Wednesday, May 18, 2011

Nuclear Crisis in Japan? When the Cure is Worse Than the Disease

I recently concluded an interview with a new publication that is under the support of Casey Research and that publication s called the International Man. It is a publication geared towards the expat or people thinking of expatration out of the USA or other western nations into the developing world in order to find their success and new opportunities.

You can subscribe to the International Man here.
We spoke of many things related to Japan and one of the most difficult questions dealt with the Tohoku earthquake and tsunami and subsequent Fukushima nuclear accident. I was asked how this chain of events would affect the Japanese and world economy.

Not to belittle a serious situation, I replied that, in and of itself, the disaster followed by the nuclear accident at Fukushima is, in the long run view of things in Japan, a blip on the screen. The nuclear problems in Fukushima are serious to be sure, but for the over-all view of Japan, that alone is not such a huge event. It is the ping-pong effect that this incident is going to have on Japan that is difficult to access the total damage that it will cause. Specifically, how much bungling will the incompetents running this country into the ground will cause with their ill-conceived and poorly considered "solutions".

Consider: There are only 750,000 people living in the Miyagi area where the earthquake and tsunami struck hardest. This disaster and the nuclear power plant accident has displaced about 400,000 (if anyone has exact figures, please send along!). Had this accident happened in Hamaoka or Tokai, south of Tokyo, it would have been an entirely different story. There are 35 million households in the Tokyo area alone.

At the end of World War II, Japan had over 2 million dead soldiers. Almost 1 million dead civilians and her cities were carpet bombed into ruin. Yet Japan recovered. This earthquake, tsunami and nuclear incident is in a small corner of Japan. Once again, not to belittle a very dire and serious situation, but it is the aftereffects of this situation - combined with Japan's debt versus GDP and a rapidly aging society - along with an exodus of cheap foreign labor that's what's really going to hurt this country.

The actual disaster is bad enough. But it is the after effects that are going to kill us. You've heard the expression that the "Cure is worse than the disease?" Well here is a case example happening in slow motion right in front of our faces.  It is the "ping-pong" effect. And the repercussions of this ping pong effect are spreading wider and wider and everyday brings a new facet to this problem as it continually evolves.  

That ping-pong effect could have very serious and long term effects and cause huge damage to the Japanese economy and, in turn, seriously hurt the world economy.

One of the worst things to come out of the Fukushima accident is, not only radiation leaking out into the ocean is - quite surprisingly -  the fact that radiation has been detected in unsafe levels in tea leaves in farms in Odawara - south of Tokyo. This is very bad for those farmers and a real head scratcher as to how this has come about. It also, on the other hand, dampens complaints that some people have about the government covering up and lying about the radiation levels. If the government were always lying and covering up as some claim, then this information would have never seen the light of day. I'll be the first to suggest that everyone should be skeptical of everything they hear and see on the mass media or from what the government says, but I also have always said that each person needs to research facts. This is why I list the radiation levels in Tokyo that are published daily by a non-governmental, science research group, the Advanced Science and Technology Unit. on this blog. See here. This group does not publish conjecture and just facts as to daily radiation levels. (The fact that a government group has also researched a published results of radiation levels in food in Fukushima, Miyagi and now Kanagawa proves that there are reliable reports coming out about radiation levels of concern to the public well-being.)

But, in the long run, and for the over-all view of the health of the nation, let's examine briefly the shockingly great deal (poor deal for the public) the Japanese government has given to TEPCO, the owners of the nuclear power plant, to bail out that company. First off, any thinking person should be dead set against a government bailout of any privately owned company. Why do privately owned companies get to enjoy profits (TEPCO charges the highest utility rates in the region and owns 44% of the market and is the #1 energy company in all of Asia) and pocket them but when they lose money, they get bailed out by the public? It is also a crime that TEPCO carried no casualty insurance. (Global Research has a great article on this here.) You or I lose our drivers license if we have no car insurance but a big company in bed with the government can run a nuclear power plant without insurance!?

The bailout package is $62 billion (USD).  Japan cannot afford this bailout. It is, also, not really a bailout as such. There will be no bonds issued. TEPCO has 30 years to repay so the actual plan is to have the Japanese government print our way out of this mess.

Throw on top of that the point that a privately owned company is giving up some control to the government and you really have to wonder what people are thinking about. Why in the world would anyone want such an inept and useless bunch of people like the Japanese government - a government who has nearly bankrupted this nation - to take over a privately owned corporation? I think this is beyond comprehension. 

Think about it folks, we are already at 225% debt to GDP. This debt is growing like a dangerous anuerism near the heart of the public. Giving this government more control and more leeway to spend and throw money at problems is not the solution. Adding another $62 billion dollars to Japan's debt mountain is not going to help us at all. The public has shown a willingness to save, but the government has not shown a willingness to stop the spend and the printing. This, plus a recession, deflation, aging population, exodus of cheap foreign labor, and some more problems that will surely pop up as we go - just as sure as the sun will rise in the east - shows that it is not the actual disaster that is going to kill us. 

The thing that is going to do us in is not the disease (all of our problems). It's the cure prescribed by the fools running Japan's government (easy credit, printing money and more debt) that will surely kill us all.

Judging from the way things are going and how the government's answer to problems is always the same, it shouldn't come as any surprise to anyone when the day soon comes that Japan's debt to GDP nears 250% ~ 300%. Could it be that far off? I don't think so.

The cure is certainly worse than the disease.

1 comment:

Poots said...

“...Giving money and power to government is like giving whiskey and car keys to teenage boys...” --- P.J. O'Rourke

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