Business banking: Japan floods economy with cash
Following the largest earthquake ever recorded in Japan and the devastating tsunami that followed it on Friday, fears over access to funding for businesses and the potential disruption of global supply chains as production and transport are wiped out, the Bank of Japan has today added another USD43,000 million to the vast sums it has ploughed into the economy since Monday.
So far this week, the Bank of Japan has pushed the equivalent of USD330,000 million into the economy. That has had the effect of reducing the fall in the Japanese stock markets which, in the two days' trading until closing yesterday, had fallen 11%. ForEx markets have also been unstable.
The effect on global markets was instant on Monday as companies feared for their supply chains. Major ports have been wiped out, major manufacturing districts are either destroyed or, effectively, cut off. As road fuel dries up, transport to other export routes are dying.
But some plants are re-opening: Sony has reopened a plant and so have some steel producers. Bridgestone tyres have reopened some plant.
But electricity remains a core problem: it is not only the major Fukushima Daiichi nuclear power plant which is out of use.
Some cities are suffering scheduled blackouts as power is rationed. But as cold weather rolls in, demand will increase and therefore blackouts are expected to increase.
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