Japan goes for broke as Fukushima takes its toll
The world is watching as tensions rise in Asia, but attention is not restricted to North Korea. About 650 miles away across the sea, Japan is struggling with the fallout from its own real nuclear hell and has taken a huge financial gamble as a result.
Two years ago, Tokyo Electric Power’s (Tepco) poorly maintained installation at Fukushima was destroyed by a massive earthquake and tsunami. There is a new leakage of contaminated water from underground storage tanks.
It comes after a failure in the cooling system left the plant unable to cool radioactive fuel rods in one of the reactors for about three hours. Last month, a rat chewed through some cables and caused a 29-hour blackout in parts of the plant and led to temperatures in the reactors rising once again.
Other equipment has broken down at the site, including devices to measure levels of radiation in the air, while the company is still finding it difficult to stop groundwater seeping into the damaged reactor buildings.
Attempts to decommission the plant and clean up the surrounding land will continue for many years, but are unlikely to be able to completely remove the radiation. Few of the displaced population will want to return.
A new report from scientists Joseph J. Mangano and Janette D. Sherman shows that in the days following the explosions at the four reactor plants, clouds of the radioisotope iodine-131 floated east over the Pacific Ocean and landed on US West Coast states as well as other Pacific countries.
The levels of that isotope were measured at hundreds of times greater than supposedly safe levels. The devastation from the radiation has produced hypothyroidism and increased the likelihood of many other conditions in babies born shortly after the incident in Hawaii, Alaska, Washington, Oregon, and California.
The Fukushima disaster led to the closure of several other nuclear plants in Japan, and sent energy prices from all the utility companies soaring. This had a significant negative impact on both the competitiveness of export commodities produced by the corporations operating in the country and on the real incomes of consumers.
So we can be certain that the result of Tepco’s profit-driven decisions to bypass proper maintenance of Fukushima was one of the key causes for the sudden shift in financial policy now introduced by the new governor of the Bank of Japan, Haruhiko Kuroda.
The BoJ has stepped way beyond the failed money-creating quantitative easing it pioneered in the 1990s in attempts to escape the country’s two decades of deflationary slump. Now it is introducing what it calls “quantitative and qualitative monetary easing”.
This new, more desperate programme is intended, in part, to increase export competitiveness by printing more money which will in turn lower the value of the yen. It will see an eye-popping doubling of Japan’s monetary base and a further stretching of credit by more than doubling of the repayment period for government bonds bought by the Bank.
What does it mean? Why are they doing this?
Like all global corporations, those operating in Japan, are in retreat, and haven’t been investing at anything like a sustainable pace.
They’ve been holding on to their profits, knowing that the global economy is contracting, with austerity programmes reducing consumption, and stocks of commodities piling up.
Sony’s profitability lags way behind its South Korean competitor, Samsung, which is Apple’s main competitor (and collaborator) in the mobile phone market. Japan’s car makers are struggling. Mazda said last week that it and its partners’ sales in China, the world’s biggest car market, dropped 21.5% in the three months to March from the same period a year ago.
Nobody thinks this not-so-new direction from the BoJ will make much impact. If it fails as badly as some are saying it could push the country from years of falling prices – deflation – to hyperinflation.
Japan's combined nuclear and financial crisis is, in its own way, just as threatening as the sabre rattling by its near neighbour.
10 April 2013