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Investors flee to safety after disaster in Japan

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JEREMY HOBSON: Now let’s get to the economic effects of the disaster in Japan. The country’s central bank today pumped about $200 billion dollars into the economy there.

Julia Coronado is chief economist with the investment bank BNP Paribas, and she’s with us live from New York. Good morning.

JULIA CORONADO: Good morning.

HOBSON: So the Japanese central bank is obviously concerned Julia. How much of an economic impact do you expect this quake and its aftermath will have around the world?

CORONADO: Well, Japan is the third largest economy in the world, and so a disruption of this magnitude is likely to have ripple effects. I think they’re going to be largest for the Asian countries that surround Japan for whom Japan is a major trading partner. For the U.S., probably a moderate disruptive impact on some of the areas of goods that we trade with Japan is likely in the next few months.

HOBSON: And Julia I read this morning that there is concern that Japan — which is one of the biggest lenders to the United States — may dump some U.S. bonds to pay for disaster costs. What would that do?

CORONADO: Well, it is likely that both the government of Japan and some of the Japanese insurance companies are going to need to repatriate some of the assets they hold abroad to pay for reconstruction. On the other hand, when we get events like this that provide reminders that the world is a risky place, often U.S. Treasuries benefit from their status as a safe-haven asset and in fact this morning we’re seeing that with stocks down and treasuries up.

HOBSON: People like to go to the safety of the dollar when times look a little iffy. Julia Coronado, chief economist with the investment bank BNP Paribas, thanks so much.

CORONADO: My pleasure.

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