Avent says "Japan's humanitarian and economic catastrophe is developing into a minor global economic crisis":
Some of the market reaction to the situation is undoubtedly reflective of the uncertainty involved. So long as it isn't clear what the total cost of the disaster will be, markets will price in the possibility of the worst occuring. If the worst does not then occur, they'll snap back. And some of the market reaction to the situation is probably a panic generated by the sharp fall in share prices. That too is recoverable.
Cassidy's two cents:
What is really going on, I suspect, has little to do with the underlying forces of supply and demand: it is mainly about speculation. The same foreign investors who are dumping Japanese stocks are selling oil futures to hedge the big long positions they have been holding. They are also dumping goldtraditionally seen as a safe haven in uncertain timesand other commodities, such as copper, corn, and wheat. That means food prices, which have risen sharply over the past couple of years, are also likely to fall backa boon to consumers, particularly poor ones.
Strange thing, global capitalism.
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