The Gulf war may be wreaking havoc on many a nation's budget but this is nothing compared with the impact of an earthquake on Tokyo. In a book to be published this month journalist Peter Hadfield has traced the shake-up that would follow. It is not just idle speculation: a number of respected scientists predict that before the end of the decade Tokyo will suffer an earthquake at least 30 times more powerful than the 1989 Loma Prieta tremor which hit San Francisco. But though Japan would bear the brunt of the physical devastation, its position as a world player means that the economic damage to other countries would be no less vital.
In "Sixty Seconds That Will Change the World" Hadfield has lined up the evidence of Japan's financial clout and the aftershock that might rend the international community. Tokyo is now the largest stock exchange in the world, over 500 times greater than London. Moreover, Japan is the biggest player in the international banking business. Its world share of outstanding loans was 20.6% in 1989, as compared with Britain's 20.5%. Direct investments overseas amounted to an accumulated total of $1,031.8 billion by the end of 1988. Some $17 billion worth of this money found its way to Britain. As for the ubiquitous Nikkon-sporting tourist, he contributed $22.5 billion to the world economy.
Where does the cash come from? As of September 1988, personal savings in Japan amounted to a cumulative total of over Y 674 trillion - "enough to pay off the debts of all developing nations nearly five times over". Add to this some Y 817 trillion in corporate savings, vested primarily in the insurance companies, banks and the post office.
But what happens if the Japanese cash mountain is suddenly needed to rebuild Tokyo? The Japanese would naturally want to dip into their assets, argues Hadfield. They would go to the bank. This would in turn precipitate a world crisis and a global recession would ensue. The moral: if Japan trembles, we should all be quaking in our boots.