I don't want to pull a Kudlow and express gratitude that the human toll in the Japan earthquake is greater than the economic impact, but in his cold-blooded way he made a valid point.
Investors in Japanese stocks, understandably nervous in their first reaction to the calamity on Friday, took the market down more than 6 percent on Monday, and markets in Europe and the United States suffered more muted losses. The selling, especially in the West, may have other underlying causes, but the reaction in Japan may prove to have been excessive, if not outright incorrect.
The Japanese economy has been in or near a recession for most of the last 20 years despite repeated efforts, including maintaining interest rates very close to zero, to free consumers from their deflationary psychology and persuade them to spend more and save less. Although no one, not even Larry Kudlow, would think that a tragedy such as this is a good way to go about it, it may produce that economically beneficial result nonetheless.
The need to build homes and other structures, as well as repair and replace power plants and transportation and communication infrastructure, is bound to stimulate the economy, not just in Japan but across Asia, for months and probably years to come. It won't bring back the many who have died, alleviate the suffering of those who have been injured or lift the spirits of those who lost loved ones, but it is very likely to create the sense of urgency among businesses, consumers and policymakers that prospective investors in Japan have been looking for.