Tokyo's potential effects to the world's financial Markets

Japan's role in the global econmics is substantial. Japan has the world's second largest economy. This was achieved in the second half of the 20th century and was considered an economical phenomenon. Japan is a expert of global capital and a source of credit, as well as an extensive aid donor.

Japan is considered "seismically active", it endures more earthquakes than anywhere else in the world. It sits on several converging tectonic plates (Figure A). The urban city of Tokyo has a dense population of 12 million people in a 2,000 square kilometers. A government earthquake panel has suggested that Tokyo has a 70% probability of a magniture 7 in the next 30 years.

Figure A ( Tectonic Plates: 1. The Philippine Sea Plate 2. The Pacific Plate
3. The North American Plate 4. The Eurasian Plate)

Tokyo, Japan is one of the most busiest cities and largest cities in the world. The city is known to have on of the most accommodating subways, delicious sea foods, and one of the most technological advanced cities in the world. Also, Tokyo is also known for having many earthquakes throughout its past. The latest and most devastating earthquake that hit Japan especially within Tokyo was the 1923 Kanto earthquake on September 1, 1923. This earthquake was also known as "The Great Kanto Earthquake" with a magnitude of 7.9. Some sources even say that it was as much as an 8.3. The source of the earthquake came from the Philippine Sea Plate. Even though Japan was not one of the most economical country in the world, it was very devastating. Figure 1 shows the devastation Tokyo experienced from the earthquake. Today, Tokyo, Japan is one of the most economical country in the world. Predictions have been mention that a powerful earthquake may strike within Japan, and this time not only it may harm Japan, but also potentially harm the world since Tokyo has a large influence to the world's financial markets.

Figure 1 Shows the devastation to Tokyo created by the 1923 earthquake.

The earthquake was generated by a subduction zone located at Philippine Sea Plate that subducts near Honshu, which is the largest island of Japan. As the dense oceanic crust sinks beneath the brittle lithosphere. The stress, which is a force that's imposed on a rock, from the convection can deform the plates because rocks are brittle solids that are elastic. Over time, as the dense crust sinks, it would store massive amount of energy during its deformation position. Eventually, it would snap back to it's original position causing it to rupture and release lots of energy, called elastic rebound of theory.

As the Philippine plate subducts under Honshu at a rate of 7 millimeters pear year. The time interval to accumulate 7 meters of slip of this rate of motion agrees with the time interval of 220 years from 1703 that struck a 8.1 magnitude earthquake to 1923's Kanto Earthquake. However, documented records of Sagami Bay for past 7,500 years of earthquake activity estimated an average repeat times of 400 years similar to the 1923 earthquake. So, the average interval is 400 years of 7 meters of slip which release 50 percent of what it as accumulated. For example, for 400 years, 14 meters has as been subducted but causes a 7 meter of slip.

The Philippine plate not only converge but it's like a giant reverse fault. A reverse fault has a foot wall and a hanging wall.
From the picture bellow, the foot wall is the arrow on the right side pointing down, and the hanging wall is the arrow on the left pointing up. Reverse faults are typical converging plate boundaries. Converging plate boundaries causes more devastating earthquakes such as the Kanto Earthquake compared to diverging plates like a normal fault.

Reverse Fault

After the 1923 Kanto Earthquake, more than 100,000 people lost their lives. A major concern that Tokyo would have if another earthquake took place this size again, is how many lives would be lost. Since 1923 the population of Japan has grown enormously and the amount of people that would loose their lifes would be much greater, causing more economic problems for Japan. Japan's economy was hit hard by the previous earthquakes and would definitely be hit just as hard or harder. Some of the consiquences that this earthquake could pose would be that first of all it would be probably a M=7.2 earthquake and would probably cost around $1.0 trillion. This would definitely be and expensive expense for Japan ssince that is about 130% of Japan's annual budget.


A 7.2 Earthquake is almost catastrophic especially in a highly populated area. Not only is it going to cause a lot of economic damage to building structures and streets but it will also be the blame of many deaths and injuries. Although buildings and safety standards have improved over time throughout Japan's past especially Tokyo, scientist have predicted that another powerful earthquake same as the Kanto earthquake may strike again and kill thousands of people and may affect the world's financial market. The problem with an earthquake that size happening again is that only about 5% of the damage costs would be covered by insurence which would mean that these costs would have to be covered by other means. Tokyo, Japan has great influence toward the world's economy. If another powerful earthquake strikes again, it may put Japan trillions of dollars into debt causing it's economy to go down and may cause other countries economy to suffer. Tokyo distributes many products around the world such as electrical devices and automobiles. Many investors may also invest stock to Japan. Under any circumstances if Tokyo were to be affected by a large earthquake again, companies may loose billions of dollars and the stock market crashing. As this happen, the world that has companies that is affiliated by Japanese companies will be affected causing major companies to be shut downed and employees being lay off around the world like a domino effect.

The Kanto Quake Today

According to Dr. Frank Press, a world authority on seismology and disaster planning, there is about 40 to 50 percent chances tthat California will be hit by a major earthquake in near future. He also declares that Japan is ten times more dangerous than California and is one of the most dangerous places to live on Earth. In Japan, there are over eighty active volcanoes and minor earthquakes can be felt very frequently. There are about 10,000 earth tremors a year and on average an earthquake with considerable magnitue can be felt one out of three days. What scares many of the inhabitants of the islands of Japan more than the quakes themselves is the tidal wave, also known as Tsunami, that sometimes accompanies earthquakes. If an event as large as the Great Kanto Earthquake was to happen today in Tokyo, scientists expect about 156,000 people to die, leaving 200,000 more injured. The amount of money required to rebuild the city varies from 500 billion to trillions of dollars depending on whom one asks. Some argue that such event would cause the whole world economy to fall into recession for more than five years.


While Tokyo, being one of the wealthiest cities around the world, seems like a problem when thinking about how a mas
Figure 3. Base Isolation System
Figure 3. Base Isolation System
sive earthquake could damage the city, it seems like good portion of the city's wealth is being used for preventing, or at least, trying to minimize the damage of a future earthquake. The people of Japan are aware of the potential danger of an earthquake and every effot is made to make sure that every citizen equipped with essential information about earthquakes. Children who are old enough to be enrolled in kindergarten are given earthquake drills and know the location of their designated earthquake sanctuary. Tokyo Fire Department runs an educational center where civilians are encouraged to test their surviving skills through a virtual reality program. Public efforts to mitigate the next big earthquake's damage does not stop there. Tokyo City government had spent $800 million dollars in building 18 interconnected blocks of concrete on which apartments for low income families are built. These neighborhoods are built upon 40meters thick concrete blocks which will reduce the initial waves of an earthquake. For those who have enough money to build earthquake proof buildings, there are the skyscrapers built employing what is referred to as "base isolation" technique. Such buildings, located in Tokyo's exurbs such as Shinjuku, have rubber made cushions on the bottom and computerized weight balancing system on top. There will surely be another big earthquake to hit the city of Tokyo, but the people of Tokyo seem to be spending good portion of their efforts and yens to minimize the damage.

Another form of mitigation being used in Japan is a warning system that has different levels of danger. The warning system contains sensors that send a message to an alarm which makes a ringing sound as well as flashes a light, the color of the light depends on the severity of the earthquake.

Since the entire area of Japan is seceptable to earthquakes they had to implement the system throughtout the whole country. Japan put hundreds of sensors all around their continent, covering almost all corners remote and populated areas. The sensors pick up the P-wave, and send out a message all over Japan, and a warning system is alarmed. The warning system is designed by color. each color representing the level of the earthquake. This system gives the people of Japan a few seconds of warning before an earthquake reaches their area. Obviously the warning will not be as meaningful for those who are very close to the epicenter, however it will give people further away the opportunity to seek shelter.

Since earthquakes are such a threat to Japan it is very important for the citizens of Japan to know what to do when they are faced with an earthquake. They give lessons on what to do when an earthquake occurs as early as kindergarden.

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