A world in economic crisis

Japanese economy suffers slow down

Posted in Japan by Aussie on December 21, 2011

This year Japan suffered the devastating effects of the earthquake an tsunami. The economic impact of those natural disasters was worth billions of dollars to the Japanese economy. Now it seems that Japan is facing a new crisis in regards to exports to other nations. The BBC News reports that Japan’s exports have been hit by a slowdown of demand. You can probably pin this slow down on the current conditions in Europe.

I think it might be fair to blame this situation on the push to go Green in Europe. Watermelons have no regard for economic prosperity. It seems that in some European countries there has been an increased push towards technologies that are in fact an utter failure. As a result of this push, Japan is one of many countries beginning to suffer the consequences of Watermelon foolishness.

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Standard and Poor downgrade Japan rating

In the wake of the disaster of the 9.0 earthquake and the tsunami that followed, as well as the nuclear reactor accident at Fukushima that was a result of the tsunami, Standard and Poor have downgraded the outlook for Japan in being able to pay back its debt. This downgrading must be a very big blow to the Japanese economy, especially when Japan needs to rebuild after the devastating events.

Here are the reasons being given for the poor outlook with regard to the Japanese economy:

According to S&P, the cost of rebuilding could go as high as 50 trillion yen ($612bn; £372bn).

Japan has the highest public debt among the industrialised countries.

The agency also warned that if Japan’s debt levels continue to rise it could take further action.

“We revised the outlook on the long-term rating on Japan to negative, to reflect the potential for a downgrade, if fiscal deterioration materially exceeds these estimates in the absence of greater fiscal consolidation,” S&P said in a statement.

Japan’s reconstruction bill has been increasing as the full extent of the damage caused by the earthquake and tsunami becomes clear.

The government initially estimated that it will cost 25tn yen ($306bn) to rebuild the infrastructure in the affected areas.

However, S&P has indicated that the cost could be almost double that amount.

Please read the whole report on why Stanadard and Poor outlook is negative.

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Economic outlook for Japan in the wake of the earthquakes, tsunami and nuclear accident crisis

According to this report from the BBC, the Japanese government has downgraded its assessment for the economy as a result of last month’s catastrophic earthquake, tsunami and nuclear plant accident.

Key areas of the economy, including industrial production and exports would suffer. Indeed, as a result of the nuclear accident, food exports are under threat.

This is the first time in 6 months that the Japanese government has downgraded its assessment.

At the same time the International Monetary Fund (IMF) cut its forecast of Japanese growth:

“The economy is showing weakness due to the influence of the Great East Japan earthquake” the Japanese government said in its monthly economic report. “It remains in a severe condition”.

The earthquake and tsunami had affected many companies with operations in the affected regions, destroying factories and blocking supply chains.  The electricity shortages caused by the nuclear accident at Fukushima Daiichi power plant are likely to continue into summer.  The government has therefore warned of a negative impact on exports, with shipping tipped to decline as manufacturers seek to bring their production lines back to full capacity.

Japan had been struggling to emerge from the impact of the global financial crisis but as a result of the earthquake and tsunami, as well as the aftershocks that have followed, the direction of the economy has been downward.  

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A world in Turmoil, and Portugal heads for collapse

Portugal is the latest of the PIGS nations in Europe to head for collapse. Already we have seen Greece, Ireland and Spain reach the critical level, and now it seems that Portugal has finally admitted that it needs help. The implications for countries such as the UK is that the necessity to fund the rescue package will hit the pocket of every man, woman and child. However, if Portugal does not end its Socialist practices, and if Portugal does not cut the unnecessary spending, then there is no real hope.  (I will post something else on this subject when I learn more about what is happening).

However, the collapse of Portugal is small potatoes compared to some of the other crises in the world. Earlier this year, Christchurch suffered its second devasting earthquake in a matter of months. The first one in September left lots of damage, but there were no deaths or injuries. The epicentre was close to a town near Rolleston. It happened in the middle of the night, so that no one was around when a few buildings collapsed. Probably the worst damaged building at the time was the Anglican Cathedral. At least when we had a tour that included Christchurch, we saw the fencing around the cathedral indicating that there was a danger of collapse and people getting injured. However, when the shallow quake at Lyttleton harbour struck, it led to a devastating loss of life, widespread destruction and an economic disaster for New Zealand, as well as the insurance industry. The final death toll was more than 160 persons killed, with hundreds injured, including those who had limbs amputated. Several families have been left without a mother or a father.

Unfortunately, the earthquake in New Zealand has been overshadowed by the devastating magnitude 9.0 quake and tsunami in Japan. Thousands have lost their lives and thousands have been left homeless, with many small towns being almost wiped out by a tsunami that was around 32 ft or approximate 12-14 metres in height.  It is this quake that will have financial aftershocks for Japan well into the future.

The problem in Japan is not so much the devastation to property and the wiping out of thousands of people, but the nuclear accident at Fukushima that followed the quake and tsunami. As a short background, the nuclear reactors at the Daiichi and Danii plants shut down as expected when the quake hit. The generators started so that the reactors could continue to operate and cool down. There was no damage at this point to the housing of the reactors. However, the tsunami was much larger than anticipated and the 14 ft wave took out the generators that were providing the emergency power to the Daiichi plant. The battery operated generators kicked in, but these only had 8 hours of life.  It was after these died that the real problems began at the Daiichi plant.  There was an explosion at the nr 1 reactor. The outer concrete housing partially collapsed, but the inner steel housing survived. The explosion was explained as being the result of a build up of hydrogen. This was followed by an explosion in the 2nd reactor, and then another in the 3rd reactor.  In one case, the one I believe was due to human error, the rods were exposed to air for 140 minutes, which has led to a partial meltdown of the core.  It is in this reactor, where it is believed that the containment unit was damaged.  The Japanese are struggling to bring everything under control again. This accident is on a par with the accident at Three Mile Island.

The most devastating part about this kind of accident is that radiation is released into the atmosphere. This is what has happened at the Daiichi plant. At first the releases were small, and the over-reaction from the anti-nuclear lobby has been a joke, but the levels of radiation from the later explosions have been cause for concern in Japan, as well as in countries that have been importing Japanese food products. In Tokyo the levels of radiation are high enough to be considered dangerous to babies, and several farms outside of Fukushima have had traces of radiation discovered on their produce, meaning that they cannot sell their product on the open market.

As the exports stop for foodstuffs, Japan will suffer some economic consequences, but hopefully this will be short-lived.  It is too soon to tell how this will hurt the Japanese economy. At the same time, thousands of foreigners have fled from Tokyo and Japan out of fear of the impact of the radiation. Again, there will be some economic consequences to Japan because of this flight of foreign workers. This is all on top of the losses sustained because of the earthquake and Tsunami.

At the same time, the Middle East has broken out in a fever of revolution. It started in Tunisia, then Egypt caught the bug, followed by Morrocco, Syria, Bahrain and then Libya. Whilst I have concerns about some of these countries because there is a very real possibility of them falling into the hands of Muslim Brotherhood, there is one country that is a stand out, mainly because of the brutal manner in which its leader, Moammer Gadhaffi has attempted to put down the revolt.  As a result of the humanitarian crisis, the UN responded with sanctions against the regime in Libya, followed by Resolution 1973 which led to the bombing of Gadhafi’s military bases. That action saved Benghazi from a promised massive slaughter.

This turmoil in the Middle East might be just a hiccup, but it has consequences in the form of oil price rises. This is the 1970s redux.

A crisis of the future? How the Watermelons aided China’s monopoly over rare earth minerals

Posted in China, Japan, rare eath minerals, watermelons aka Greens by Aussie on October 6, 2010

Recently I noticed a news report relating to China using its monopoly over rare earth minerals to put pressure upon Japan over disputed territory. Specifically, the Japanese won the territory during the Sino-Japanese war.  The incident that has sparked off a confrontation was related to a Chinese boat that had strayed too close to the islands. As a result of the action taken by the Japanese the Chinese have decided to refuse to ship to Japan rare earth minerals that are so necessary for the manufacture of electronics components such as LEDs etc. etc.

The Chinese would not have this monopoly except for the lunacy of the Watermelons aka the Greens.  As a bit of background here, according to Forbes, which has a really good report on the issue, the Chinese has this monopoly because the environmentalists had succeeded in shutting down the existing mines in the USA, and had successfully shut up millions of acres of land where mineral exploration could have yielded a rich deposit of these same rare earth minerals.

What is rare earth?Forbes states it this way:

Rare earth” refers to a collection of 17 elements from the periodic table, with Star Trek-sounding names like holmium, europium, neodymium, and thulium.  They tend to be found together, and exhibit similar chemical properties that make them useful — and in many cases vital — for a whole host of high-tech applications, such as superconductors, magnets, and lasers.  Rare earths are essential ingredients in many emerging “green” technologies, including wind turbines and batteries for electric cars.  A lot of advanced U.S. military hardware, including tank navigation and naval radar systems, also depends on rare earth-based components.

The last mine in the USA was shut down in 2002. For the watermelons the closing of that mine was a victory. However, in 2010 it should be seen as a disaster. The policies of the watermelons has aided and abetted the Chinese in having what is a near monopoly on rare earth. Considering the advancement in technology, as well as acceding to watermelon demands that we seek out new ways of generating electricity via the expensive and not so viable wind farms and solar panels, the reliance upon a near monopolistic source of supply is quite dangerous to the strategic requirements of most other nations.

The shift from manufacturing production in the USA (UK, Australia and Europe) to India, China and other South-East Asian nations is not a good move. What if the Communist Chinese became aggressive again?  The rare earth elements are required in items that are used for strategic defense. On top of that the shift in the manufacturing base has left millions of Americans unemployed.

There is no doubt that many of the watermelon policies must be reversed – and the sooner, the better. There needs to be a move to allow the rare earth mines to be opened and to be operational again. At the same time there needs to be a reversal on all those acres of land that have been locked up as reserves etc. so that the USA will not be as dependent upon other nations for oil, gas, and rare earth minerals.

I see this situation between China and Japan as a crisis in the making. If the monopoly situation is not reversed, and if we cannot reverse the watermelon demands relating to things like the manufacture of wind turbines and solar panels (which are manufactured in China rather than in say USA or Australia) then could be severe consequences in the long term.