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Wednesday, March 16, 2011

Well

Update: US flying drone over Daiichi plant to see if they can help pinpointing sources.
Further developments: Some Japanese companies are refusing to deliver close to the exclusion zone. Tap water in Fukushima city showed trace cesium contamination in the morning there, but had cleared by the afternoon.

Radiation 6,600 times normal was detected in Namie, which was reported as being beyond the 20km exclusion zone but within the 30km "hide inside" zone. Still, normal in that area is probably around 0.005 microsievert so that would only translate to 33 microsievert/h, which is not a threat to human health on a short term basis. A full week of that would net you 5.5 millisievert. Nine weeks of consistent exposure at that level would net you almost 50 millisievert, which is the maximum annual dosage for a radiation worker. At that point, one would be concerned and have to widen the evacuation area.

However none of these levels have been consistently reported. These are highs. The tap water contamination might be more of an issue, but if they can keep emitting steam instead of fire/explosions, they should be able to keep that down. End update

The scale of the disaster in Japan is such that it makes it hard to write about more mundane matters. In actuality, right now far more people in Japan are endangered by the quake/tsunami damages and shortages than are threatened by four unstable nuclear reactors. You have, at a minimum, 50K people out there with shortages of food, water, heat and medicine and also medical needs. A better estimate would be 200K. Since the major impact areas experienced complete rubblizing of their roads and other transport systems, the first task is to clear the roads to restart transportation, restore power, and restore clean water.

Having written that last sentence, a cloud of incredulity fogs my senses. That is one eventuality that I had never considered. One would think that four unstable reactors within 180 miles of a population center as big as Tokyo would be about the worst, but no, it isn't.

Further, with many ports being damaged, the exclusion zone around Daiichi is going to pose additional problems restoring land transportation. Any main traffic arteries going through there have to be rerouted.

If the damage and radiation limits can be kept relatively low and local, then Tokyo is mostly impacted by power shortages. This is far more of an issue than one might think; the entire area is dependent upon the train system, which needs electricity.

However the best-case scenario now is that the relatively controlled emissions at Daiichi will go on for at least six weeks, so I cannot estimate the total impact. Recovering full power (even at reduced consumption levels) in and around the Tokyo area may take a very long time. The latest news today is that there appears to be further steam emissions at reactor 3 (reported around 10:20 PM their time), but they think the containment vessel is basically intact. And they should know from radiation levels. Still, it is hard to lift the exclusion zone under these conditions.

You can't restart any of the reactors at Daini until you are sure that the situation at Daiichi is under control as regards radiation emissions. I do not believe that any of the reactors at Daiichi should be restarted ever. Since the site will remain mildly radioactive for a very long time, rebuilding reactors there might make sense. But trying to ever restart 5 or 6 given the impacts to which they have been subjected seems like lying down in front of a train.

The Bank of Japan responded on Monday and Tuesday by simply hurling money out there. I do not think that the immediate effect on Japanese bonds will be quite what some think.

Immediate payouts by insurance companies are likely to go back into bonds substantially in the near term. Obviously Japan is now facing some form of fiscal crisis; public debt levels were estimated close to 200% of GDP before this and the need to borrow to rebuild is obvious. Most of the debt is owed to their own residents and financial institutions. One would think that massive inflation would be the answer, but it is hard to know. It is hard to get massive inflation with those demographics and the import needs.

In terms of the area of damage and the fiscal impacts, I am using Katrina in the US. Power and roads were knocked out for hundreds of miles continuously. The first task was to start working inwards clearing the roads. After that power companies could get in. Of course, the US was not working under the handicap of such a population density, which greatly complicates logistics, nor the nuclear issue, which also does so.

Because of the scope of the damage, one would expect that a lot of the money would pool into the banking system as it did in Katrina. The banks in the affected areas were swimming in deposits and could do little with them due to low monetary demands. So you want to separate this into 3 month segments to project forward. In the worst-hit Katrina areas, it took over 12 months for much to get going.

US Treasuries have gone up as buy-ins continue.

China is donating fuel to Japan. It would appear that a major international relief effort is needed for Japan to bridge some of the worst issues.

Comments:
Any increased probability of bondholder haircuts (at least on old debt)?
 
The EU Energy Commission was just speaking in front of the EU Parliament and described the situation as "out of control" and warned of "possible catastrophic events" in the next few hours. This tanked the stock market.

The French, who of course have perfected the art of fleeing situations like this, have advised French nationals to leave the country and have commandeered Air France planes in Asia to Tokyo to ferry people home. The French are also more dependent on nuclear power than any industrialized country - so theirs is an informed dissent.
 
Brian - the Russians are going to evacuate the families of diplomats on Friday.

But mathematically, they already blew up one reactor so I think they are getting the divine wind.
 
Barber - for company bonds, maybe. For sovereign bonds, since they would be defaulting almost solely on their own banks and population, one would think they would inflate their way out of it.
 
I've been using the term "multiple Katrina's" to describe the devastation. I wonder if anyone has come up with some kind of quantification to compare the two.

Conditions for many of these people must be terrible. It is snowing in some places where people have little or no shelter and the temps are going down to the 20s tonight.

Here's a sign of how dire things are getting. The Japanese, after having thought about it for 4 days, are going to allow foreign doctors to treat people. On the one hand it's kind of laughable that you would have to think hard about accepting offers of assistance like this. On the other, given their well developed sense of xenophobia, it underscores the gravity of the situation.
 
George Freidman of Stratfor has a free article with some historical perspectives that are, if not chilling, then quite sobering.
 
to be precise, China will donate 20000 tonnes of fuel to Japan. it should be not treated lightly.
 
No, it shouldn't be, and days ago when Japan asked for extra, China said yes immediately.

This is of great practical use.
 
Brian, unfair on the French.

They recognised the Libyan rebels, and were first to advise citizens to consider leaving Tokyo.

Hopefully that hasn't put the hex on either situation.
 
Also of interest is Georneys, a PhD student's blog. Her father is a retired USN commander and nuclear power plant engineer, and they have been podcasting for several days now on the situation.
 
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