The tragedy befalling Japan is likely to have much wider consequences for the global economy.
Japan is already the single most indebted country in the world as compared to GDP. As a consequence of this earthquake and the destruction that it has caused, Japan will need to sell billions more of sovereign debt into the market. As a result, sovereign funding needs for Japan, the USA and Europe in 2011 are going to be in the $10Trillion range.
Where is this money going to come out of?
Moreover, coming on the heels of already heightened volcanic and seismic activity globally, I should think that the likelihood of more events taking place globally is fairly high.
Too, we’ll have to monitor whether Japan’s rice growing capacity is intact or has been hindered and, if it has, to what degree.
So that’ll probably mean more sovereign debt come flooding onto the markets at a time that sovereigns are already attempting to compensate for lack of funds globally buy ‘buying’ their own sovereign debt.
This is the predicament brought about by a debt based fiat monetary system.