So what what now for the weakened Japanese economy?
Already struggling under high debt and with a fragile economic recovery, the economy faces another negative shock from the quake and the tsunami.
Many early estimates about losses and the size of the impact on the economy made on Friday and Saturday have proven too optimistic and missed the startling damage caused by the tsunami.
Some comparisons said the latest quake seemed to do little damage compared to the impact on Kobe in 1995, but this time it was the wave of tsunamis that battered the north east coast of Japan, causing most of the damage and the terrible loss of life.
The combination of the quake and the tidal waves seems to have been the trigger for the worst problem, the damage to at two nuclear power reactors at big power stations to the northeast of Tokyo.
While Japan is Australia’s second most important trading partner and the outlook is uncertain, the impact of the disaster on us should be minimal financially (and hopefully in personal terms with around 11,000 Australians living in Japan).
In fact in the short and medium term more supplies of coking and thermal coal and iron ore and LNG and other commodities will be needed for the rebuilding.
Realistically, for Australia the impact will also be cushioned by the markets we have in China, India and South Korea.
But already the damage to the nuclear reactor of Tokyo Electric Power Co at Fukushima yesterday is having a dramatic impact with the company warning it can’t meet its normal power demands and won’t be able to do so for much of then next week at least.
Two reactors at its big Fukushima plant are damaged and have released radioactive vapour in an attempt to try and bring an overheating core in each plant under control.
A cooling pump at a third power station in the region is reported to have broken down. Three other reactors are now reported to have problems.
That’s six in total as at 8 am Monday.
The damage from the quake and subsequent tidal waves has seen around 9,700 megawatts of nuclear power generation, or up to 20% of Japan’s nuclear capacity, taken out of service.
And Tepco said that five coal or gas fired power stations in the Tokyo area were taken off line as well by the quake and would take around a week to restart.
With that shortfall of capacity, Tepco warned of massive blackouts from Saturday evening, even affecting areas far removed from the direct impact of the earthquake, given that its power facilities were damaged by the quake.
Japanese political leaders have started pushing for an emergency budget to counter the damage from the quake and tsunami.
With numerous factories and businesses shut, some indefinitely, and power supplies uncertain, the stuttering economy and government finances will suffer a hammer blow.
The level of government debt this year was already projected rose by 5.8% to a huge $US12.2 trillion, which is around 210% of GDP.
As a result of that and the emerging political deadlock over debt, Japan’s credit rating has been cut this year.
Japan’s rating outlook was lowered to negative from stable by Moody’s Investors Service on February 22.
The ranking is Aa2, the company’s third highest. Standard & Poor’s cut its ranking of Japan in January to its fourth highest.
But it is now clear that tens of billions of new debt will have to be issued to raise funds to meet the cost of the damage and rebuilding, as well as whatever happens at the Fukushima nuclear power plants.
That could see the rating under renewed downgrade pressure.
The problems at Fukushima are starting to cause increasing concern. Any worsening could be dangerous not only for Japan and the people around the plants, but nuclear power and the economy.
Despite initial belief that the quake had not caused too much problems, those commentators completely missed the impact of the tidal waves and the problems at Fukushima.
Before all that happened on Friday afternoon the Government was struggling to get its current budget through the Japanese Parliament and the Prime Minister, Naoto Kan himself was under pressure from claims of illegal political donations.
Now the chances have improved for getting the budget through, as well as an emergency spending package to meet the cost of the reconstruction.
There are no firm estimates, but some reports suggest the damage bill could be as high as $US100 billion.
The level of insurance held against quakes and tsunamis is low in Japan; (around 17%) compared too much higher levels in Christchurch, for example and the US.
The total insured loss could be up to $US15 billion according to early estimates over the weekend, but that is too low with the damage to the nuclear power stations and the widespread destruction along the coast much worse than it looked on Friday.
The Bank of Japan has cut its normal two day meeting to one day and brought it forward to today, and the central bank will issue a statement at the end tonight, Australian time.
The Bank of Japan said on Friday that its financial settlement and money transfer system was working and there had been no disruptions during the quake and tsunami, meaning the potential for losses from uncompleted settlements or cash transfers between various parts of the economy, has been lessened.
The bank has already provided 55 billion yen (or $A6.6 billion) in emergency aid to 13 banks in
