The BOJ has left its key interest rates and its policy unchanged. Interest rates remain between zero and .1 percent. What? Zero? Ho Hum, these markets are boring me to death.
A little bit more fun was that the upper house last week vetted the appointment of a bank economist, R Kono from BNP Paribas, fearing that he would be unable to do enough to help the Japanese economy. Maybe they should just hire a man/woman of the street, who may have a much better feel for what’s going on in Japan and in the world.
The BOJ is looking desperately to fill two vacancies in its board with members who can come up with a more pro-active monetary policy, whatever they think they mean by that. Last month consumer prices rose, if you can call that a rise, .1 percent. The BOJ forecast for inflation next year is .5, but I think they may want to rethink that number.
The Nikkei recovered a bit from last week’s losses, while this month’s Tankan survey reflects lackluster manufacturer’s confidence. Executives surveyed see an average yen of 78/14 this year, while Toyota’s President said last week that a more “appropriate level” would be around 95-100. More appropriate indeed.
Sony cut over 10,000 jobs worldwide, its annual loss forecast more than doubled. Yuck, that strong yen is creating havoc!
Economic recovery in Japan? Huh?
Unless, of course, Japan starts up at least some of their reactors.
Last night Bloomerg reported that PM Yoshihiko Noda and three cabinet members, the group of four that have the authority to make this decision, met last night about the possibility of turning on two Kansai Electric Power Co. reactors that passed stress tests. Executives from Kansai visited Tokyo to declare that “safety at nuclear plants is their top priority”.
I don’t know about you, but when people talk too much about pushing a red button to restart something, with safety as a top priority, it gives me the creeps. It’s like some twitching trigger finger or something. As they assure the world that safety is a top concern, Kansai’s President is also warning the Noda groups that unless they can turn on their machines, there will be shortages this Summer, and then, well, then, what will happen to the economy?
Sources say that Noda and his guys will make a decision by the end of the week. It they come up with a “yes”, I would say that the market will rally. Duh!
Kansai’s service area is actually a part of western Japan which economy is worth about $1 trillion dollars, home to Osaka, Kyoto, Sharp and Panasonic.
With noises from some Japanese major companies like Komatsu that they will have to move overseas as a result of power shortages, the threat of a recession, and the number of people waiting for Kansai to restart in order to go back to work, it is my feeling that something’s gotta give.
What do you think?
In the US, the Nuclear Regulatory Commission has a term called "Beyond Design Basis", which is engineering speak for "If something THAT bad happens, we're so FUBARed a nuclear meltdown doesn't substantially make things worse at that point."
The 9.0 magnitude earthquake that hit Japan was beyond the design basis for Japan's nuclear plants, for its roads, for its chemical plants, for its refineries, for just about EVERYTHING.
Even then, nine out of twelve nuclear reactors within close proximity of quake safely shut down. The other three, combined, emitted 30% of the radioactive Cesium and Strontium that Chernobyl emitted- much of that directly into the sea rather than onto surrounding land- and despite the tragic deaths of thousands of people in the earthquake an tsunami, did not contribute to any immediate deaths or even immediate medical issues for anyone exposed. Long-term, we can expect a few dozen cancer cases from the meltdown and an exclusion area of 300 square miles; declining to 100 square miles after three decades.
Obviously, it's wise not to restart the reactors that sit near the faults or could see their cooling systems shut down by a tsunami. It may also be a smart move to have a conversation about shutting down Indian Point Reactor #3 which sits on a fault line 40 miles north of Manhattan.
But in the context of the most violent earthquake to hit a heavily populated area in half a millenia, that western lightwater reactor design held up tremendously well. The area around Fukushima will be habitable much sooner and the size/scale of the area affected has more in common with a chemical disaster than Chernobyl.
If the alternative is natural gas fracking in the Great Lakes watershed, nuclear is a much cleaner, safer choice.
Thanks! Very interesting comments. And yes, I agree about Indian Point #3
Kyle Bass
As far as I can find it seems Japan is using thermal, natural gas etc currently as a stopgap for their energy needs. Frankly with the price of natural gas and a relatively strong yen, which you already noted is hurting them, they could use that as a decent stopgap for the moment. I tend to agree with Illini however about nuclear power. I've long thought that nuclear is the way to go moving forward. Obviously people will argue about the waste that they produce could cause problems eventually but breeder reactors can take away many of those issues. A fast breeder reactor, although not totally eliminating the water, would be able to reduce the longevity of some of the waste and allow others of it to be recycled. I'm sure someone knows far more on that topic than I do but from what I know that would at least help mitigate the issues raised by waste. The problem in Japan is that much of the public has turned against Nuclear energy turning it into a real hot button issue. There are also long standing demographic trends that don't favor Japan going forward. I think they will figure out the energy supply situation short term but longer term it could certainly be an issue. I'd certainly favor turning at least a few of those reactors back on for now though.
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