A massive earthquake and tsunami have accomplished what Japan's
fiscal policy and central bank could not. Rebuilding a large swath
of Japan will stimulate domestic growth and global demand, energy-
efficient technologies, while helping to integrate China and Japan.
No one - least of all someone like myself who has experienced the
existential terror of California's regular tremors and knows the big
one is coming here next - would minimize the grief, suffering, and
disruption caused by Japan's massive earthquake and tsunami.
But if one can look past the devastation, there is a silver
lining. The need to rebuild a large swath of Japan will create huge
opportunities for domestic economic growth, particularly in energy-
efficient technologies, while also stimulating global demand and
hastening the integration of East Asia.
Japan's nuclear crisis: 6 reasons why we should - and shouldn't -
Japan has been wallowing in stagnation for years despite massive
government stimulus programs and zero-interest rates because, simply
put, in such an advanced, mature economy, there was too little
demand to generate sufficient returns to attract private investment.
Thus the famous "bridges to nowhere" and other projects that
amounted to pushing a string.
By taking Japan's mature economy down a notch, Mother Nature has
accomplished what fiscal policy and the central bank could not. Now
there are more bridges to somewhere to be built than one can count.
Entire cities and regions need to be reconstructed in toto, from
housing and commercial buildings to roads, rail lines, information
networks, the energy grid, and even the tsunami warning system that
must be digitally revamped. Twitter- and Facebook-like platforms
will need to be integrated into a system reliant on old technologies
like warning sirens and radio or TV broadcasts. (It was reported
that at one point on the day of the quake, 20 tweets a second were
coming out of Tokyo.)
The result of all the new wealth creation will be money in the
pockets of Japanese to buy global goods and services.
A classic debate about economic stimulus
This newly created demand will surely attract the piles of cash
out there looking for investment opportunities, from global private
equity pools to American banks and China's sovereign funds. At a
dinner in Hong Kong a couple of weeks ago, one of Asia's largest
investors complained to me about the dearth of good deals in Asia
outside of China. China itself has more surplus funds than it knows
what to do with. Direct foreign investment in overly indebted
Japan's reconstruction by China would more closely integrate the
second- and third-largest economies in the world in a way that
political reconciliation has failed to do under normal
Japan set for green recovery
The greatest opportunities lie in building the world's most
advanced, smart, energy-efficient cities and infrastructure out of
the rubble. …