the S&P goes down 1%, this fund goes up about 3%.  I felt like the market top was in weeks ago, and has nowhere to go but down.  Say the S&P takes a 30% hit ( it took a 60% hit in 08 ), this fund will have you 90% ahead of just sitting in cash.

      16. Being right most of the time still wont make you rich but if I was, the models would be busy putting lotion on themselves while I watched.  People that rush to “safe” bonds will be crushed in the future.  There is something to be said for liquidity during interesting times. 

      17. I like it when important people go golfing.  Less problems that way.  The Dow fell off the cliff this morning (yawn) and silver/gold ratio is holding steady at 40.7:1.  Not bad at all.

      18. “Being right most of the time still wont make you rich but if I was, the models would be busy putting lotion on themselves while I watched.”

        Hmm… I’m thinking about bumping suntan lotion higher up on my prep list. Got to cover all possible scenarios.

      19. Natural gas is the only thing up right now in the sh%*t list of commodities.  We have plenty in reserve in the white house & DC.

      20. What SPF?  GE is keeping very quiet.

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