Category Archives: Economy and Meltdown

Due to International Pressure (Or Typhoon Damage?), Tepco Agrees to Start Removing Radioactive Fuel from Fukushima a Year Early


 

Tepco was going to wait until late 2013 to even begin to start addressing the greatest threat to humanity.

There is some good news.

Specifically – due to international pressure – Tepco has agreed to speed up the timetable.  As Reuters notes:

Workers at the crippled Fukushima nuclear plant will begin removing fuel rods from a damaged reactors a year ahead of schedule, a government minister said Thursday, a move to address concerns about the risk of a new quake that could cause a further accident and scatter more radioactive debris.

 

***

 

“We would like to start taking out undamaged fuel this year. Preparation is now under way,” Japan’s nuclear crisis minister, Goshi Hosono, told Reuters in an interview.

 

“Doing it quickly is important. But we also have to make sure those workers out there, who are struggling under harsh conditions, will not be endangered by trying to move things fast.”

Postscript:  Of course, some theorize there is a more disturbing explanation of Tepco's willingness to move up the timeframe.  For example, Fukushima Diary and What Really Happened claim that the roof of Building 4 is now GONE – perhaps due to damage from typhoon Guchol – and that the building is in real trouble.

However, videos posted at EneNews appear to show that Tepco simply removed the roof with a crane as part of its ongoing work.

Dr. Michael "The Big Short" Burry’s "Brutal Hangover Is Inevitable" State-Of-The-World UCLA Commencement Speech


Infamous for his prediction of the great recession, Europe’s demise, and the collapse of the US financial system (as well as profiting extremely handsomely from said predictions), so well captured in Michael Lewis’ book “The Big Short”, UCLA’s Dr. Michael Burry undertakes UCLA’s Economics Department’s commencement speech with much aplomb. In this “age of infinite distraction”, the astounding truthiness of this 15 minute speech is stunning from single-sentence summation of Europe’s convulsions that “when the entitled elect themselves, the party accelerates, and the brutal hangover is inevitable” he reminds us that Californians, and indeed all Americans, should take note. A quarter-of-an-hour well spent from a self-described ‘chicken-little’ who was “just trying to figure it all out”.

 

The Extortion Racket Shifts To Italy


Wolf Richter    www.testosteronepit.com

One thing Greek politicians have taught other European leaders: fear mongering for the purpose of extortion is the way to go. It might not work, and it might be counterproductive, and it might destroy confidence in the economy and give investors goose bumps and blow up markets, and it might cause spooked consumers to hold back on purchases and worried businesses to freeze hiring plans, thus exacerbating the situation, but it’s nevertheless the way to go.

Greek politicians learned it from Treasury Secretary Hank Paulson who'd walked into the Capitol in September 2008, threatening that the whole world would collapse if his demands weren’t met. Soon, they expertly issued a series of escalating threats to extort the maximum amount in bailout euros from the Troika. It didn’t work very well as the Greek economy continued to spiral out of control, and as the frustrated Troika halted bailout payments from time to time, and as tempers flared, and as the people in Greece became increasingly edgy. But it was the way to go. Then came Spain. And now Italian Prime Minister Mario Monti.

As always, timing is everything. And there was no better time than Thursday, the day before the meeting in Rome of the big four—Germany, France, Italy, and Spain—and a week before the European summit, which isn’t a run-of-the-mill summit, but the summit, the one that would have to save the Eurozone. And the world. Again.

Monti, the unelected technocrat who was supposed to be able to unite parliament, is losing support in Italy, which is mired in its fourth recession since 2001. His real estate tax is widely despised, though he’d picked up some brownie points in the foreign media as deficit fighter, and an imperceptible nod from German Chancellor Angela Merkel. And yields on Italy’s government bonds have spiked to levels where the resulting interest expense would eat Italy’s budget alive [Read…. Italy Trembling on the Brink].

If the summit next week doesn’t result in a grand plan to turn everything around, Monti said, the Eurozone would spiral into its political and economic demise. “There would be progressively greater speculative attacks on individual countries,” he said. And he mentioned Italy by name. A “large part of Europe” would suffocate under “very high interest rates” and would go into paralysis. The public would get frustrated with Europe. A vicious cycle would ensue: while the Eurozone would need greater integration to survive, the people, governments, and parliaments would “turn against that greater integration.” That process has already started, Monti said, “even in the Italian parliament, which has traditionally been pro-European and no longer is.”

Hence, no agreement by end of the summit next week, no Eurozone—though the breakup would be gradual. And he had a grand plan: more integration to where “markets are convinced” that the euro would be “indissoluble and irrevocable”; mechanisms to keep debt contagion from spreading (meaning massive and unlimited bailouts); a full-fledged banking union with unified supervision and European-wide deposit insurance; “new market-friendly policy mechanisms”; and the direct purchase of sovereign bonds that teetering member states could no longer bamboozle the markets into buying. Every item on his list would be funded by taxpayers in other countries, particularly in Germany. And so he also mentioned fiscal responsibility, to satisfy Germany.

That would be the “absolutely necessary” minimum to save the Eurozone. And it would have to be agreed to by next week—though he’d assured the rest of the anxious world less than a week ago that Italy wouldn’t even need a bailout.

But the fear-mongering didn’t sway the German Chancellor during the Rome meeting on Friday. In fact, she left early to fly to Poland to watch Germany’s soccer team demolish the Greeks—and the anti-Merkel triumvirate of Monti, Spanish Prime Minister Mariano Rajoy, and French President Francois Hollande could stew amongst themselves.

There was, however, a nugget of success that the triumvirate threw to the media: €130 billion would be dedicated to growth measures. A step away from Merkel’s austerity. Alas, it wouldn’t be new public money or additional public money, but the activation of private capital and a shuffling of funds within the existing EU budget. It was nothing.

And Merkel brushed off any hopes that the EFSF and ESM bailout funds could hand taxpayer money directly to the banks. Nein, Merkel said, the contracts clearly spell out that states are the partners, not banks. “It’s not that I don’t feel like it,” she said, “but the contracts aren’t made that way.”

Hollande again called for Eurobonds, like a child that doesn’t want to see reality; Germany’s refusal is nearly absolute, and it’s not just Merkel, but the population as a whole. Even the banking union that Merkel emphasized she’d be open to could not include any form of common liability; it could only have a common regulator, she said. And so, Monti’s threat has once again proven to be the way to go, though it didn’t work and might become counterproductive.

Meanwhile, Germany and Austria have plunged into public soul searching about the euro and the endlessly growing expense of maintaining it. Like so many things that appear useful, the euro has become dangerous. Read…. “The Euro Is Like a Knife in the Hands of a Child.”

And here is a pungent article by George Dorgan, a macro-based fixed-income and currency portfolio manager: Germany won't, and can't, agree to most of the Eurozone bailout measures bandied about. Period. Regardless of what the FT and the Economist wish to believe. And hedge funds betting that Germany will pay in the end are wrong too. Read…. Eurobonds, Fiscal or Banking Union—They're All Pure Utopia.

Guest Post: Could This Make Ben Bernanke A Soviet Dictator?


Submitted by Simon Black of Sovereign Man

Could This Make Ben Bernanke A Soviet Dictator?

Could this make Ben Bernanke a Soviet dictator?
More than two decades after the fall of the Soviet Union, the Iron Curtain is still alive and well in an often forgotten corner of Eastern Europe… albeit a kindler, gentler version.

Belarus has been ruled by the same person, Alexandr Lukashenko, practically since its independence in the early 1990s.

He has total control of every facet of the country, from media and information flow, to education, to the military and ‘State Security
Agency’ (which is still called the KGB), to the centrally planned economy.

Perhaps nowhere is this more obvious than with respect to the nation’s currency, the Belarusian ruble.

In 2009, one US dollar bought roughly 2,200 Belarusian rubles. In 2010, that number rose to 2,800. A year later, over 3,000. And today, one US dollar is worth over 8,000 rubles. On the black market, it’s much, much higher.

(You can just imagine how much the ruble has lost against gold and silver over the same period.)

My friends here tell me that, last summer after another bout of devaluation, it became nearly impossible to purchase euros and dollars. The currency was falling too rapidly, and no trader was willing to take the risk. Even the central bank stopped exchanging its reserves.

Consequently, small businesses in Belarus couldn’t get their hands on the hard currency they needed to pay foreigners for imported goods. Store shelves, including groceries, emptied quickly.

And people took whatever savings they had and traded it for anything they could find– sugar, toilet paper, ironing boards… you name it. As I’ve been told, hand tools were especially popular as a store of value in some parts of the country.

4 It could be Vienna 300x199 Could this make Ben Bernanke a Soviet dictator?This is the key difference between ‘inflation’ and ‘hyperinflation’. Inflation involves a lot of painful price increases that reduce the
standard of living for most people in society.

Hyperinflation, on the other hand, is a complete loss of confidence in a currency.

Anyone here who has held on to the local currency has gotten completely screwed. The few people at the top making the decisions have held on to power and become very wealthy at the expense of everyone else.

Let’s face it, though, the situation isn’t too different in the west– a tiny elite making decisions that affect hundreds of millions of others.

The only distinction is that western governments wrap up their economic authoritarianism in a blanket of democracy to make it seem like it’s OK. Yet in controlling the price of money, they control virtually everything else in the economy… at the expense of everyone else.

It’s a different variety of central planning, but it creates the same sorts of egregious misallocations of resources: people borrow when they should be saving, they consume when they should be working harder, they load up on multiple homes when they should be renting, businesses expand when they should be conserving…

These are the consequences when a tiny elite is given the power to print silly pieces of paper and pass it off as money.  We’ve all seen this movie before, and we know how it ends.

Zimbabwe is the example most frequently cited, though Belarus’s authoritarian, state-controlled economy easily ranks among the most spectacular destructions of wealth in modern times.

For what it’s worth, the Minsk city-center is quite nice and exceptionally clean. If not for the authoritarianism and constant presence of uniformed goons on the street, it would be a really great place to hang out. The people, particularly the youth, are engaging and friendly.

I have serious expectations that this country will one day dump this totalitarian nonsense and emerge as a resource-rich power in Europe, in no small part due to the energy of its youth.

Escalation: Syria Says Turkish Jet Shot Down Was Over Syrian Territorial Waters


The “Syrianna” story from this afternoon, which many were quick to label as merely a lot of diplomatic hot air and rhetoric, just turned uglier, after Syria not only did not officially apologize as Turkey PM Erdogan implied had happened previously for the shot down Turkish F-4 fighter jet, but instead turned the tables on Turkey, and gave itself an out for what is now a definitive military action. From Reuters:

The Syrian military said it shot down a Turkish military aircraft “over Syrian territorial waters” on Friday.

 

Our air defences confronted a target that penetrated our air space over our territorial waters pre-afternoon on Friday and shot it down. It turned out to be a Turkish military plane,” a statement by the military circulated on state media said.

The only question remains whether Syria’s act was offensive or defensive. Naturally, its version is one of self-defense. Turkey obviously will claim it was in its right to be wherever the plane may be, and will say this was an act of provocation. Then NATO, read Hillary Clinton, will promptly step in, and make this a case in which Turkey was in its right and that Syria committed an act of aggression. From there, things will just escalate, and can potentially deteriorate to a far more troubling scale, because as we reminded earlier, Syria has recently become a major symbol for NATO vs the Russia-China axis:

Here is the rub: Turkey is a NATO member, and by definition the alliance will have to come to Turkey’s aid if requested. Syria, however is not just any country as has been made quite clear over the past several months of UN impotence: it is a critical staging ground for both Russia (which has a very critical regional naval base in the city of Tartus) and China, and according to the Jerusalem Post, the three countries are in preparation to conduct the “largest ever” war game. As such Syria, already gripped by fierce local fighting, where just like in Egypt and Libya the presence of US-based flipflop on the ground can be smelt from across the Atlantic, is merely a symbol. The real implication is how far can little escalations push until finally the showdown begins, with NATO on one side and Russia and China on the other?

Ultimately, the key catalyst here may be something as simple as whether the pilot of the Turkish plane are alive or dead. BBC explains:

Given the breakdown in relations between the two countries over the Syrian conflict, this incident has the potential to provoke a serious crisis. When gunfire from Syrian forces crossed the Turkish border earlier this year, Ankara threatened a military response.

 

Much will depend on whether or not the Turkish pilots have survived. If not, public anger might push the government into some kind of punitive action against Syria.

 

Syria’s response will also influence Turkey’s reaction. A clear apology, and a statement that the shooting was unintentional, might be enough to assuage Turkish anger.

 

But then again, we do not know yet whether the aircraft were clearly in Turkish airspace or not. Initial Turkish reports that they came down eight miles from Syrian territorial waters suggests that they were, but Syria may claim otherwise.

At this point it is clear no apology will be forthcoming as Syria’s official story is that Turkey had effectively committed an act of aggression against it. So it is up to the viability of the pilots. If dead, anyone who may have been shorting Brent into the weekend may have a nasty surprise come start of trading Monday.

Where the crash supposedly happened:

courtesy of @Thalion_1