Earthquakes, Tsunamis and Meltdowns

What happens on the other side of the globe doesn't usually make too much of a difference in our day-to-day activities. But with a cataclysmic event this is not so true.

The triple-whammy in Japan is yet another reminder of this truth. Their problems are now starting to generate problems in the United States. Some things are obvious: reports in the media this morning are saying traces of radiation from the Japanese nuclear reactors were found in the atmosphere in Florida and North Carolina. Some things are not as obvious: you may not be able to get your Toyota repaired if the supply chains are disrupted and parts become scarce. And, some things are unknown: manufacturers such as Nikon may be forced to delay the rollout of new products that are normally made in northeastern Japan.

Any of these consequences could be large or small for individuals. Are you susceptible to health issues from the radiation? Can you drive to work if your car can't be repaired? And are you going to invest in a new camera now or just wait for another six months?

Of course the consequences for individuals also impact businesses. Health care providers, auto mechanics and professional photographers are now starting to realize that they may have to make adjustments to deal with all of this. How much will change is tough to know, but as the days go by and the news remains grim, it appears that the odds are increasing that the impact will be felt.

Keep in mind that is also happens in reverse. The rest of the world was not the subject of the attacks on the World Trade Center on September 11th. Yet it impacted financial markets, tourism, and many other areas of commerce in most countries around the globe. In fact, one estimate at the time said that approximately four percent of the entire United States economy was located in the devastated city blocks of New York. It's almost impossible for an event that large not to be felt internationally. More recently, the BP oil spill in 2010 had effects well beyond the Gulf of Mexico.

So how does Japan relate to your business activities? In my practice I am asking my clients if they sell anything from -- or to -- Japan. I am also keeping abreast of the news to identify the possibility of "collateral" impact - the health of employees, currency exchange rates, seafood prices, etc. Any of these issues can change the value or viability of a business.

A Side Note ... The crisis in Japan is much like many others. It is not just one event that increases the problems. Instead, it is a series of calamities that occur in a short span of time. Remember that Japan had an earthquake and  tsunami which caused the nuclear crisis. On September 11th it was one plane crash, another plane crash, a building collapse, and then another building collapse. In the Gulf of Mexico it was an oil rig explosion, followed by multiple months of leaking oil, which caused extensive disruptions to the environment and the regional economy. My contention is that if any of these events had only one problem (just an earthquake, just a plane crash, or just an oil rig explosion) then much of the disasters that we experience would have been avoided.
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