Citi's Steven Wieting has built one of the most clear cut cases we've seen thus far that the markets are overreacting to the situation in Japan.
From Steven Wieting:
1) Three Mile Island, 2) Chernobyl, 3) Kobe earthquake, 4) Indian Ocean Tsunami, 5) Hurricane Katrina. These are five tragic events with one thing in common: They didn’t precede U.S. or global recessions.
For a little more detail, Wieting adds that it would take a significant spillover from abroad to derail the current U.S. rebound.
We should remember, however, that the earthquake and nuclear disaster are not events preceded by a new lending boom, or bank capital crisis (see Figure 7). Supported by expansionary macro policies this year, and a long period of adjustment, private activity in the U.S. has been and will remain on a recovery track, barring the most acute spillovers from the global economy, in our view.
For a visual of just how calm markets are right now, check out 3-month LIBOR, etc. al.
Don't miss: Shocking photos from the Japanese disaster >
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