500,000 forced to evacuate; shelters low on supplies

LOS ANGELES TIMES

Monday, March 14, 2011
By Barbara Demick

SENDAI, Japan – Japanese authorities say thousands might have died in the massive earthquake and tsunami, which left many survivors stranded or shivering in makeshift evacuation centers that were running low on supplies today.

In Miyagi, one the three hardest-hit prefectures, at least 10,000 were killed, police spokesman Go Sugawara told the Associated Press late last night. Only 400 people had been confirmed dead in Miyagi, which has a population of 2.3 million.

Elsewhere, about 1,800 people were confirmed dead yesterday – including 200 bodies found along the coast. About 1,900 were injured, and more than 1,400 were missing.

More than 500,000 people have been forced to evacuate from quake- and tsunami-affected regions, Kyodo News reported.

Televised reports showed hundreds of thousands of hungry survivors huddled in darkened emergency centers, cut off from rescuers, aid and electricity. At least 1.4 million households had gone without water since the quake struck, and about 1.9million households were without electricity, Kyodo reported.

“We have no choice but to deal with the situation on the premise that (the death toll) will undoubtedly be numbered in the ten thousands,” Naoto Takeuchi, head of the Miyagi prefectural police, told a Kyodo reporter during a local disaster task-force meeting.

There were dramatic rescues of tsunami survivors yesterday, including a 60-year-old man who had been waiting for help since he was swept out to sea Friday.

Hiromitsu Shinkawa was spotted by rescuers at 12:40p.m. local time nine miles offshore by the crew of a Japanese Maritime Self-Defense Force destroyer, according to Jiji Press.

Shinkawa, from the devastated city of Minamisoma, was conscious and in “good condition,” officials said.

“I ran away after learning that the tsunami was coming,” Shinkawa told rescuers, according to Jiji Press. “But I turned back to pick up something at home, when I was washed away.”

The tsunami submerged about 5,000 houses in Rikuzentakata, a port city of about 20,000, and most of the 7,200 houses in Yamada, Kyodo reported. In Otsuchi, the tsunami swept away the town office.

Foreign search-and-rescue teams arrived in Japan yesterday, and 88 governments and six international institutions have offered assistance with recovery efforts, the Japanese Foreign Ministry said.

Adding to the misery were a series of more than 40 punishing aftershocks, three of magnitude 6 or more yesterday.

The Japan Meteorological Agency said there was a 70 percent probability of a magnitude 7 quake in the next three days.

Officials of Tokyo Electric Power Co. said they will begin rationing power today to the 45 million people they serve to prevent Tokyo and nearby prefectures from experiencing massive blackouts, Kyodo reported.

The power rationing is expected to continue through April, Kyodo reported.

Japanese Prime Minister Naoto Kan told reporters yesterday that his country faces its most difficult challenge since World War II, and he called on his people to unite in the face of a devastating earthquake and tsunami and potential nuclear crisis.

“This is the toughest crisis in Japan’s 65 years of postwar history,” Kan said in a televised news conference. “I’m convinced that we can overcome the crisis.”

Kan said 100,000 soldiers will be deployed to help quake victims.

Analysis: Japan quake impact seen deep and long
Mon Mar 14, 2011
By Kristina Cooke and Natsuko Waki

NEW YORK/LONDON (Reuters) – Japan’s already weak economy faces deeper damage than initially thought from the triple blow of a devastating earthquake, tsunami and nuclear disaster, and risks prolonging its sluggish recovery.

At worst, forecasts from some economists suggest the world’s third largest economy is in danger of slipping back into recession.

The hit to growth from Japan’s worst crisis since World War 2 is likely to exceed that of the 1995 Kobe earthquake, when industrial output fell but overall output remained strong, analysts said — a downgrade from their first estimates after Japan was hit on Friday by its largest earthquake on record.

This time the yen is stronger, hampering exports, and Japan’s debts — twice the size of the $5 trillion economy — are much bigger. It also faces a major power problem.

Rolling power blackouts begin on Monday, which will lower production. Car and semiconductor factories and oil refineries in the north-east region are closed. And Japan may raise taxes to pay for relief work, reducing consumer spending.

“We now expect the Japanese economy to take longer than we expected to exit its current soft patch owing to the earthquake and tsunami,” Nomura analysts Takahide Kiuchi and Okazaki Kohei wrote in a note to clients.

Nomura expects the economy, which shrank late last year, won’t shake off its lull until the third or fourth quarter.

In contrast, some analysts initially had seen a return to growth in the April to June period.

Nissan Motor halted output at all its four domestic assembly factories and said restarting them could depend on whether it can get parts, one of many companies unsure of how quickly they can get their plants back up and running.

Power supply also is critical factor in estimating the loss to the nation’s productive capacity. Nuclear power plants are offline, and officials are grappling to control the damage and radiation leakage.

Ward McCarthy, chief economist at Jefferies in New York, called this development troubling. “It just increases uncertainty at a time when uncertainty is already high,” he said.

“If power production output is damaged in a sustainable fashion, that could have a durable impact,” said Michala Marcussen, head of global economics at Societe Generale.

Export-dependent Japan already faced vulnerabilities. The European debt crisis, an oil price spike and a still fragile recovery in the United States have all posed challenges.

Add to that a potential drop in Japanese consumption, said Brendan Brown, head of economic research at Mitsubishi UFJ. Consumers will be “under influence of squeezed incomes and trauma,” he said.

This will feed into global growth through Japan’s trade.

“The primary effect on the world economy will be on big trade partners in Asia, including China and Korea,” said Brown.

WATCH CREDIT RATINGS

Providing at least some relief for officials, credit ratings agency Moody’s Investors Service suggested on Monday that it sees no sign of a fiscal crisis in Japan. A day earlier it said the “temporary” fiscal impact would not be a big factor as it ponders whether to downgrade the country’s credit ratings.

Japan was downgraded by Standard & Poor’s in January, given the lack of a plan to fix public finances, and Moody’s has warned it may do the same.

There are some positives. Some economists said the huge influx of government spending needed to repair the damage could help the Japanese economy eventually shake off its long period of sluggish growth and falling prices.

“The question is: does this finally push them out of the deflationary spiral and allow them to get their economy back on track, or does it push them deeper down?” said Sharyn O’Halloran, a professor of political economy at Columbia University.

After the 1995 Kobe earthquake, there was a big drop in industrial output, but the economy grew strongly that year and the effects of rebuilding gave it another boost in 1996. Back then, oil prices were hovering around $17-21 a barrel while the yen, key to exporters, was around 100 per dollar when the quake hit.

Currently with oil prices just off 2- year highs above $100 and the Japanese currency at a stronger 82 per dollar, the impact from these two factors alone will be more adverse.

Japan’s gross domestic product shrank by an annualized 1.3 percent in fourth quarter. A Reuters poll published before the quake showed it was likely to expand 0.5 percent in Q1, or roughly 2 percent on an annualized basis.

Bank of America Merrill Lynch estimates the quake-hit areas account for up to 7.8 percent of Japan’s GDP, compared with 12.4 percent from the regions affected by the Kobe earthquake.

The bank expects the hit to GDP to be at least 0.2-0.3 percentage point, although a relatively large amount of spare capacity may offset the production loss.

The yen rose sharply following the Kobe earthquake as Japanese companies repatriated capital, a pattern which may gather momentum in the coming week.

The Bank of Japan offered to pump a record $183 billion into the banking system on Monday to stabilize markets after the quake.

The central bank may also ease monetary policy further at its meeting on Monday. With interest rates virtually at zero, the most likely option is for the BOJ to top up the 5 trillion yen pool of funds it put in place last year to buy assets ranging from government bonds to private debt — a factor that could weigh on the yen.

Nomura said the BOJ could increase the scale of its asset purchases to 8-10 trillion yen.