Special Japan Reconstruction Issue | Macro Millionaire Coaching Program and Trading Service

March 25, 2011 - PRLog -- As destructive as the Japanese tsunami has been, it may have left some investment pearls in its wake. It has suddenly made available some of the country’s best of breed, world beating companies available at throw away prices. But this is going to be an investment for longer term money, not a trade, as some patients may be required for a payday.

There is no doubt that the economy has suffered a body blow. I believe that quarterly GDP growth  has swung from a 2% to a -3% rate, a flip of 5%. Electricity shortages are the biggest problem, followed by the disruption of  a parts distribution web with global implications. A significant portion of the world’s DRAM, semiconductor package, and thin screen production has been taken out, and there are no easily available replacements for the higher end, customized parts.

To show you how daunting the electric power problem is, take a look at the satellite photo below from NASA. It is overlaid on an identical photo taken in 2010. Areas in yellow show where power generation is unchanged over last year. Areas in red have gone dark since the tsunami. While the largely rural Sendai area had 1% of the country’s population, it produced 10% of Japan’s electric power, making it a huge net supplier of power to the rest of the country. There is now a crash program to conserve power. The lights in the Ginza are off. Trains are shorter and without heat. LNG tankers are being diverted from European destinations to Japan. Japanese companies are scouring China for every large diesel generator they can get their hands on.

The down leg of a “V” economy is now upon us. What lies ahead for we traders and investors is how to best take advantage of the inevitable up leg that will follow. The last estimate of the earthquake and tsunami damage is $300 billion, or 6% of GDP. That means this amount has to be injected into the economy to make the country whole again. The largest part of this growth will be concentrated in the first two years, which means Japan may become one of the better performing developed countries in 2012 and 2013.

For a start, you can ignore much of the drivel that is being passed off as research by several American based institutions. Despite having a debt to GDP ratio of over 200%, one of the world’s highest, funding will present no impediment to Japan’s recovery whatsoever. The current level of interest rates, 0% at the short end and 1% at the long end, prove that there is too little borrowing going on in Japan, not too much.

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