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.