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Ian R. Campbell  -  Mar 14 09:55 AM 66 Posts 1 Follower 0 Following
Update on Japan!

Following from my e-mail commentary on Saturday titled ‘Japanese Earthquake Aftermath?’ I continue to believe this event could prove to be a macro-economic game-changer.  I have found the following articles written over the past two days that I think worthwhile to bring to your attention:


·        ‘The world’s nuclear fate rests in Japan’ – reading time 3 minutes.  While arguably extreme, the article discusses the possible negative effect on the nuclear power industry of the Japanese nuclear reactor issues in the aftermath of Friday’s earthquake.  I have little doubt, irrespective of how this issue ultimately turns out, that any number of people in any number of countries will over-react, thus setting the nuclear power industry back on its heels from where it was last Thursday;


·        ‘What next for Japan’ – reading time 2 minutes.  The article suggests that the Yen may continue to weaken, that the costs of rehabiliation will bring the ‘tipping point’ for a “hugely indebted” Japan that much closer, and that some disruption in global trade will occur as factories in Japan shut down with a threat of ‘rolling blackouts’ ahead (resulting from disruption to Japanese electricity supply).  Importantly, the article suggests that “it’s hard to see how this (the loss of about 20% of Japan’s nuclear capacity) can be positive for global energy supply/demand” in the long run.  It also raises the same nuclear ‘safety’ and nuclear industry ‘trust’ issues suggested in the previous article.  The article suggests the greatest benefactor arising from the nuclear aspect of this tragedy could be natural gas;


·        ‘Japan Earthquake: Impact on Crude Oil, Fuel and Nuclear Power’ – reading time 3 minutes.  This article again deals with energy supply and nuclear credibility issues, but with respect to crude oil does so in some detail;


·        ‘Japan’s Nuclear Morality Tale’ – reading time 3 minutes.  This article is focused entirely on the impact of the north-east Japan nuclear issues arising out of Friday’s earthquake.  As I read the article the important point it makes is a generic statement that could have been made last Thursday before Friday’s earthquake event, being that: “The central dilemma of nuclear power in an increasingly water-stressed world is that it is a water guzzler, yet vulnerable to water. And, decades after Lewis L. Strauss, the Chairman of the United States Atomic Energy Agency, claimed that nuclear power would become “too cheap to meter,” the nuclear industry everywhere still subsists on munificent government subsidies”;


·         ‘Global Recovery Fraud Is Kaput’ – reading time 3 minutes.  While in my view not particularly well titled, this article stresses (1) the Japanese earthquake will disrupt production by a key global exporter, (2) the event will ‘nudge’ Japan (a major world economy) into financial crisis, and (3) will cause supply/demand imbalances in critical materials and grains.  These things all intuitively make sense to me.  The article mentions other factors its author(s) see happening, but personally I don’t link those things with the situation currently unfolding in Japan; and,


‘How Black Is the Japanese Nuclear Swan?’ – reading time 7 minutes.  This article strikes me as an excellent and quite detailed review of the Japanese nuclear plants issues that are ongoing.  I learned a great deal from printing it out and reading it carefully, and suggest you take the time to read it as well.  While somewhat technical, it is written in ‘easy to understand language’.
Topics:   Japan, Japanese Earthquake, nuclear energy, yen, Crude Oil, global recovery, critical materials, grains
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Christian Jean  - Mar 14 03:39 PM4 Posts0 Followers0 Following
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Every time I hear conversations about the construction of a nuclear plant near me (Montreal, Canada) I can't help but get shivers all the way down my back. 

Excluding the fact that this is the most expensive type of energy (on a per KW basis) I can't really explain why I feel this way and why I despise this form of energy so much.  Maybe it's from the bias imposed on me at an early age by my teachers while they made me watch "The China Syndome" (in Japan is this called the Canadian Syndrome?... ok some bad humor).

But with all that is going on now in Japan, I can just say that it keeps confirming and strengthening my current sentiment about nuclear power.

It may be proclaimed safe... until something like this happens, and a simple mistake can affect HUGE amounts of populations and geographic areas.




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Daniel Ricard  - Mar 14 10:45 PM1 Posts0 Followers0 Following
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Bonjour M. Campbell,

I wonder if you came across articles on who could benefit from this tragedy ? it may be sad but in some ways, when you think that people used to say "there's nothing like a war" to jump strat an economy, well, reconstruction of that part a Japan may create a lot of jobs.

Maybe, most of the money printed by japan should be used to re-construct. Meaning creating (or re-creating¸) something new and better from the ashes. What will they do for energy ? how (and where) will they re-construct hospitals, schools, telecom infrastrcutures,...

While on the short term, surely there are opportunities that may rise for GM, Audi as well as for some tech companies, on the long term, it may help Japan.

You see, in my only economy class at the university, I was told that one of the flaw of the GDP is that a catastrophe should lead to in increace in the GDP...

Although I beleive the international risk may be high for the monetary system, I tend to beleive that Japan will end up stronger from re-building itself mid to long term.

I would like to know what you think ?

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Ian R. Campbell  - Mar 15 12:52 PM66 Posts1 Follower0 Following
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Hello Daniel:

Thank you for taking the time to comment yesterday.

It is possible that GM and other automobile companies will benefit in the near-term if the auto plants in Japan are closed or partially closed due to electricity black-outs or other damage related issues.  As for printing money, Japan is the world's 3rd largest economy but has a very high debt:GDP ratio (about 2:1).  I don't think Japan's ability to print Yen will strengthen Japan on the world economic stage - but that is more intuitive than anything else.

Japan's need for base metals and products generated from base metals may increase during the re-construction, but it remains to be seen whether the incremental base metal amounts required will be so significant as to noticeably increase base metal prices - again too early to tell.

Overall, I don't think Japan will emerge as a stronger country in economic terms as a result of this tragedy.

Good comment.  Please continue to comment on our e-mail commentaries, and consider adding Questions and Answers to our other Forums.

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