“Mortal Wound”: Japan Disaster Could Trigger Global Liquidity Crisis, Martenson Says

GM and Toyota is doing temporary shut downs due to parts shortages. I told my CEO back in 1995 this "just in time" parts delivery system was going to sting someone one of these days.

So our Global Economy puts us at risk when anywhere in the world there is a catastophe? And all our smartest elites thought this was a good thing? Who would have thought.

There will be another liquidity crisis and after it happens all of the economists will get together and try to figure out why it happened and nobody will ever come to a real conclusion.

Why did the flash crash happen? Nobody knows nor will ever know. The financial system is so complex now that nobody really even understands anymore how it works nor can control it.

Make it in America and we don't have this problem.

If it gets bad enough maybe they'll wise up and quit outsourcing all the parts.

Bring those jobs home.

A silver lining to the radioactive cloud.

Perhaps US can pick up on manufacturing due to the need of supplying the world with what japan can't manufacture now. Japan was already not on top of their game. Other countries have been picking it up before the disaster.

Financial "experts" tend to think in terms of bits/bytes/pencils/accounting... The real work will be done by the people who do the work in the first place. Shovels, bulldozers, construction projects. Japan has a work ethic that can get it done. So all you guys with the pencils sit down and shut up, or go buy a shovel and help clean up.

This is fascinating! The TRUE intercourse of economics and societal needs. How does an economy run on 40% less power input? Who makes the productivity decisions, the government or the kieretsu corporations? It is a humanitarian disaster that needs the lifeblood of monetary systems to stage it's recovery. In my 50 Summers nothing like this has ever happened. WWII and 911 were man made disasters, caused by man, repaired by man. This is mother earth laughing at our frivolity. How do we recover, grow, and serve the human poulace? I'll be pondering this for the rest of my life with the full effects only known when I'm dust and my Daughter is an old lady.

This guy is spot on. The disability of Japanese production this year will result in big sale of USD based assests to rebuild QUICKLY. That means ALL the USD assets holders, i.e. China, India and Mideast, etc. will stop buying USD based bonds expecting continued falling prices.
This would place tremedous pressure on the US economy, then the Fed has to print great amount of money to buy our own Treasury bonds. There will be a sharp inflation of living costs but deep deflation (recession) in the production sectors.
A perfect storm worse than 2008 is quickly forming. CASH will be king, precious commodities will be queen.

guess what america japan needs to cash in its 900 billion in treasury notes to do its recanstruction. you thank the fed 60 billion was bad, we need to jump on this reconstruction and create jobs in america, after all our money will be going there way, and it needs to be spent in america, but with globalization everything is cheaper elsewhere.this is the big pictuer, is it good or bad only time will tell?

There is a lot of economic negativity being postulated but thus far Bernanke has been able to avoid the silver bullet. Published economic reports support a turnaround, provided you actually believe the information within the reports. I think all government released information, is pre-election year propaganda to ensure re-election for the incumbents. According to our government nothing is wrong and everything is rosy.

Another melt down scenario to get the tax payer to pick up the financial risk by our insurance companies.

Has anybody got it Too Big To Fail has got to go.

the US government like most american households spend spend spend and leave no room for error.

I believe this shows some of the weakness of the global market place where parts may come from anywhere. This is an example of how this can occur in the future and how it might impact world wide production and money supply. I doubt it will be a significant or lasting hit, but with a weak economy already, it could hurt more than if we were all doing very well.

The September/October west coast earthquake/tsunami? will be the nail in the coffin. This combined with America's excessive debt and Japan's current problems will cripple America much more than Katrina. Bernanke and Obama are out of bullets to help inn this matter.

OPEC better take a serious look at increasing production and lowering the price of oil a bit - or the combination of the Japanese problems, related parts shortages, and oil above $100, will send the entire world econ back into recession or worse!

Global economy contingency. Issue work visa's to some of the displaced Japanese and relocate them to affordable housing in Detroit. Retrofit some of the unused factory space to produce the parts that are needed to continue manufacturing for Toyota and GM. Essentially transfer production to the US. The logistics would be a bit of a challenge as well as the cost. That could happen sooner than rebuilding in Japan and waiting until any viable equipment becomes radioactive or the employees get their housing and lives back in order. Seriously the real estate is available at a low cost.

The problem is really the global supply chains in many corporations. For example, Renesas builds small 8-bit processors, which are used heavily in the auto industry for such things as anti-lock brake controllers, or other low-power processors. While most of their plants are open now, it's not clear which plants make which parts. If manufacturers can't quickly switch to other parts, they won't be able to make their product, which will destroy their profitability. Other parts of the tech industry which has had problems is in making of the silicon wafers used to make chips. Inventories are small, and if production doesn't catch up to use, that starts to shut down other industries, again with ripple effects. These events will also start to encourage hoarding of impacted parts, making their prices shoot up beyond their normal values. All of these electronic parts are made in clean rooms, and the earthquake likely both damaged equipment, and let dust into the clean rooms, so that they will need to be cleaned again.

If you own stock in companies that make things with electronics, it might be a good idea to see if they know how their supply chain will be impacted.

The world banking system, financial markets and economy are excessively integrated. The loss of control in national systems, giving way to international systems, is not working and will never work. The uniquenesses of each national market are disregarded to the detriment of those nations' real economy. The creation of winners and losers is totally artificial and leads to economic meltdowns effecting each national market. Read 1929 and excessive integration.

Globalistic interdependence, JIT, 80-20 Rule, free trade. greed, borderless countries, too big too fail oligarchs, and uncontrolled immigration are proving they are false economic and business concepts ! They didn't exist prior to 1970 and most products Americans bought were made in the US not just assembled! Political policy has made the US unnecessarily vulnerable to economic disasters, terrorists, foreign values, and natural disasters ! There were valid reasons why our form of capitalism and democracy worked ! The structure of our society has been allowed to be changed deceptively gradually ! Americans are being downsized with huge and growing inequality of income ! Americans were not told up front what the plan was or what the risks were and the gambles that are being made longterm with no guarantee of success ! Devaluation of currency does not assure that more goods will be exported and jobs created ! There is no longterm guarantee of American globallism !