Cardboard Spaceship

Former Japanese Prime Minister - Tepco Looked at Abandoning the Site, Tokyo would have been Uninhabitable....

Sometimes I wonder if I have right perspective, as I am very disturbed about the situation in Fukushima.   Is this an over-reaction?  Well, turns out that neither I nor anybody else really knew the half of the story.  This is an English version of a story in one of the main Japanese Papers.  Read the following from the recently resigned prime minister of Japan.

Former Japanese Prime Minister Kan Naoto says he felt a sense of crisis that the nuclear plant mishap in Fukushima could obliterate Tokyo and its vicinity, said the Japanese daily Tokyo Shimbun Tuesday.

Kan, who stepped down as prime minister Friday, said, “The week shortly after the accident is the period when I felt the highest sense of crisis,” adding, “The thought of an uninhabited Tokyo made me shudder.”

“At around 3 a.m. March 15, three days after the accident, I got a report from then Economy, Trade and Industry Minister Banri Kaieda that Tokyo Power Corp. was about to withdraw from the nuclear facility. So instantly I summoned the company`s president Masataka Shimizu and asked him to set up a joint countermeasures headquarters of the government and the company at the company’s headquarters,” Kan said.

"Had Tokyo Power Corp. withdrawn from the nuclear power plant, nobody might live in Tokyo now.”

Kan said, “If the power company had pulled out of the facility and left nuclear fuel unattended, the cooling water would have dried out within dozens of hours and the meltdown of reactors would have occurred,” adding, “If this had been the case, radioactive materials several or even dozens of times as much as those leaked in Chernobyl would had leaked. The country was brought to the brink of collapse.”

Wow.  I think that passes without further commentary really.  Except to note, of course, that the reactors melted down anyway, making me wonder what the real situation is right now.

 

 

 

My Three Summer Panic Items, Number Three: Arab Sprung

Well, we hoped that there would be a sweep of democratic thought through Egypt, Libya, Syria, etc. 

No, turns out it isn't the dictators first rodeo, and they aren't giving up lightly.  The Libyans assassinated their rebel leader, and now that has collapsed into anarchy, with the West bombing stuff at random, while the Syrians are prepared to shell their own towns, and we just watch. 

Nasty business. 

Norway

I mentioned in my last update that Mrs Spaceship's Norwegian cousins the Ulands had come to visit on the way back to Oslo from a trip around the Mont Blanc. 

Mrs Uland is quite senior in the Norwegian government, in the administration and civil service.  She had been lunching with her son, very near the bomb site, and was walking back to the parliament, when the bomb detonated, and she said that she and her son could feel the physical shock of the explosion. 

Fortunately unhurt, she then commented that real impact is that she works with the labour party extensively, and so she and many, many others will know parents, friends and colleagues of those who were massacred, and that it will be a generational wound,  as the community is a small and tight knit one.

Of the "man" himself, the less said the better.

The Three Things I am Watching...

Well, have been meaning to blog a bit during my enforced idleness, but haven't really been doing so due to blogger's block again - mainly, the news that worries me isn't getting any better, and it seems a bit pointless just to stand in the headlights of the train shouting "ohmigod, it's a train!" the whole time.

My top three "ohmigods!" at the moment are: Fukushima, the Euro, and the Arab Sprung.

Fukushima has dropped off the main media cycle, which is surprising given the fact that three of the reactors are now known to have melted down, and the spent fuel pool in building four seems to have more or less evaporated.  Current exclusion zone is at 20km and holding, but on the ground reports seem to suggest it should be two or three times that, eating a big slice of land on a very crowded island.  The pattern seems to be drip drip drip with the bad news, so I'll guess that we have to keep watching that one.

The Euro.  Nouriel Roubini, and now just about everyone else, thinks that the game is up for Greece, and hence default is going to happen.  What we don't know is what the really means for the situation.  Do we; fuck Greece, fuck Germany and France via their banks, or fuck the whole Euro project?  Answers on a postcard please.

Arab Sprung.  Egypt has stalled, Gadaffi is looking remarkably tenacious and the Syrians are not exactly taking the idea of internal dissent lying down.  The best outcome is establishing democratic and fair government in the region, the likely outcome is economic hardship followed by more unrest, and the worst outcome is that the present actors keep their places, but crack down even harder on other ideas.  Sheesh.

 

Oddity in Japanese Electric Situation

As no doubt with all the world, you have been following the unfolding horror in Japan, I country I was sitting in when I started Cardboard Spaceship.  The debacle of the Fukushima nuclear plant collapse is harrowing to watch, as it seems only to underline the fragility of civilized life in general.

I was surprised that Tokyo was having rolling blackouts as a consequence, because shouldn't the rest of Japan have more or less spare capacity?

Turns out that due to some historic decisions to purchase from different comanies at the end of the 19th centrury, Japan actually has TWO electric grids which are incompatible.  I know how expensive it wold be to replace the one or the other to standardise, so that's a real legacy issue right there. 

Wikileaks Seems to Confirm Saudi Oil Reserves Overstated...

Interesting angle to the current issues with both the Middle East kicking off, and the food price inflation discussion taking place at the moment, and oil prices back at near record highs.

Saudi Arabia's oil reserves may be overstated by up to 40%. 

So, as people starve, and then revolt in the Middle East, we might be relying on a phantom source of emergency oil. 

Well, many people have seen this coming, led by the late Matt Simmons, but it's going to be hard when it does.

 

Egypt, off the 'net...

Whatever the rights and wrongs of the situation in Eygpt, and I honestly don't know enough to make any kind of informed comment, what is clear is that shutting down the social media and other sites is a goal of the operation to supress or at least severely hamper the protests. 

Egypt has basically shut down the 'net.  Damn. That's gotta be bad news.  80 million people with no access to the modern world, how's that gonna work?

 

Euro - End Game Coming Up

Been busy here in the Spaceship, doing the day job, and also had a bit of socialising, and then finally the last couple of days sick with a cold that was brought on with the rather sudden onset of winter here in Switzerland.  We had 18 degrees Celsius within the last three weeks, and now we have snow and -3 degrees.  Brrr. 

There's only really been one thing that I have been following in the news, and that's the situation with the Euro.  (Okay, Inflatable Elvis, AKA the head of North Korea, Kim Jung-Il, may start world war three, but that's a local affair.)  So, in the familiar litany, Ireland was "sound, very sound, no really, we're sound, we have money till next year, oh no, we're not", and now it's IMF and EU to the rescue with a whopping great package of further debt to shore up the whole mess. 

Lot of finger pointing at the politicians, who like all politicians are the best that money can buy, but remember that Ireland's national debt was 62% of GDP, and they ran a budget surplus the whole time since they joined the Euro, which is actually a rather good track record.  What they could not do was set interest rates in a local currency to choke off a stupendously inflated property bubble that the banks fed aggressively. 

Now, Greece has gone, Ireland has gone, and Mr Market is going to take the rest out one by one until the current options are no longer viable.  The credit default spreads in Spain and Portugal are at record spreads, the market is more nervous not less.   

The Euro has about a month to save itself, I would say.  Bit dramatic?  Well, here are the options I see:

Peripheral countries get loaded up with debt to make the bond-holders of other countries that lent them money whole.  For example, Ireland will be loaded with 85 billion EUR of debt, or 19,000 EUR, per living person in the country.  Fine Fail has agreed to it, but parliament hasn't, and the Irish public, unsurprisingly, are not sure why they are being turned into debt serfs to make German and French bondholders whole.  So, will this process hold the road?  Not clear to me. If it does, these countries are going to have some of the most deflationary pressures ever in economic history, and their standard of living will collapse. 

Countries default within the Euro.  Greece, Ireland and the others tell the banks to get knotted, due to popular pressure, and the defaults are foisted onto the bond owners - taking down the core countries, and turning the Euro into the New Lira.  Interest rates on all debt in Euros goes sky high, Euro collapses as a functional currency.  Then it's Argentina, or the Weimar Republic.

Countries default outside the Euro.  The PIIGS either leave or get shoved out, with the one splitting in the Neuro, the good Northern Euro, and the Sudo, the Southern Euro, or back to local currencies.  In some sense this has already perculated into public consciousness, as some Germans refuse to hold southern origin notes.  (You can tell by the serial number apparently.)  The only issue with this, is that leave the Euro, you have replace the currency.  I worked with SAP when we were doing just this in the run-up to European integration, and it was considered to be a bigger problem than Y2K.  This blog post gives a good general discussion of the issues, but the main one is what do you say you are moving to, and how can you revalue to this new currency, when the whole objective is to default with it?  It would be so worthless on the markets in the transition phase that would would likely be straight into hyperinflationary currency collapse, as Argentina found when it replaced dollar accounts with local currency, it just lead to a huge run on the banks.

Germany gets bored of paying for other people' mistakes, and jettisons the Euro.  Actually, this would be about the least bad scenario, because German NeuDeutschemark would be sought after, so would be strong in the transition phase, and the Euro would be the Sudo, and collapse to the point where the South might be competitive again.  There might even be the ability to bring a couple of the healthier countries with it, like France and Holland.  Still, it would be greatest political reversal in recent European history, and not without a lot of dangers.  Interest rates would soar on the Sudo, and that might bring either deflation, or the new Southern Central Bank prints enough to get inflation stoked. 

The European Union realises that Monetary Union without Fiscal Union cannot work, and under some kind of emergency diktat creates a de facto European Fiscal Union, not letting a good emergency go to waste as the old phrase has it, and the Eurocrat project is complete.  Now, that sounds really tin foil hat, I know, but it has effectively happened to Ireland and Greece, so why not impose it globally, so that the Euro gets one economic control mechanism.  It would be the most breath-taking political coup in history, but actually compared with some of the other outcomes, at least it might leave something standing. 

One thing seems clear to me, something is going to change, and soon.  One quote to mull over:

"I used to think that if there was reincarnation, I wanted to come back as the president or the pope or as a .400 baseball hitter. But now I would like to come back as the bond market. You can intimidate everybody."

— James Carville, political advisor to President Clinton

You know what I'm going to say next - enjoy the show, you've paid a lot for the ticket.

Cargo Bang Bang..

As a (very) frequent flier, I was not in the slightest surprised to read that whoever had been planning to blow up aeroplanes decided that as shoes and underpants had proven to be unsuccessful as a bomb carrying medium, why not just post it instead?  Makes me so glad I spent so long going through all those endless unpleasant hours of Security Kabuki theatre, when it turns out that the Bad Men just need to pop to the local post office.

It's rather obvious that it is harder to screen cargo than passengers, as parcels would have to be opened, inspected, and then closed again.  X-rays aren't actually much use, if you don't know what you are looking at, and whether the high value electronic gadget that is being shipped should have that particular combination of wires, components, etc.   Try that with any sensible amount of airfreight, and you'll bring the whole system to a complete stop.  (Rather the terrorists aim in the first place.)

What to do?

One approach is to accept that some planes are going to get caboomed, and keep on as usual.  Not likely to be acceptable, and I sure wouldn't like it, as I am often on one.

Another is to separate all freight and passenger traffic, but the disruption would be enormous, and it is unlikely to prevent cargo planes being blown up.  So, fewer passengers die, but having a jumbo jet spiralling in bits into the middle of a major urban centre isn't likely to be much more acceptable. 

The profiling of the sender didn't help much as it turns out the putative sender was a presumably blameless computer engineering student who was a victim of identity theft.  (Which they seem to have concluded rather quickly, thank goodness for the poor woman concerned, as people have ended up in extra-judicial custody for much less.)

Other than that, there really much that can be done other than intelligence gathering, and if that worked we wouldn't be reading these headlines.

Looks like air travel just got that much more interesting.  Wonder what ineffectual crap we'll be stuck with next?

The Senator from Enron

I have a great respect for the notion of the American First Amendment allowing Free Speech, it's one of pillars of what has been one of the 20th century's great nations. 

What I fail to see is why a corporation is considered to have the form of a legal person, and therefore has inalienable rights to bribe and skew the politic process, bending it to a corporate desire.  That's effectively the green light that the US Supreme Court gave to the corporations when it ruled on Thursday that there should be no limits on political spending for corporate entities.

President Obama says it well:

“This ruling strikes at our democracy itself,” Mr. Obama said, adding: “I can’t think of anything more devastating to the public interest. The last thing we need to do is hand more influence to the lobbyists in Washington, or more power to the special interests to tip the outcome of elections.”

So if Monsanto wants GM crops mandated, or Exxon wants to drill Alaska, they just have to make sure that they have the best government that money can buy.  From democracry to plutocracy to kleptocracy in such a few short years.