Showing posts with label nuclear plant shutdown. Show all posts
Showing posts with label nuclear plant shutdown. Show all posts

Tuesday, April 3, 2012

Japan's Collapse Will Be Absolute and it Cannot be Stopped - Here's Some BIG Reasons Why

Truly this country is in a position whereby there will be no way out. The government has dragged us into a cesspool of debt and there will be no fix. The nuclear disaster has put the nation is a position whereby political populism has taken the driver's seat over cool-headed reasoning. 

Japan can't last like this for much longer. I hope I'm wrong about this but I think it looks like our situation is impossible to fix. And I do not exaggerate when I say "impossible to fix." Some will scoff at this but I ask you to read on and see what conclusions you come to. Let me know if you disagree. 

Please keep in mind these three important points as you read on. I think these three make a poisonous cocktail:

*Japan's debt to GDP is too high
*The energy crisis will much further ruin the employment and the economic situation here
*The energy crisis will also cause a hollowing out of Japanese industry

The only good news is that there will be no sales tax increase as prime minister Noda will be, as I've already predicted, out by September 1st at the latest. I seriously doubt that he can last that long. The other good news is that more Japanese fathers will be spending time with their kids as they will be out of jobs.

But first up, about that sales tax problem and our soon-to-be ex-prime minister. From an article that ran at Testosterone Pit in Feb: Unpopularity Contest at the Edge of the Japanese Abyss:  

In a Kyodo News telephone poll over the weekend, Noda’s approval rating dropped to 29%, down 6.8 points from January, and down a dizzying 50 points in less than six months. The disapproval rating jumped to 55.2%. Only Taro Aso fell faster. But at the current trajectory in the prime-ministerial unpopularity contest, Noda might beat his records soon:

Looking at the graph above, you'd see how Noda's popularity was just crashing in his first 5 months in office. Interestingly though, he got a minimal reprieve last month in March 2012. His popularity actually went up 2.5%!:

While not in the least bit scientific, I have projected Noda's popularity with the black arrow. I think this is being quite generous considering the fact that his cabinet actually publicly presented their plan to increase the public tax burden. Please refer to: Japan's Noda Government Passes 200% Tax Increase - Look For Noda to Be Out by July, September at the Latest. Either way, if my guess is correct, Noda will hit the 20% area in late June or early July. Then it's curtains for his administration. If he can survive until September it will be a miracle.

But that's not the whole story here folks. We're not talking about getting rid of another prime minister.... Actually, it won't matter who prime minister is. Japan's political situation is much like the United States: There is no one who even has the hope of repairing the situation. At least the USA has Ron Paul. In Japan, we have no one.  

We're talking about several factors combined to make a political situation that cannot be fixed. The whole story involves the bleak future this country is heading for. Raising taxes will not remedy our debt burden. I've mentioned before that we need massive cuts in government spending - cuts which we will never receive.. Throw on top of this the energy situation in Japan and how that will lead to absolute disaster on our horizon.

Folks, this summer could be the beginning of the end for Japan as a modern day economic powerhouse. I do not make this statement lightly. Like I said, read on and see what conclusions you come to...

Japan has no natural resources and energy. We are on a course to shutdown all of our nuclear power plants this summer. Great! You say? Really? How great will it be when industry finds that it is no longer economical to do business and run their factories and plants in Japan? What's going to happen to your rosy life and happy existence when the Japanese economy hollows out and industry leaves for greener pastures in other countries?

People are going to criticize me for writing this and saying that I am hysterical but all I can say is that I have seen this happen with my own eyes in another country before. It happened in my country. The causes of the hollowing out of the economy were different, but the end result was the same: In the United States, industry left for better shores in the 1980s (they all went to China and India) and we are seeing the results of that today... 

All one needs to do to see what that hollowing out has done to the middle class in America is to get on an airplane and fly to, say, Detroit to see what is left of industry there. It's not rocket science, but where's there's no industry, there are no jobs.

That is the future we are heading for in this country and I see no way out. Zerohedge writes in: A New Beginning in Japan: Glimmers of False Hope:

TEPCO, the bailed out owner of the Fukushima nuclear power plant, is trying to shove rate increases of 17% down the throats of its commercial customers—while rationing power at the same time. Power shortages will spread across most of Japan this summer as the last of 54 nuclear power plants will be taken off line in a few weeks. While pressure is building to restart some of them, public distrust and resistance run high, particularly after revelations seeped out about the nuclear industry’s controlling relationship with its regulators. Japan Inc. at work. The conspiracy had squashed stiffer regulations for nuclear emergencies. Five years later, the people of Fukushima paid the price. For that fiasco, the emails that documented it, its deadly and ongoing impact, and the anger it caused, read... A Revolt, the Quiet Japanese Way.

But it’s a two-edged sword. Shortages of up to 20% this summer are expected to strangle the highly industrialized Osaka area, and companies are shifting production overseas. Now a panel of the Osaka municipal and prefectural governments floated a plan for the city of Osaka to demand that Kansai Electric Power shut down its nuclear power plants permanently. Mayor Toru Hashimoto has come out in support.

Catch that part about a 17% rate increase for commercial customers? Are these people nuts? Japan Inc. is losing money left and right as it it without a massive increase in costs. Please refer to Times of India Sony, Panasonic forecast deeper losses:

Japan's biggest makers of phones, televisions and chips say they'll lose about $17 billion this year, about three-quarters of what Samsung Electronics Co will spend on research to lengthen the lead over its competitors.
Sony Corp more than doubled its annual loss forecast for the year ending March 31 as it announced a new chief executive officer, while Panasonic Corp and Sharp Corp predicted the worst losses in their histories. Their combined losses compare with the $22 billion that Samsung, Asia's largest consumer- electronics company, said it will invest in capital expenditures.
These two Japanese giants are going to lose nearly what one Korea competitor will spend on R&D? Folks, it doesn't take a genius to figure out what's going to happen to these entities when they are hit with a 17% increase in costs; two things. One, they will make you pay for those costs and; two, they will move factories overseas where it is cheaper to operate.

I am a bit surprised at Osaka mayor Hashimoto supporting an idea that's going to wind up putting a large part of his constituency in the unemployment line. I thought he wasn't too interested in populism.... Guess I was wrong.

I think he'll be singing a different tune around autumn of this year. In fact, I predict that he'll be changing his mind real quick and getting off his populist duff when people are out of work. Funny that. Politicians seem to want to talk about jobs and getting people back to work is usually a very populist issue when everyone is broke... Testosterone Pit reports in A Revolt, the Quiet Japanese Way:

...people are opposing the almighty nuclear industry at a local level. Every time a nuclear power plant shuts down for scheduled maintenance, people in the area come out against restarting it. Thus, of Japan’s 54 reactors, only two are still generating electricity. And both are scheduled to be off line by April. With harsh consequences for industry and manufacturers.
And another setback for Prime Minister Yoshihiko Noda, the sixth ineffectual prime minister in six years. Like his predecessors, he is stumbling down a steep slope in approval ratings. When they drop into the low twenties, he will be axed, and a new sacrificial lamb will be stuffed into that slot. For the fiasco that is sending Noda to replacement hell while the economic and fiscal fundamentals are falling apart, read.... Unpopularity Contest at the Edge of the Abyss.
Under pressure from Japan Inc., Noda suggested that some of the reactors should be restarted. And the arm-twisting with the resisting public got a little tougher on Friday, when METI Minister Yukio Edano predicted that Japan would face a power shortage this summer of 9.3%. Last summer, power shortages were largely limited to the Tokyo area and northwestern Japan. This summer, they would hit Kansai, the huge and highly industrialized Osaka area, where shortfalls could peak at 20%.
Industry and households would have to cut back drastically—a Third-World problem that will send more manufacturers overseas. 

It seems to me that there are no good options at this point for Japan. The people are so against nuclear power that they might be able to close the nuke plants for a while, maybe even permanently. I figure that's going to be one of those good examples of "Be careful for what you wish for, you just might get it."

Japan's financial and energy situation is a wreck... It's not even a slow motion train-wreck anymore... If Japan can make it to the New Year (2013) without some sort of devastating financial chaos, it would be a total and complete miracle.... I don't think that can happen.

Even if Clark Kent were the next Japanese prime minister, he couldn't fix this mess.

Tuesday, March 6, 2012

Japan is Facing a Currency and Economic Meltdown

There's an awesome article over at Zerohedge about Japan's current economic malaise. Please refer to, Japan Is Now Another Spinning Plate in The Global Economic Circus

For those who are in a hurry today, the bottom line is that Japan is in serious trouble right now and is a top candidate to be the next black swan. Here are the elements of difficulty that concern me the most, each one serving to reduce Japan's economic and financial stability:
  • The total shutdown of all 54 nuclear plants, leading to an energy insufficiency
  • Japan's trade deficit in negative territory for the first time in decades, driven largely by energy imports
  • A budget deficit that is now 56% larger than revenues (!!)
  • Total debt standing at a whopping 235% of GDP
  • A recession shrinking Japan's economy at an annual rate of 2.3%
  • Renewed efforts underway to debase the yen

Oh, and let's not forget that Greece is about to default day after tomorrow.

If you live in Japan, I hope that you have at least two weeks worth of food and water stored up (you should have that anyway - especially if you have children - as this country has lots of earthquakes). Preferable, if you have a place to put it, two months is best.

This article is coming hot on the heels of a post I wrote about being positive. Well, my friends, trust that it is much easier to be positive when you are prepared.

What should the government do? Well, twenty years of easy credit and deflationary policies haven't worked. Why don't we try what worked after the war to create the greatest economic recovery the world has ever seen? Please refer to: In 1949, Japan Started on the Road to Prosperity by Eliminating Sales Tax.

Raising taxes and continued debt spending has gotten us to where we are today. Devaluing the currency and taking on more debt won't help us. More debt will not solve a debt problem. That's basic math.

If you owed $10,000 on all your credit cards, would it help you if you got another credit card and borrowed $10,000 to pay off your old credit cards?

Why can't the government see this?

Devaluing our currency will only punish the people and the savers. We need people to save in order to invest.