Archive - Mar 15, 2011

Following explosions in at least two reactor cores at Japan's Fukushima nuclear power plant - and as the developing crisis is rated at level 6 of seven levels on the International Nuclear Events Scale (previously being 3, or below 3 Mile Island status, to keep the panic level low)- attention is turning to just what is happening inside the 40-year-old power plant in north-east Japan. Al Jazeera's Dan Nolan explains how a meltdown would happen.

The IAEA Incident and Emergency Centre (IEC) continues to monitor the status of the nuclear power plants in Japan that were affected by the devastating earthquake and consequent tsunami. All units at the Fukushima Daini, Onagawa, and Tokai nuclear power plants are in a safe and stable condition (i.e. cold shutdown). The IAEA remains concerned over the status of the Fukushima Daiichi nuclear power plant, where sea water injections to cool the reactors in units 1, 2 and 3 are continuing. Attempts to return power to the entire Daiichi site are also continuing.

Following reports that all major banks have pulled their employees out of Tokyo overnight, finally broad evacuations are starting to spread to the ordinary citizens, starting with China. AP reports that: "China became the first government to organize a mass evacuation of its citizens from Japan's northeast on Tuesday, while other foreigners left the country following radiation leaks at an earthquake-damaged nuclear power plant. Austria said it is moving its embassy from Tokyo to Osaka, 250 miles (400 kilometers) away, due to radiation concerns. France recommended that its citizens leave the Japanese capital, while the U.S. government advised Americans to avoid travel to Japan." And while the Chinese concern for its citizens is admirable, what is peculiar is the complete silence as to how China, which is very much downwind from Fukushima, is handling the fears of its own local citizens regarding spreading radiation.

Probably a reasonable purchase in these uncertain times.

The Navy said very low levels of airborne radiation were detected Tuesday morning at greater Tokyo-area bases in Yokosuka and Atsugi, prompting commanders to direct base residents to remain indoors as a precaution. At 7 a.m., the aircraft carrier USS George Washington at Yokosuka Naval Base detected elevated radiation levels, according to a U.S. Navy 7th Fleet statement. The Navy said the elevated levels were associated with the disaster at the Fukushima Dai-Ichi nuclear power plant, located about 200 miles to the north. A level of 0.5 millirems of radiation was detected at Atsugi with similar levels at Yokosuka, said Atsugi public affairs officer Tim McGough. The radiation was detected coming from winds blowing from the northeast, he said...“The level of 0.5 millirems, which is translated to five microsieverts, is 50 times more than the level that exits in nature,” said Masaharu Hoshi, professor of radiation physics at the Research Institute of Radiation Biology and Medicine of the University of Hiroshima.

In plain terms, the financial system is RED ALERT. The question now is if additional liquidity can prop this giant house of cards up anymore. We’re about to find out.

When we looked at TEPCO last two days ago, we said that as a result of the catastrophe in Fukushima its CDS which then had jumped by 90 bps to 133 bps, "we expect this number will soon be at multiples as the fall out to the company is increasingly exposed to the market." Alas, as predicted, the CDS is now trading 390-440 and will likely go points up very soon. Recall that the utility has over $90 billion in debt, which may or may not be nationalized, but any "conservatorship" treatment will likely trigger restructuring clauses. And the latest news out of Kyodo goes from bad to worse for the electric company: "TEPCO unable to pour water into No. 4 reactor's storage pool for spent fuel."

Marc Faber appeared earlier on CNBC in response to a plunging market, and gave his latest updated outlook on QE3... and 4, 5, 6, 7 and 8 (not to mention 18). "We may drop 10 to 15 percent. Then QE 2 will come, (then) QE 4, QE 5,
QE 6, QE 7—whatever you want. The money printer will continue to print,
that I'm sure. Actually I made a mistake. I meant to
say QE 18." Faber was modestly constructive on the Japanese selloff, which at one point hit 18% down in overnight futures trading: "This huge selloff is an investment opportunity in Japanese equities, but if a meltdown occurs then all bets are off." As usual, there is no love loss between Faber and the Chairsatan (recall that today's Empire Manufacturing survey confirmed margins continue to be crushed due to surging input costs): "I think Mr. Bernanke doesn't know much about the global economy but he probably watches the S&P every day." And on Fed criticism: ""Until very recently the Feds have had very few critiques, very few
people criticized the Fed's policies under Mr. Greenspan and Mr.
Bernanke. Over the last few months, a lot of critical
comments have come up about the Fed and its money-printing habit. The
S&P drops 20 percent (and) all the critics will be silent and they
will all applaud new money-printing." No fear of that here: Zero Hedge has been rather vocal in our opinion of the world's most destructive central planning buro from day one. We will continue being so, regardless how low the S&P plummets... Perhaps even to its fair value south of 500.

Confirming, yet again, that MIT Ph.D.'s (such as the FRBNY's Brian Sack) are among the most dangerous around, a paper made the rounds yesterday by one Josef Oehmen titled: "Why I am not worried about Japan’s nuclear reactors." In the ensuing 48 hours, anyone who listened to Josef's advice (who incidentally is not a scientist) and was also "not worried about the reactors" has paid an exorbitant price, possibly up to and including their lives. We demand that MIT School of Nuclear Science and Engineering clarify their position on the matter, and make sure that incidents such as this, where Oehmen's paper received top billing due to its perceived "endorsement" by MIT and has since been completely discredited, never recur.

In the rubric of today's irrelevant news, we have the Empire Manufacturing Index which came at 17.50 on expectations of 16.10, compared to a prior print of 15.43. And you know the drill: the only thing that matters for the average American is the Priced Paid, which increased from 45.78 to 53.25 a fresh two and a half year high: "The indexes for prices paid and prices received showed that prices continued to accelerate in March; the trend was particularly pronounced in the case of the prices paid index, which rose a cumulative 31 points over the past four months. This month, the index advanced 7 points to 53.3, with 53 percent of respondents reporting higher input prices while no respondents reported lower prices." The margin situation is getting worse as the Price Received increased by half the rate of increase of the Prices Paid at 20.78, compared to 16.87 in February. Elsewhere, New Orders, Inventories and Shipments all plunged. What is even scarier is that the Prices Paid Expectations soared from 55.42 to 71.43.

There are simply too many balls being juggled in the air to hope that none of them - not one of them - will fall.

"The level has come down to the level to cause no harm to human health, according to the report I have received," Chief Cabinet Secretary Yukio Edano--

Meanwhile, after tracking all the manifestations of the black swan clusterflock, and taking a quick look at that "other" crisis, shows that the Gulf, and thus the oil supply picture, are about to be impacted. The AP reports that according to a security official, a Saudi soldier shot dead by opposition protester in Bahrain. We have no idea how this will impact the escalating violence even as Bahrain state TV reports that a second batch of Saudi soldiers has just arrived, following the announcement by the Bahrain king to order a national state of security for three months.

Those who wish to bypass the media entirely and observe Tokyo radioactivity directly, and the SPEEDI site is down (as it seems to always be), here is a live webcast showing a live Tokyo Geiger counter.