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Time To Dump TEPCO CDS: Japan Considering Nationalization Of Most Recent TBTF-Club Entrant
Update: first market post news: 300-350; 100 bps tighter.
Per Yomiuri, TEPCO may be up for nationalization, precisely as we had predicted, due to the insurmountable amount of accrued liabilities from the Fukushima disaster which would bury a standalone company. And just as we rode the CDS on the way up from 90 to 460, so now is the time to assume there will be no credit risk whatsoever, now that TEPCO is the first ever Japanese non-bank TBTF. Time to bail as central planning is about to branch out.
From Yomiuri:
Liability is expected to cause a huge accident in Fukushima Daiichi Nuclear Power Station, in fact, it has emerged 28 days in a government plan to nationalize the reconstruction was found.
Revealed several government officials. Even if a nuclear accident caused enormous damages, to obtain a majority of the shares of TEPCO and the government to fulfill their liability so that management support.A government official yesterday, "(for power supply), the temporary nationalization to be privatized to raise capital on the play," the idea of ??this.
And agricultural products to compensate for shipping companies and can no longer operate in nuclear accident, the government has shown its intention to seek TEPCO pay principle. TEPCO damages are out of view and also a few trillion yen.
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100 cents on the doll... err... yen?
Or are we talking 'Even Steven'?
plutonium is too big to bail.
Hell no! TEPCO will go bankrupt! Or Yen has to be printed...
I don't know how people can reconcile these two things:
(One of the following statements has to be false.) !(A&&B) = 1
A. Dirty bomb in a metropolitan city, (like NYC) will kill millions.
B. Fukushima / Tokyo / Japan is fine.
Riddle me this.
(For the record, I am not the original poster of this idea, but it's been a busy 14 days, and ZH is tough to search... so my apologies.)
Well if we dont allow women to even have one xray during pregnancy I am going to say B is false .
Good point, thanks for pointing out.
Dirty bomb is unlikely to kill millions. That would require a dirty bomb with the efficiency of the neutron bomb (the professional version of the dirty bomb). I doubt any non government organizations have that capability. However Fukishima and Tokyo are not fine. Both are false. This is going to go on for months if not years. The Japanese don't care. Most of it is wafting out toward the USA and away from Japan. Fuck you Japanese assholes!
This is bullish for the yen, yes?
Temporary nationalization?
Too Funny Cossack. That's like harmless Plutonium. And Oxy-foxy-Bush-tailed-moron.
NAtionalize the losses, privatize the gains. Wash in radioactive warter, rinse in radioactive water, dry in radiactive air...repeat. It's painfully boring now. More painful that boring at that, eh?
ORI
http://aadivaahan.wordpress.com/2011/03/28/for-dis-believers/
Wouldn't you say that the gains were also nationalized in the form of power that was cheaper than it would otherwise have been if more stringent safety requirements were imposed?
Given who imposed the requirements in the first place (and then enforced them in whatever way it deemed best), doesn't it seem suitable that the government should have a role, at the very least, in paying for the consequences?
Not to speak for ORI, but IMHO, certainly.
I will always support goobermint paying for falacies by enduring the "Gauntlet of Guillotines".
I see George Clooney in the lead role and Lewis Black as head rope-puller.
Indeed GF, but the question is, is the government realy going to pay for the consequences? Better yet, who pays the government to pay for the consequences?
Perhaps us, eh?
ORI
Yes, of course that was essentially what I was driving at. It's sort of a fallacy of representative government that "we" are the ones making decisions like this about how much cost to bear on one hand, and how much risk to accept on the other.
Of course the matter is so complex that no system of representative government can really answer such a question well. Still, if you judge the risk-taking behaviors of the nuclear industry in the US, say, against the overall risk-taking behaviors of the populace at large, then I'd say the NRC is definitely in the top quartile of prudence, at least. Perhaps not so much in Japan.
"March 29 (Bloomberg) -- Five of the six biggest container shippers are maintaining routes to Tokyo and Yokohama after the U.S. Navy said radiation on vessels from the leaking Fukushima Dai-Ichi nuclear plant can be scrubbed off with soap and water"
Whod'a thunk it...soap and water! Don't forget behind the ears.
Those ingenious people in authority, next they'll be telling us that 3 steel-structure buildings were brought down by fire, on the same day within a few hours...
http://www.serendipity.li/wot/other_fires/other_fires.htm
Update- The govt now says there officially was no building 7. Case closed.
And plaintiffs attorneys everywhere sulked...
criminal attorneys too. they TBTJ (too big to jail)
Somewhere within the offices of AIG, there is a lowly clerk executing large checks made payable to Goldman Sachs & JP Morgan, on CDS exposure, vis a vis TEPCO, all backed by The Timmy Jeetner & Joe Q. Taxpayer.
...the total gross notional value of TEPCO CDS crossed $5 billion for the first time...
http://blog.creditlime.com/2011/03/25/weekly-tepco/
Does this include the rights to Godzilla?
+1
'Temporary nationalization'...OH yea sure thats how it always works, same as temporary tax hikes they never go away.
No Dog...temporary nationalization as in General Motors...as in until all debts and liabilities are wiped away, and the new IPO comes.
Well, the core rods temporarily melted, according to TEPCO.
+1440
GM= Government Motors
let's keep it real people...
Jreb - Are you one of the "free market fools" who doesnt think there is ever a role for government? I bet you didnt realize those Japanese and German car makers you anti-Detroit people always tout have actually been subsidized by their governments to the tune of a trillion dollars over the past 30 years. I know that doesnt fit into your right wing world view but it is the facts
A handful of wrongs do NOT make a right!
Good point Cdad - very convenient for people to forget some of the bailouts actually accomplished the intended purpose.
Who's going to buy...Bernanke?
The proverbial, fictitious, Legendary, Fabled taxpayer"
To meet the requirements of the law, Japanese nuclear plant operators buy property and liability insurance from the Japan Atomic Energy Insurance Pool (JAEIP). However, JAEIP does not sell the utilities coverage for earthquake damage, tsunami damage or business interruption, which could leave the Japanese government responsible for those costs.
Where are the Mutant Ninja Turtles when you need them most? They could figure this nuclear shit out before the next station break.
I guess we shouldn't have thought so poorly on their Risk Management team. They did assess their company's risk. When TSHTF, they knew their gooberment would nationalize TEPCO so now, no one can sue TEPCO for any immediate or decades-out losses.
kinda sounds like AIG, GS, BoA, etc...
TBTS (sue). clever bitchez....
Goldman Sachs Employees Told Not to Leave Japan
On Monday March 28, 2011, 12:40 pm EDT
At least four Goldman Sachs executives flew into Japan last week to speak with nervous ex-pat employees about radiation fears, according to a person familiar with the situation. They also conveyed another message: don't leave Japan and don't leave Tokyo.
Employees at the investment bank's Japan offices are worried about radiation levels affecting their families, the person said. Many were asking if they could temporarily relocate out of the country or perhaps move to a location in southern Japan, farther away from troubled nuclear power plants. The were told that they should not leave Tokyo, according to the person.
Several meetings were held last week between senior Goldman executives and Tokyo-based employees. At least one meeting was held in a large conference room on one of the five floors of the Mori Tower in Tokyo, which houses Goldman's offices in Japan. Senior executives attending the meeting included Michael Evans, the firm's head of emerging markets and Asia chairman, and Ed Forst, the co-head of Goldman's investment management division. Lloyd Blankfein was testifying in the insider-trading case against Raj Rajaratnam last week.
"The message was clear: no one is to leave. If you do leave, you can't come back and expect to still work for Goldman," the person said.
The reaction has been mixed. Some employees praised the level of information about radiation levels and safety the firm has communicated to them. Others objected to the instructions to stay put.
"I get that they're trying to send a 'business as usual' message to Japan and rally the troops, but some times the party line asks too much," a source in the Tokyo office said.
Some employees have decided to relocate their families, the person said. Radiation can be more harmful to children, pregnant women and unborn children.
The orders to stay put seem to have been effective. Another person at Goldman's Tokyo offices said that almost everyone was still in place.
Financial firms have had divergent reactions to the nuclear crisis in Japan. The private equity giant Blackstone reportedly relocated its office to Hong Kong, as did French bank BNP Paribas. Bank of America (NYSE: bac), Citigroup (NYSE: c), JPMorgan Chase (NYSE: jpm) and other American banks have reportedly decided not to relocate.
Immediately following the earthquake, Goldman (NYSE: gs) and Morgan Stanley (NYSE: ms) closed their offices. Many workers at Goldman, however, stayed at work-some sleeping there overnight-because transportation was disrupted.
Goldman could not be reached for comment.
http://finance.yahoo.com/news/Goldman-Sachs-Employees-Told-cnbc-11282932...
Nice, go Goldmanite! They deserve this!
You've got to ask yourself, what is worse than a zombie banker?
A MUTANT zombie banker! We're in big trouble now!
Woman: [dubbed out of synch] What is that coming out of the ocean!
Man: [off-screen] Oh my God....it's...Goldmanzilla!
[Woman screams.]
Coming to your town next!
In order to demonstrate their confidence, I think GS should move its entire operations to northern Tokyo.
Meanwhile, the New York office is busy relaunching QxX.LS on the Tokyo staff and looking for long side buyers.
Given the relative ease of finding a similarly overpaid job in financial services sector, without the radioactive threat, and the cockiness of the average GS employee, what is one to infer when an entire office full of GS employees is told to take one for the team and “almost everyone was still in place”?
Unless the GS office in Tokyo somehow contributed to the meltdown at Fukushima, then they the need to have the balls to tell management to go take a trip about a hundred or so km up the coast.
It does make sense to nationalize to keep it running. lets see what happens to the bondholders, and the equity holders.
In the name of some humanity, can someone imagine if after the tsunami this company went under and stopped producing power.
It seems to me maybe a few hundered thousand homeless should perhaps get access to electicity if it can be provided.
It's all about how this turns out in the long run. of course it is also protection for insurance companies perhaps?
No. See what happens in a bankruptcy is assets are sold off. So performing assets like other power plants would be sold off and still producing power for the people. Bankruptcy is not some magic event where all physical assets are sucked into a black hole. I know under our TBTF system that is what is put forward but I assure you it's just propaganda. A black hole will not open up and devour physical assets.
This is about keeping things under wraps. How much news do you expect to get unconved by the courts or admitted to in the media if Japan itself is on the hook? Kick the can, just another example.
And what effect does this have on JGB CDS?
IMHO, it is placing another, rather large and heavy straw on that already over-burdened camel's back.
I'm sure that's why Goldman Sachs has told its expats in Japan, "Don't you dare leave Tokyo or you will lose your job." There will be some trading to do, you know?
http://www.cnbc.com/id/42304574
At least the human toll is larger than the financial one.
Drawings of contaminated trenches outside the Fukushima plant buildings, relative to the ocean:
http://saposjoint.net/Forum/viewtopic.php?f=66&t=2657&p=31438#p31438
It is kind of obvious, from the drawing, they new these trenches are contaminated immedeately when floor of turbine building was filled with radioactive water.
Prime Minister Kan went to the Nuke Plant on March 12 because he wanted to learn a little bit about nuclear power. Nice. The whole country, and the world pay for his educational trip.
http://ex-skf.blogspot.com/2011/03/fukushima-i-nuke-plant-prime-minister...
This doesn't make sense! It is not going to hurt the economy to zero out the shareholders, replace the board, and give the company to the bondholders. The company will still be there. It will still be in operation. All this does is reward careless investors/owners and management who should have known better than to put backup generators in a basement in a tsunami prone area, or put a cooling pool on top of a nucleear reactor in a quake prone area!
Oh. It does make sense. New ownership and a bankruptcy court would uncover all the embarrassing details, the faked inspections, the decades of forgeries, deliberate safety and inspection violations, and the true extent of the damage. Now I know why they have to nationalize it. They don't want any outsiders snooping around during bankruptcy.
After reading this google translated note, it is clear to all that the Fukushima catastrophe must have been rooted in the google translated "tsunami emergency procedures" booklet the plant operators recurred to when they were suddenly faced with a panic situation on 3/11.
> TEPCO is the first ever Japanese non-bank TBTF.
Japan Air Lines joined that club a few years before TEPCO did.
congratulations Japanese government. There's still a mess. Thanks for the attribution TD on the nationalization thingy. Shall we place our bets on when "sarcophagus time" begins? One thing's fer sure..."gonna be the mother of all sarcophagi"(sp?).
Google needs to do better job on translation tool...
Ok, so here's what happened.
The earthquake/negligence caused a multiple failure of backup generators/hydraulic system which prevented the control rods from actuating and shutting down the reactor. The control rods come up from the bottom of the reactor core, rather than from the top or the side.
The only reason why Japan is still on the map is that the core melt, which might have breached the core and blown up again, or reached critical mass by now, drips into those control rods like so much candle wax. I think this is probably the case with #3.
So they're going to have to allow the meltdown to continue in each reactor partially melted down, even though they insist that the containments are not breached. The top of the containment is certainly not there in #3. And there's plutonium everywhere.
That means more steam and smoke and more water for the pools. And continuous releases of radionucleides.