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The TEPCO Bail Out Begins: Japanese Government To Foot "A Portion" Of Compensation Costs

Tyler Durden's picture




 

As predicted when we outlined the imminent surge in TEPCO CDS nearly two weeks ago, when the utility was trading still in the double digits, we speculated that the Japanese government will have no choice but to step in and rescue the pre-collapse utility. Indeed, that is now reality, with Reuters reporting that "the Japanese government is looking at paying off a portion of the compensation Tokyo Electric Power Co will owe to evacuated residents, local farmers and others directly hit by the emergency at the Fukushima Daiichi nuclear power plant." The question we have is how much did Japan bulls such as Buffett purchase in TEPCO stock in advance of this latest pseudo-socialization in which taxpayers once again bail out private shareholders, and just how much of his decision to acquire said stock would have been predicated on the knowledge another taxpayer-to-right pocket transfer was imminent.

More from Reuters:

Tokyo Electric, also known as Tepco, could be facing a compensation bill totaling several trillion yen given that roughly 80,000 residents have been evacuated, the business daily said, quoting government estimates.   

The company is also likely forgo its year-end dividend - a first in the last 59 years - because of the crisis, which has forced local companies to suspend operations and farmers to stop shipping produce, the Nikkei reported.   

Chief Cabinet Secretary Yukio Edano told a news conference that if Tepco could not provide adequate compensation, the government will guarantee it, according to the Nikkei.    

A 1999 accident at a nuclear fuel processing plant in Tokaimura, resulted in a compensation of about 14.6 billion yen ($180 million) for about 7,000 cases, the Nikkei report said.

 

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Wed, 03/23/2011 - 16:26 | 1092021 Flore
Flore's picture

Nobody can have such an investment career without a gubment hotline.... but hey.. uncle warren is the role model for all the amateurs gaming the money away in the stockmarket... so the gubment keeps him informed.. and he is legendary...

It isn't that hard.. when you know alot of thing before average joe does

Wed, 03/23/2011 - 17:14 | 1092291 avonaltendorf
avonaltendorf's picture

predicated on the knowledge another taxpayer-to-right pocket transfer was imminent

Ouch.

Wed, 03/23/2011 - 22:54 | 1093380 dark pools of soros
dark pools of soros's picture

you thread jumped for that?? what next?  gonna blow up a telephone pole for more attention?

Wed, 03/23/2011 - 16:32 | 1092022 hedgeless_horseman
hedgeless_horseman's picture

Recipe for Wealth

Self regulated;

Private gains;

Socialized losses;

All the rest is just garnish.

Wed, 03/23/2011 - 16:49 | 1092153 tmosley
tmosley's picture

PROTIP: The nuclear industry in Japan is not self regulated.

Lest we rush to blame the free market once again for the failures of mixed markets, please remember that nuclear power is the most heavily regulated industry on the face of the Earth.  Indeed, it is so overregulated that new plants can't even be built in the US, forcing us to rely on outdated, unsafe designs just like that at Fukushima.

Hitachi has designs for nuclear power plants that are so safe they don't even need workers.  They just produce power for about 50 years, and then you replace the fuel.  Of course, we can't get these, because of the utter terror the government has us living in so they can save us from it.

Wed, 03/23/2011 - 16:58 | 1092194 hedgeless_horseman
hedgeless_horseman's picture

Don't fool yourself.  The nuclear industry in Japan and the USA, Big Oil, the American legal system, American medicine, and clearly the global banking industry are all self-regulated. It is just that the Wall Street to K-Street revolving door gets all the publicity.

Wed, 03/23/2011 - 17:02 | 1092236 Thomas
Thomas's picture

During the Gulf Oil Crisis, closed door meetings at the CFR included BP executives. The entire topic: the cost.

Wed, 03/23/2011 - 16:52 | 1092174 sangell
sangell's picture

Nonsense! There is an FDIC in Japan too that covers these things.

The Fukushima Daiichi Insurance Corp.

Wed, 03/23/2011 - 16:53 | 1092193 NotApplicable
NotApplicable's picture

Don't worry, the G7 is gonna start the Yen carry-trade back up!

http://www.reuters.com/article/2011/03/23/markets-forex-carry-idUSLDE72K...

In more Bizzaro World news, Chavez speculates about capitalism ending life on Mars.

http://www.reuters.com/article/2011/03/22/us-venezuela-chavez-mars-idUST...

We now return you to your regularly scheduled abnormal normality.

Wed, 03/23/2011 - 17:04 | 1092259 francis_the_won...
francis_the_wonder_hamster's picture

The Chavez quote made my day.  You just can't make this $%^@ up.  A colleague I shared this with commented that it is amazing that people that daft can become leaders of a nation.  I asked him if he'd taken a look at the US' leaders recently.......he left my office looking very depressed.

Wed, 03/23/2011 - 17:36 | 1092414 Michael
Michael's picture

Can't wait till the silver bears do a cartoon on this story.

Will JPMorgan Now Make and Take 'Delivery' of Its Own Silver Shorts?

"There is nothing inherently wrong and certainly nothing "illegal" about J.P. Morgan Chase (JPM) gaining a vault license for storing and taking delivery of gold/silver/platinum/palladium from the futures markets known as NYMEX/COMEX. However, the speed, timing and manner in which the exchanges just granted it troubles us."

http://seekingalpha.com/article/259549-will-jpmorgan-now-make-and-take-delivery-of-its-own-silver-shorts?source=hp_latest_articles

Wed, 03/23/2011 - 16:27 | 1092027 SparkyvonBellagio
SparkyvonBellagio's picture

Buffett is the BIGGEST FRONT RUNNER WITH INSIDE INFO ON THE PLANET.

THE OLD MAN SHOULD BE IN THE JAR WITH A BUNKY!

Wed, 03/23/2011 - 16:32 | 1092057 Robot Traders Mom
Robot Traders Mom's picture

Tyler coined the nickname "Octogenarian of Omaha"---classic! Just like Robotgaylord is the "Troll of Trading"

Wed, 03/23/2011 - 16:41 | 1092126 Sancho Ponzi
Sancho Ponzi's picture

Totally off thread, and totally amazing, via steampunkworkshop.com:

http://steampunkworkshop.com/keyboard.shtml

Wed, 03/23/2011 - 20:29 | 1092926 ZackAttack
ZackAttack's picture

Holy shit! Impractical, but what a display piece.

Wed, 03/23/2011 - 16:28 | 1092029 malikai
malikai's picture

I get the feeling Tokyo still needs electricity, so this is absolutely no surprise.

Wed, 03/23/2011 - 16:29 | 1092035 economessed
economessed's picture

The insolvent government provides financial backing to the insolvent public utility.  Makes perfect sense.  Perhaps they can make a children's video out of it and show how the shareholders avoid the poo.

Wed, 03/23/2011 - 16:39 | 1092116 A Man without Q...
A Man without Qualities's picture

Exactly - it's only money, you can easily print more.  I suspect this is a requirement for the bank loans, but shareholders will be wiped out.

Wed, 03/23/2011 - 16:58 | 1092213 Bicycle Repairman
Bicycle Repairman's picture

"but shareholders will be wiped out."

Why should anyone lose anything?

Wed, 03/23/2011 - 16:35 | 1092040 thedrickster
thedrickster's picture

EWJ 643K block AH....WTF...

Wed, 03/23/2011 - 16:30 | 1092044 Ruffcut
Ruffcut's picture

The checks are in the mail, right to your address of record. Destroyed or contaminated residents, do not qualify.

Wed, 03/23/2011 - 16:30 | 1092049 johnQpublic
johnQpublic's picture

never saw it coming

 

 

 

 

sarc off

Wed, 03/23/2011 - 16:31 | 1092063 Lapri
Lapri's picture

That's been known. It's in the law that governs nuclear industry.

Wed, 03/23/2011 - 16:31 | 1092065 Dr. Porkchop
Dr. Porkchop's picture

When nuclear power plants are born, I thought it was common practice to leave the umbilical attached anyway.

Wed, 03/23/2011 - 16:33 | 1092077 Dr. No
Dr. No's picture

Warren is the Wall street poster boy.  Squeaky clean, role model, "hey, everyone can make it", kind of guy.  Lets the moths (small investors) fly into the flames.  Propaganda.

Wed, 03/23/2011 - 16:34 | 1092085 Commander Cody
Commander Cody's picture

Never to early to start the taxpayer-funded spigots flowing.  Next up, the car companies, electronics firms, farmers, fishermen, etc., etc., etc.

Wed, 03/23/2011 - 16:44 | 1092129 Dr. Richard Head
Dr. Richard Head's picture

I want my red-headed step-child bailout please.  Gingers have to qualify for something right?

Wed, 03/23/2011 - 16:59 | 1092219 Bicycle Repairman
Bicycle Repairman's picture

It will all be bailed out.  And who bails out Japan?  Hmmmm....

Wed, 03/23/2011 - 16:36 | 1092088 Shameful
Shameful's picture

Good because clearly the Japanese government can issue an infinite amount of debt.  200% is for wusses, show us the way Japan.  Show us the way.  Just for God's sake don't sell US Treasuries.  Don't need to give Zimbabwe Ben an excuse to shoot another cool trillion off the presses.

Wed, 03/23/2011 - 16:39 | 1092114 bingaling
bingaling's picture

I am sure the US is now the biggest buyer of japanese debt and the EU is second , shit it wouldnt surprise me if China was buying too . The worlds biggest circle jerk must go on .

Wed, 03/23/2011 - 16:49 | 1092156 disabledvet
disabledvet's picture

there does indeed seem to be a problem with the "buyer of last resort" now, yes, yes?  from where i sit (and again I AM SITTING DOWN FOR THIS ONE) a "hyperinflation is preferable to nuclear meltdown."  What say all of you?

Wed, 03/23/2011 - 16:38 | 1092098 RobotTrader
RobotTrader's picture

Why not?

Everyone is now using the Ben Bernank model.

He's successfully skied the S & P 500 by 90% or so in 2 years, with no improvement in the economy whatsoever.

Virtually everyone is now going to bail out, nationalize, monetize, and POMO their way out of all problems.

So far, it is working.

Why stop now?

Wed, 03/23/2011 - 16:44 | 1092121 equity_momo
equity_momo's picture

Deleted my rant.

Robo , add some value for once.

Wed, 03/23/2011 - 16:47 | 1092141 Dr. Richard Head
Dr. Richard Head's picture

There are nuggets of truth in Robo's statements.  For instance the one you are responding to. Point out where he is wrong.  So far, he is 100% on his assessment as it relates to this post. 

He never did say it would last forever, but so far it is working to delay the inevitable.

Then disregard my remark here.  I almost locked you in to your rant. Haaa

Wed, 03/23/2011 - 17:58 | 1092488 equity_momo
equity_momo's picture

Nuggets of truth? Its all factual - but i dont believe there is any value pointing out the blindingly obvious in the comments section.  The point i have a problem with is the question - its posed in a way to affirm the medicine prescribed. As if pumping up NOMINAL asset prices is the be all and end all. How perverse!

Those of us with an above moderate intelligence realise printing money is no panacea and that in itself is reason enough to stop the madness that has resulted in an ever decreasing living standards of the post-nuclear American family.

 

Now , feel free to encourage more bandwidth white noise unless you care to point out how extend and pretend doesnt result in ever decreasing living standards for more and more people , eventually even yourself and Robotrader will be sucked into that mire.

Wed, 03/23/2011 - 16:47 | 1092147 Caviar Emptor
Caviar Emptor's picture

Agree with you Robo. No central banker is gonna want to be different (nor will they be allowed to)

Wed, 03/23/2011 - 16:54 | 1092189 disabledvet
disabledvet's picture

having been someone who helped create Robo I cannot stress enough how wrong all of us can be.  Sometimes "the evil" is right underneath our feat and not at all "standing right in front of us."  "intelligence" to the extent it exists at all is always a "collective" enterprise.  the most important voices are those the we disagree with since it is impossible for any mere indvidual to rise above his/her inherent prejudices.

Wed, 03/23/2011 - 17:42 | 1092436 SheepDog-One
SheepDog-One's picture

Skied the S&P (which was recently sold to the Germans) by 90%, still around 1999 levels. Oh well, maybe next year there will be an actual gain of some sort, but highly unlikely.

Wed, 03/23/2011 - 16:37 | 1092100 metastar
metastar's picture

Like I said, ... TBTF.

Wed, 03/23/2011 - 16:39 | 1092102 equity_momo
equity_momo's picture

I just want to hear about Buffets insurance losses in Japan. 

This guy is the devil in sheeps clothing. Next time the "dinner with buffet" is auctioned off , can we get serious and whip up enough fiat to put the head Tyler in front of him for a night of Q and As?

Wed, 03/23/2011 - 16:41 | 1092124 thedrickster
thedrickster's picture

Thanks to whomever planted a vision of Quick's skirt in my head yesterday.

Hey Warren, will you pass the thigh?

Wed, 03/23/2011 - 17:38 | 1092224 thedrickster
thedrickster's picture

http://dailybail.com/storage/becky%20quick.jpg

Warren, not the webcam again......grrr

 

Wed, 03/23/2011 - 16:50 | 1092159 Caviar Emptor
Caviar Emptor's picture

If he incurs losses he'll be quietly bailed through the back door (Fed money channeled through Japan)

Wed, 03/23/2011 - 16:40 | 1092111 taraxias
taraxias's picture

Why not foot the ENTIRE bill? Seriously, they can print it in a few seconds, so why not?

Folks, we're not in Kansas anymore, stop trying to find rational solutions.

This game will continue UNTIL those with real commodities to sell say ENOUGH.

Wed, 03/23/2011 - 16:50 | 1092160 hedgeless_horseman
hedgeless_horseman's picture

This game will continue UNTIL those with real commodities to sell say ENOUGH.

Like KSA, Libya, etc?  All the "leaders" of those countries are either bought and paid for or hiding in a spider hole. 

Wed, 03/23/2011 - 17:11 | 1092284 Bicycle Repairman
Bicycle Repairman's picture

Yeah.  How about that?  Did you include military action in your model?  What does armageddon look like if the US controls all of the mideast oil directly, and all of the US debt owed to the mideast?

Wed, 03/23/2011 - 16:42 | 1092119 Piranhanoia
Piranhanoia's picture

Max Keiser makes more sense every day. You can't make food from shit directly, and that we are being fed the latter and expected to make do.

Wed, 03/23/2011 - 16:43 | 1092136 thedrickster
thedrickster's picture

I used to love Keiser, that was until he decided to jump upon the Gabby "rhetoric" vomit comet.

Forgive and forget I suppose.

Wed, 03/23/2011 - 16:44 | 1092130 RobotTrader
RobotTrader's picture

I guess Buffett doesn't care that when you peel off Becky's blouse, all you see is a flat, pasty, white surface that looks like the bathtub from a 1928-built 1-bedroom apartment on Melrose Ave.

Hence, the name "Bathtub Becky"...

Heck, he could sell 1 share of Berkshire Hathaway and pay for a world class "makeover", including a boob job....

Wed, 03/23/2011 - 17:24 | 1092140 thedrickster
thedrickster's picture

Don't fuck with nature, haven't you learned anything from TEPCO?

Wed, 03/23/2011 - 16:58 | 1092222 disabledvet
disabledvet's picture

brains attract.  period.  unless of course your arguing "it's the chance for notoriety via Becky Quick."  Is that what you're arguing?

Wed, 03/23/2011 - 18:30 | 1092597 Buck Johnson
Buck Johnson's picture

I know, Becky seems to have Buffet as her special project when he goes places.  Just as Carlos Slim has Caruso Cabrerra.  Have you noticed that when Caruso goes to Mexico to report on Carlos or anything dealing with Mexico finance, they darken her makeup a little and it seems they darken her hair more (I guess they want her to fit in more as a Mexican than a white Cuban).

Thu, 03/24/2011 - 00:12 | 1093713 Yen Cross
Yen Cross's picture

Beat it. I find what I want!

Wed, 03/23/2011 - 16:45 | 1092144 AG BCN
AG BCN's picture

Paint what’s left of the reactors pink and put 200ft Hello Kitty’s on the side, all will be well.

Wed, 03/23/2011 - 17:27 | 1092365 SparkyvonBellagio
SparkyvonBellagio's picture

" Paint what’s left of the reactors pink and put 200ft Hello Kitty’s on the side, all will be well. "

 

which would then be HELL GLOW KITTY !!!

Wed, 03/23/2011 - 16:52 | 1092172 One_Eyed_Pony
One_Eyed_Pony's picture

Prosecutors have charged that Gupta tipped Rajaratnam to a big investment in Goldman by investor Warren Buffett and Blankfein testifies against Gupta? TEPCO insider dive by Buffett?

HYPOCRISY!

Buffet Owns Capital Hill, Blankfein Owns the US Treasury, they both own the SEC and Puppets in DC. oh, use that the Echelon NSA system to spy on Japan's communications of financial deals. hand them over to the INSIDERS Buffett and Blankfein. Geez...Prosecuting the wrong guys!

 

Oh damn, I keep forgetting in this Corpo-Fascism government and their Money Masters, are best freinds.

 

Hah Hah... BANANA REPUBLIC~!

POT==>KETTLE==>BLACK

Wed, 03/23/2011 - 16:59 | 1092228 Life of Illusion
Wed, 03/23/2011 - 16:55 | 1092192 Caviar Emptor
Caviar Emptor's picture

The more they bail, the more they'll have to. 

This sets up a giant apple cart: if one tiny systemic risk is not addressed immediately and bailed, then they'll have to bail out the world again like in 08. 

Wed, 03/23/2011 - 17:04 | 1092250 sundarb
sundarb's picture

I guess 'you should get greedy when others are fearful' works only when you know enough information to decide if you should get greedy.

Wed, 03/23/2011 - 17:06 | 1092263 brucel
brucel's picture

I don't understand the malice toward Buffett. Munich Re loses 2 billion in Japan and BRK has 10% of munich re so Buffett sees a $200 million loss in a company with a market cap of 209 Billion market cap? That isn't even as big as the bid ask on that stock. I have watched him for 40 years and I don't see the nefarious manipulator I am hearing about in these comments.  Just saying.

Wed, 03/23/2011 - 17:06 | 1092264 brucel
brucel's picture

I don't understand the malice toward Buffett. Munich Re loses 2 billion in Japan and BRK has 10% of munich re so Buffett sees a $200 million loss in a company with a market cap of 209 Billion market cap? That isn't even as big as the bid ask on that stock. I have watched him for 40 years and I don't see the nefarious manipulator I am hearing about in these comments.  Just saying.

Wed, 03/23/2011 - 17:21 | 1092338 thedrickster
thedrickster's picture

He has done as much damage to the notion of free enterprise as anyone.

A man held up to the plebs as symbol of all that is good, righteous & possible in free market capitalism, goes .gov before the river card.

Unforgivable in my eyes.

 

Wed, 03/23/2011 - 18:25 | 1092582 sundarb
sundarb's picture

pray tell -- why did Buffet acquire Goldman Sachs during the financial crisis of 2008?

Goldman Sachs were guaranteed not to fail, by none other than the US Treasury Secretary, who was also btw -- a former CEO of Goldman Sachs.

Open your eyes. Private Gains and Public losses.

Wed, 03/23/2011 - 19:21 | 1092718 Baptiste Say
Baptiste Say's picture

Buffett has spent years lobbying for an increase in tax rates particually the death tax which has allowed him to snap up dozens of companies from families who have no choice but to liquidate their inherited holdings to pay the IRS.

 

He made a backroom deal to buy preferred stock in GS making a guaranteed profit from what is by far the biggest case of systematic fraud in the history of mankind, he has spent 50 years or more building his companies up to a market cap of $200 billion and every hour of free time he doesn't spend supporting the death tax or engaging in fraud is spent lobbying for higher income and corporate tax rates to keep enterprising individuals down.

 

Buffett is a master manipulator and you are his useful idiot.

Wed, 03/23/2011 - 17:06 | 1092273 QQQBall
QQQBall's picture

Private profits, public risk --- Japanese copy everything... Watch them float bonds and magically borrow against them with Bernank-san..

Wed, 03/23/2011 - 17:08 | 1092279 Quinvarius
Quinvarius's picture

Once again, a company that should go bankrupt and get new management is kept alive thanks to Buffet and his connections.

Wed, 03/23/2011 - 17:24 | 1092353 ptoemmes
ptoemmes's picture

Hell, WHY THE EFF NOT?

http://www.cnbc.com/id/42234584

"

If TARP is So Profitable, Why Not Bail Out Everyone?

As Treasury feeds us a steady diet of how much money taxpayers are making off the Troubled Asset Relief Program, you have to wonder why nobody thought of this idea sooner.

After all, if the worst that can happen from the collapse of the banking system is that we make money rescuing failing institutions, then who really cares how much risk they take? Can the Department of Bank Bailouts be far behind?

"

Probably worth the while to read the whole article.

 

Pete

Wed, 03/23/2011 - 17:53 | 1092469 chump666
chump666's picture

Japan is fininshed...

people should get might pissed off now riots etc

Wed, 03/23/2011 - 18:06 | 1092525 gwar5
gwar5's picture

Too bad Buffet didn't own a piece of the re-insurance.

Wed, 03/23/2011 - 19:15 | 1092699 Baptiste Say
Baptiste Say's picture

If a bailout is going to become standard practice for a nuclear company that according to whistle-blowing engineers has engaged in criminal negligence and coverups regarding the lack of safety in their plants then what incentive does any other company worldwide have to take safety seriously? The company should foot the entirety of the multi billion compensation claims that will come.

Wed, 03/23/2011 - 19:56 | 1092843 BoeingSpaceliner797
BoeingSpaceliner797's picture

The question we have is how much did Japan bulls such as Buffett purchase in TEPCO stock in advance of this latest pseudo-socialization in which taxpayers once again bail out private shareholders, and just how much of his decision to acquire said stock would have been predicated on the knowledge another taxpayer-to-right pocket transfer was imminent.

 

Outstanding question!

Wed, 03/23/2011 - 19:58 | 1092847 BoeingSpaceliner797
BoeingSpaceliner797's picture

edit:  deleted duplicate

Wed, 03/23/2011 - 20:15 | 1092899 max2205
max2205's picture

Time to get bullish. Only 5 post on ZH today. Or a well deserved lull for the zh team.

Wed, 03/23/2011 - 20:31 | 1092903 Kina
Kina's picture

Indeed well done ZH. Time to go off and make a contribution.

 

...now done.

Wed, 03/23/2011 - 20:14 | 1092901 Kina
Kina's picture

Uncle Warren has his own personal webcam focussed on the Bernanke's print button.

Wed, 03/23/2011 - 23:42 | 1093608 PulauHantu29
PulauHantu29's picture

How about the companies that built these Nuke Reactors directly over the fault zone, aka, Ring of Fire, chip in....how about their insurers and re-insurers?

Sounds only right...or does that matter any more?

Thu, 03/24/2011 - 00:10 | 1093699 Yen Cross
Yen Cross's picture

Talk to MoF Kampo and Bof. Tokyo power and electric is about that. Japan never pursuses technically Nukes. They could build a nuke in months. Think about it! I can't even pull the Americans name that rebuilt JAPAN after ww2 A little help?

Thu, 03/24/2011 - 00:10 | 1093709 Yen Cross
Yen Cross's picture

Who was that guy Toyoda had carte blanche with? It's amazing how history is LOST! Bitches!!!

Thu, 03/24/2011 - 00:13 | 1093711 Yen Cross
Yen Cross's picture

When the United States rebuilt Japan? That guy, you know?

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