From the Keynesian standpoint, this is precisely the kind of disaster that can jumpstart the economy. In the long run. In the short run, profits are going to be down, and we don’t know if today’s selloff adequately reflects short-term losses to be experienced by Japanese companies.
Some losses seem overblown even in the short run. For example, does anyone really believe that the earthquake justifies a 5% drop in the valuation of Toyota?
