Tsunami: A Massive Quake Devastates Japan
Business + Economy

Tsunami: A Massive Quake Devastates Japan

AP Photo/Kyodo News

If any nation can manage the immediate psychic distress that inevitably accompanies catastrophic events like today's devastating Tsunami, it is Japan. They have a phrase for such times. Shikata ga nai. It cannot be helped.

Japan is the only country on earth that observes disaster preparation day. It is held each year on September 1st, the anniversary of the “Great Kanto” earthquake of 1923 that destroyed Tokyo, killing more than 125,000 souls. That tumbler measured 7.9 on the Richter scale.

This time, it may be different. Japan, sitting astride the most geologically dangerous fault lines on earth, is always awaiting the big one. Was this it?

It’s too soon to calculate the extent of devastation caused by the 8.9 earthquake that rocked the northern portion of Japan’s main island Friday, sending tsunami waves across the Pacific.  The death toll, already in the hundreds, likely will rise into the thousands. The property destruction will total trillions of yen (tens of billions of dollars).

I will never forget the forced march of
hundreds of thousands of people fleeing a city.

And the worst may be yet to come. The damaged nuclear reactor in heavily-populated Fukushima Province, which is halfway between Tokyo and the epicenter of the earthquake, could melt down, triggering a cataclysmic event whose aftermath could last decades, or even centuries.

It’s hard to underestimate the stakes for Japan – and the world – in recovering from this earthquake. Japan, though still the world’s third largest economy, has been in the economic doldrums for more than two decades. Its aging population is on the decline, and its business elites have lost their ability to innovate.

Shocks like this one always hold out hope that it will jolt a country into renewal. However, the recent experience of other advanced industrial countries – notably the U.S. – isn’t positive. It’s hard to find much good to say about the aftermath of Hurricane Katrina and the destruction of New Orleans. The distinct possibility exists that this earthquake will turn into just one more milestone in Japan’s downward spiral, draining that country of much-needed economic growth and vitality.

The Horror of the Kobe Quake
I covered the 7.3 earthquake that slammed into Kobe on January 17, 1995, killing 6,434 people. Arriving at the center of the city about 12 hours after the initial shock, I will never forget the forced march of hundreds of thousands of people fleeing a city whose every essential service – electricity, telephone, sewage – was gone.

The survivors were numb. As I interviewed three men warming their hands around a barrel fire in the middle of a street, a loud screech interrupted our conversation. All heads turned to watch a six-story building, leaning like a Tower of Pisa from the initial shock, fall into the street. The men turned back to the barrel, uttering not a word.

The seemingly capricious pattern of damage during that quake turned out not to be arbitrary at all. An older multi-story apartment building erected in the immediate postwar years when steel was expensive and concrete thin collapsed like a stack of pancakes, killing nearly all its inhabitants as they slept. Next door, a fancy high-rise built during the Japanese real estate bubble, which had ended just a few short years earlier, survived intact with just a few cracks in its façade. To this day, when I hear businessmen rail against government regulations, I think to myself: building codes matter.

Of course, no building code on earth can protect a region against the powerful surge of water that accompanies earthquakes when they occur under oceans, like those that devastated western Thailand in 2004 or Indonesia last year. They have occurred so frequently in Japan over the years that the entire world uses its word for the phenomenon – tsunami.

Frantic Families
During natural disasters, everyone first thinks about their immediate families. Maasaki Sakamaki, a former government official who now runs his own consulting firm in Tokyo, was working at home when the earthquake hit at 2:46 p.m. local time. Though hundreds of miles from the epicenter, books fell from the shelves and the kitchen floor became a minefield of broken glasses and plates, he told me in an email.

His son had just returned from school, rang the buzzer to go upstairs when his wife Hatsue frantically ran downstairs to stop him, since the elevators automatically stopped working during earthquakes. She couldn’t find him. “We started worrying about his being stuck in the elevator,” he wrote. “Then he showed up saying that he was helping the food delivery man.”

The earthquake’s troubling aftermath continues for 80-something Toshio Matsushima, who lives in the western suburbs of Tokyo. His wife Miyako was downtown visiting old friends when, “All trains stopped and she and her friends were obliged to stay in Tokyo Station all night since they are no hotels available in the central area – all booked up!” he wrote in an email.

The world has a lot at stake in what happens to Japan in the wake of this disaster, and its losses will ripple across global markets – in lost production, in insurance payouts, and in what might turn into a crippling blow against nuclear power, which many are hoping will become a major contributor to energy production and reducing greenhouse gas emissions.

“There is no way to assess even the direct damage to Japan’s economy or to the global economy, that this will cause,” Carl Weinberg, chief economist at High Frequency Economics, told Bloomberg News. “Experience tells us that the economic shock can be, and likely will be, much bigger than anyone can imagine.”

The political fallout in Japan in is likely to be just as huge, and could deal another body blow to an aging society that is deeply in debt and has never found a way to escape the doldrums that evolved out of the collapse of its stock market and real estate market bubbles of the late 1980s. “With the foreign minister resigning a few days ago, and the quick rotation of (prime ministers) Abe, Fukuda, Aso, Hatoyama and now Kan, it is undoubtedly an especially bad time psychologically for Japan,” said Marie Anchordoguy, chair of the Japan Studies Program at the University of Washington. “The international community has lost confidence in the capacity of their leaders to deal with their economic problems.”

Now all eyes will be focused on how Japan deals with this looming nuclear power crisis, and the rebuilding of the region devastated by the quake. “There should be a positive economic stimulus impact from the rebuilding that will have to occur,” Anchordoguy said. But her fear, like many Japan experts, is that “one way or the other, Japan will remain adrift.”