BOSTON — Let's be perfectly clear: the multiple disasters hitting Japan are, above all, a human tragedy.
Thousands of people are confirmed dead, and that toll is rising. Many thousands more are displaced and there are few in this island nation of 126 million people who have not been directly or indirectly touched by the one-two-three punch of earthquake, tsunami and nuclear meltdown.
This is an ongoing story about people and their lives.
So please keep that in mind as you read all the coming analysis (such as this story) of what the past few horrific days in Japan — and what's yet to come — might mean for the global economy and markets.
That said, an event of this magnitude will undoubtedly have an impact — not only for the victims and their families across Japan — but for the world economy. That's because, for all its recent problems, the Japanese economy is still the world's third-largest (behind China and the United States, but ahead of Germany).
Its GDP per capita of $34,200 places Japan ahead of France, the European Union, Israel and about 200 other countries.
Japan remains a powerhouse of innovation, Tokyo is a key global financial markets hub, while Japanese firms have market-leading positions in highly competitive global industries ranging from consumer electronics (Sony, Nintendo, etc.), to automotive (Toyota, Honda, etc.), to computers and semiconductors (Fujitsu, NEC, etc.)
But its seems Mother Nature is cruel, indeed. Or maybe she's got a sick sense of humor when it comes to economics because to target Japan, right now and with such destructive force, is one of the worst things that could have happened to the global economy.
Japan's large economy is already in a fragile state. Following decades of anemic growth, government spending did finally help pull the country out of recession in 2009 and 2010, though it was showing signs of weakness even before last week's disasters. A shock like this won't help.
Already, Japanese automakers are reporting immediate problems.
The tsunami damaged 1,300 Nissans headed for the United States. A Toyota plant in quake ravaged Miyagi prefecture was the company's first new plant in Japan in 18 years. The plant was scheduled in April to begin supplying the Japanese and North American markets with Corollas.
Meanwhile, Honda, Nissan and Toyota are temporarily halting all production in Japan, beginning Monday. The shutdown will reportedly cost Honda 4,000 vehicles per day.
Electronics giants Sony and Toshiba are also halting production at factories in the north.
On a structural level, Japan's fiscal picture isn't very promising, either. That's because Tokyo's government is the proud owner of the world's second largest public debt (after Zimbabwe).
The pile of yen owed to others is currently more than 200 percent of Japan's $5.3 trillion GDP. By that measure Japan's public finances are worse than Greece, Iceland, Italy, Belgium, Ireland, France and other countries currently starring in Europe's debt crisis. It's also twice as bad as Sudan's debt problems, three times more than Egypt's current debt and four times larger than debt woes in the U.S.
A natural disaster of this magnitude — and the new spending required to rebuild a major economic power like Japan — will no doubt add to that considerable debt burden, at least in the short-term.
It's also likely to add more volatilty to the yen's performance in the weeks and months ahead. It will challenge the Bank of Japan to come up with the right policies for these extraordinary circumstances, including an emergency "quake budget" needed to keep Japan's economy from going into freefall.
In addition to business and financial considerations, there's the energy issue. Japan is both a major consumer (third in the world, again behind the United States and China) and importer of oil (second only to the United States.)
With the Middle East in turmoil oil markets will now have to figure out what this disaster means to oil demand in Japan, and by extension, for demand worldwide. Will oil demand (and prices) go down if the Japanese economy slows? Or will it rise if Japan's giant nuclear power industry suffers long-term production delays due to frightening safety worries.
Nuclear power currently produces about a third of all of Japan's energy needs, so the question is not insignificant. But there's no way to know right now how that will play out, and uncertainty is never a good thing for markets.
Which, of course, brings us to the last piece of this grim puzzle: investment sentiment, particularly on equity markets worldwide. The past two weeks have been rough and tumble, with global share prices falling to a six-week low last week.
On Monday in Tokyo, Japan's Nikkei Index slid more than 6 percent. The broader Topix tumbled nearly 7.5 percent.
It's been a toxic mix of news for investors in recent days: unrest across the Middle East, a widening war in Libya, ongoing worries about another global oil shock, economic growth concerns in both the United States and Europe.
Toss in Japan's Armageddon-like earthquake and tsunami, and now the uncertainty over nuclear meltdown, and it could get very ugly, very fast on global markets in coming days and weeks. And that matters because people tend to spend less when they feel poorer. Tumbling markets are, therefore, not good for consumer confidence. And when it comes to economics, confidence is everything.
Of course, even in this dark hour for Japan there are potential bright sides to consider (every economist, after all, has two hands).
So on the other hand, the economic costs of rebuilding could be mitigaged somewhat by the economic activity generated by national rebuilding efforts. Of course, those new spending measures will need to be managed efficiently, or Japan could feasibly become "the next Greece."
Moreover, as Detroit figured out in the 1970s and 80s to its great cost, Japanese companies are incredibly efficient and highly productive organisims. They will be back, as will the resilient Japanese people.
So, yes, pray for Japan. But also save a prayer for the global economy. We're all going to need the help.
This story was updated from its original version to reflect the day's trading in Tokyo.