Tag Archives: Japan

Lenin would be so proud, by Simon Black

By socializing risk, in other words by making others pay for someone else’s mistakes, we make sure those risks will be taken again and again. From Simon Black at sovereignman.com:

Several years ago back in 2004-2006, if you had a pulse, you could borrow money from a bank to buy a house.

In fact, bank lending standards were so loose back then that there were some infamous cases of people who DIDN’T have a pulse who were still able to borrow money.

That’s right. Some banks were so irresponsible that they actually loaned money to dead people.

Of course, it turned out that lending money to dead people… or people with terrible credit who had a history of default, was a bad idea.

And the entire financial system almost blew up as a result of this reckless stupidity.

But then something even crazier happened: the Federal Reserve came in and bailed out all the banks with trillions of dollars of free money.

That was utterly nuts. Instead of being wiped out by their idiotic mistakes, the banks learned that they would always be bailed out no matter how stupid or greedy they acted.

The key lesson was that there would be zero consequences for bad behavior.

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The Asian Arms Race and the ‘Weaponization of Finance’, by Ritesh Jain

The days of Asian countries living under the US defense umbrella but enjoying the fruits of trade with China may be coming to a close. This has substantial investment implications. From Ritesh Jain at worldoutofwhack.com:

There are those in financial markets who believe that Mike Pence’ s bellicose speech at The Hudson Institute a few weeks ago was merely sabre rattling ahead of the US mid-term elections. Sadly your analyst could not disagree more. That speech, reported in the last Solid Ground newsletter, has now been followed by the United States’ threat to withdraw from the Intermediate-Range Nuclear Forces Treaty (INF) with Russia. For those who still believe this has nothing to do with China, the US President made it clear on October 22nd that the withdrawal from the INF is as much about countering a threat from China as it is about countering a threat from Russia:

“Until people come to their senses, we will build it up…” “It’s a threat to whoever you want and it includes China, and it includes Russia, and it includes anybody else that wants to play that game. You can’t do that. You can’t play that game on me.”

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Anti-Vaccine Japan Has World’s Lowest Child Death Rate & Highest Life Expectancy, by Amanda Mary Jewell

Vaccines administered jointly, like the MMR (Mumps-Measles-Rubella) vaccination, and vaccines containing aluminum adjuvants and mercury have finally been acknowledged to pose significant health risks to the children who receive them. From Amanda Mary Jewell at healingoracle.ch:

Fact: Japan has the lowest infant mortality rate following ban on mandatory vaccinations, they urge other countries to follow this firm stance

The citizens of Japan are statistically proven to be the healthiest and longest-living people in the world. The country also has the lowest infant mortality rate on the planet. It may come as no surprise to many that the Japanese Government banned a number of vaccines that are currently mandatory in the United States and has strict regulations in place for other Big Pharma drugs and vaccines in general. Japan’s anti-vax policies have long been criticised by vaccine pushers in the US who claim that vaccinating the public “promotes health.”

However, Japanese people live longer, healthier lives than Americans, with babies born in the US twice as likely to die in infancy than those born in Japan. It’s clear to see that Western nations have a lot to learn from the Japanese when it comes to their approach to vaccinations and issues facing public health. The Japanese are vaccine sceptics, to put it simply, and due to adverse reactions suffered by Japanese children, have banned many vaccines.

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Why Japan may spark the next crisis, by Simon Black

Japan has the worst debt problem among developing nations…by far. From Simon Black at sovereignman.com:

In a world full of reckless and extreme monetary policy, Japan no doubt takes the cake.

The country has total debt of more than ONE QUADRILLION YEN (around $10 trillion) pushing its debt-to-GDP ratio to a whopping 224% – that puts it ahead of financial basket case Greece, whose debt-to-GDP is around 180%.

Japan spent 24.1% of its total revenue (appx. 23.5 trillion yen) last year servicing its debt – both paying down principal and interest. And that percentage has no doubt moved even higher this year.

And, keep in mind, this isn’t some banana republic. It’s the world’s third-largest economy.

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The country’s economy is so screwed up that the Bank of Japan (BOJ), the central bank, has been conjuring trillions of yen out of thin air to buy government debt.

The BOJ printed yen to buy basically all of the $9.5 trillion of government debt outstanding. When it ran out of bonds to buy, BOJ started buying stocks. Now it’s a top 10 shareholder in 40% of Japanese listed companies.

Most recently, the central bank has started “yield-curve control,” which basically means they’ll do whatever it takes to make sure the government doesn’t have to pay more than 0.1% interest.

But something interesting has happened over the past few weeks…

Despite the BOJ’s promise to hold rates and bond yields down, the other owners of Japanese government bonds (JGBs) have been getting nervous. And they’ve been selling.

The selling pressure pushed bond prices down (and, inversely, yields and rates up)… In just under two weeks, yields on 10-year JGBs soared from 0.03% to 0.11% – an 18-month high.

If you own an asset and you don’t think it will perform well, you sell it. And clearly that’s how people feel about Japanese debt. The bonds pay close to zero, after all.

Japan has been fighting deflation for a long time. And with deflation, when the purchasing power of your money increases every year, you may consider holding a bond that pays close to zero… because you’re still maintaining your purchasing power.

To continue reading: Why Japan may spark the next crisis

Contaminated Fukushima Water Storage Tanks “Close To Capacity”, TEPCO Admits, by Tyler Durden

Japan is nowhere close to “containing” the Fukushima nuclear power plant disaster. From Tyler Durden at zerohedge.com:

The Tokyo Electric Power Company is running out of container space to store water contaminated by tritium outside the Fukushima No. 1 nuclear power plant, and it’s also running out of room for building more tanks, according to Yomiuri Shimbum, a Japanese newspaper, which is creating an intractable problem for the utility, which has been tasked with supervising the cleanup of Fukushima.

The Japanese government has been desperately trying to accelerate the cleanup ahead of the upcoming 2020 Olympic Games in Tokyo – and it’s a miracle it hasn’t run into this issue sooner. TEPCO is still struggling with how to dispose of the tritium-tainted water. Options discussed have included dumping it into the ocean, but that proposal has angered local fishing communities.

At some point, TEPCO and the government will need to make a difficult decision. Until then, ground water will continue to seep into the ruined reactor, where it becomes contaminated. Afterward, TEPCO can treat the contaminated water to purify it, but they can’t remove the tritium, which is why the supply of water contaminated with tritium continues to grow.

As one government official pointed out, Japan can’t simply store the radioactive water forever. As of now, the company should be able to store water until 2020.

Efforts have been made to increase storage capacity by constructing bigger tanks when the time comes for replacing the current ones. But a senior official of the Economy, Trade and Industry Ministry said, “Operation of tanks is close to its capacity.”

TEPCO plans to secure 1.37 million tons of storage capacity by the end of 2020, but it has not yet decided on a plan for after 2021. Akira Ono, chief decommissioning officer of TEPCO, said, “It is impossible to continue to store [treated water] forever.”

To continue reading: Contaminated Fukushima Water Storage Tanks “Close To Capacity”, TEPCO Admits

The Fukushima nuclear meltdown continues unabated, by Helen Caldicott

It looks like Fukushima’s radiation will be leaking into the surrounding Japanese countryside and the Pacific ocean until the end of time. From Helen Caldicott at independentaustralia.net:

Satellite image shows damage at Fukushima Nuclear Power Plant (via ecowatch.com).

Dr Helen Caldicott, explains recent robot photos taken of Fukushima’s Daiichi nuclear reactors: radiation levels have not peaked, but have continued to spill toxic waste into the Pacific Ocean — but it’s only now the damage has been photographed.

RECENT reporting of a huge radiation measurement at Unit 2 in the Fukushima Daichi reactor complex does not signify that there is a peak in radiation in the reactor building.

All that it indicates is that, for the first time, the Japanese have been able to measure the intense radiation given off by the molten fuel, as each previous attempt has led to failure because the radiation is so intense the robotic parts were functionally destroyed.

The radiation measurement was 530 sieverts, or 53,000 rems (Roentgen Equivalent for Man). The dose at which half an exposed population would die is 250 to 500 rems, so this is a massive measurement. It is quite likely had the robot been able to penetrate deeper into the inner cavern containing the molten corium, the measurement would have been much greater.

These facts illustrate why it will be almost impossible to “decommission” units 1, 2 and 3 as no human could ever be exposed to such extreme radiation. This fact means that Fukushima Daichi will remain a diabolical blot upon Japan and the world for the rest of time, sitting as it does on active earthquake zones.

Robot image of Fukushima Daiichi Unit 2 reactor (Source: tepco.co.jp)

What the photos taken by the robot did reveal was that some of the structural supports of Unit 2 have been damaged. It is also true that all four buildings were structurally damaged by the original earthquake some five years ago and by the subsequent hydrogen explosions so, should there be an earthquake greater than seven on the Richter scale, it is very possible that one or more of these structures could collapse, leading to a massive release of radiation as the building fell on the molten core beneath. But units 1, 2 and 3 also contain cooling pools with very radioactive fuel rods — numbering 392 in Unit 1, 615 in Unit 2, and 566 in Unit 3; if an earthquake were to breach a pool, the gamma rays would be so intense that the site would have to be permanently evacuated. The fuel from Unit 4 and its cooling pool has been removed.

But there is more to fear.

The reactor complex was built adjacent to a mountain range and millions of gallons of water emanate from the mountains daily beneath the reactor complex, causing some of the earth below the reactor buildings to partially liquefy. As the water flows beneath the damaged reactors, it immerses the three molten cores and becomes extremely radioactive as it continues its journey into the adjacent Pacific Ocean.

To continue reading: The Fukushima nuclear meltdown continues unabated

Tax Reform & The “Japanification” Of America, by Lance Roberts

When an economy has too much debt, tax cuts don’t do much for it. From Lance Roberts at realinvestmentadvice.com:

On Friday, Kevin Brady of the House Ways and Means Committee was on my radio program discussing the “Tax Cuts & Jobs Act” bill which was released later in the day.

Here are the details of the release he referenced in the interview.

Of course, the real question is how are you going to “pay for it?”

Even as Kevin Brady noted in our interview, when I discussed the “fiscal” side of the tax reform bill, without achieving accelerated rates of economic growth – “the debt will balloon.”

The reality, of course, is that is exactly what will happen because there is absolutely NO historical evidence that cutting taxes, without offsetting cuts to spending, leads to stronger economic growth.

Those, of course, are the long-term concerns that will lead to lower rates of returns for equity-based investors and will continue to suppress interest rates for the next decade as the “Japanification” of the U.S. continues.

Let’s Be Like Japan

Bad debt is the root of the crisis. Fiscal stimulus may help economies for a couple of years but once the ‘painkilling’ effect wears off, U.S. and European economies will plunge back into crisis. The crisis won’t be over until the nonperforming assets are off the balance sheets of US and European banks.” – Keiichiro Kobayashi, 2010

While Kobayashi will ultimately be right, what he never envisioned was the extent to which Central Banks globally would be willing to go. As my partner Michael Lebowitz pointed out last week:

“Global central banks’ post-financial crisis monetary policies have collectively been more aggressive than anything witnessed in modern financial history. Over the last ten years, the six largest central banks have printed unprecedented amounts of money to purchase approximately $14 trillion of financial assets as shown below. Before the financial crisis of 2008, the only central bank printing money of any consequence was the Peoples Bank of China (PBoC).”

To continue reading: Tax Reform & The “Japanification” Of America