The bad case to watch for is a scenario that includes
- prolonged electrical outages and brownouts -- a bane of electronics production
- a disrupted transportation system (both internal to Japan and via ships for export)
- an inability to repair and restore damaged factories and production infrastructure
- a months-long period of social unrest caused by an inability to put the earthquake and tsunami behind sufferers due to lack of food, water, housing, transportation, and knowledge of the fate of loved ones
- a faltering government response including leadership, monetary policy, police, and moral suasion.
As of this morning, I'm very concerned that the bad case is quite possible -- no one still has the whole scope of the damage, the time it will take to get back to a semblance of a modern economy, and the resulting impact on the global electronics supply chain.
Like the threat of the SARS virus in 2003 closing China's factories to the world, the earthquake may have wiped out or seriously impacted a double-digit cohort of the electronics components industry. If Japan's output is inhibited more than a few more days, the impact on Q2-2011 and subsequent quarterly revenues of major electronics products companies will head south quickly.
DRAM prices on the spot market jumped 5% yesterday as companies moved to shore up inventories.
I think the needed process is called "watchful waiting", an apt expression.