Archive for the ‘earthquake’ tag
Pressure is building on the north American plate beyond the rocky mountain continental divide. As far north as the Cascadia range in the Pacific Northwest, south east to Yellowstone, then further south east to Georgia, up north to Montreal / New York …
The threat of a new madrid earthquake , in my opinion, goes up ANOTHER notch, with the signs of more activity in the north east, extending along the faults down to Arkansas.
The pressure buildup is extending across the atlantic to the mid-Atlantic ridge, and now showing signs of stress on BOTH sides of the european plate.. the european plate is showing signs of “uptick” in activity.. as far north as south belgium, east towards Poland and south to the mediterranean sea.
Expect anywhere along a plate boundry and anwhere there are active volcanos to experience 5.0 quakes and greater for the next 2 weeks or more.
Also areas where DORMANT volcanos exist .. such as greenbrier Arkansas, Mono Lake California, off the coast of seattle, south belgium / west germany…
Asia, the threat extends from the India Russia border (central india) south east to australia, and bending around the australian continent down to the south pole, right through new zealand, and branching north up to the hot spot of japan.
Japan still is due for a VERY large quake.. in the 8.0+ range within the next 2 weeks.
Post glacial rebound effect:
check out scott from believers underground who first proposed this theory to us here on youtube.. he is correct about the effects of PGRE.
No quakes in Australia.. hmm
Japan Copes With 21st Century Dark Age -Seattle Times
“Tokyo’s iconic electronic billboards have been switched off. Trash is piling-up in many northern cities because garbage trucks don’t have gasoline. Public buildings go unheated. Factories are closed, in large part because of rolling blackouts and because employees can’t drive to work with empty tanks.”
“This is what happens when a 21st-century, technologically sophisticated country runs critically low on energy. The March 11 earthquake and tsunami have thrust much of Japan into an unaccustomed dark age that could drag on for up to a year. “It is dark enough to be a little scary…To my generation, it is unthinkable to have a shortage of electricity,” said Naoki Takano, 25, a pony-tailed salesman at Tower Records in Tokyo’s Shibuya district, normally infused by neon lights. The store has switched-off its elevators and a big screen that used to play music videos late into the night, a situation Takano expects to last until summer.”
“Japan’s energy crisis is taking place on two fronts: The explosions at the Fukushima Daiichi nuclear compound and the shutdown of other nuclear plants owned by Tokyo Electric Power have reduced the supply of electricity to the capital by nearly -30% Nine oil refineries also were damaged, including one in Chiba, near Tokyo, which burned spectacularly, creating shortages of gasoline and heating oil. Gasoline lines in the northern part of Honshu, Japan’s main island, extend for miles. About 30% of gas stations in the Tokyo area are closed because they have nothing to sell.”
“Economists say it is difficult to parse out how much is the result of actual scarcity and how much comes from hoarding. We are close to getting back to the gasoline capacity we had before the earthquake, but we are hearing demand has been two-to-threefold the normal volume,” said Takashi Kono of the policy-planning division in the natural-resources and fuel department at the Ministry of Economy, Trade and Industry. With that much demand, of course we’re looking at a shortage.”
“Energy analysts expect the gasoline crisis to ease in coming weeks as supply lines reopen and panic buying subsides. The electricity shortage, however, is likely to linger for months and might worsen as the weather warms-up and people try to turn on their air conditioners. Tokyo’s Asahi Shimbun newspaper, on Tuesday, quoted an unnamed senior official of Tokyo Electric, which serves 28 million customers, as saying rolling blackouts could last a year.”
“Electricity is the talk of the town. Newspaper readers pore over detailed schedules of rolling blackouts. Many movie theaters are closed and companies have switched-off unnecessary lights and advertising, restricted use of elevators and shortened working hours. For now, gasoline shortages are disrupting both daily life and relief efforts. In Akita, 280 miles north of Tokyo, the few gas stations that are open have lines extending as long as a mile and limit purchases to 4 gallons. It would hardly be worth the wait, except that people want gas for emergencies — for example, if they need to flee radiation from the crippled nuclear plant.” http://seattletimes.nwsource.com/html/nationworld/2014616863_quakenergy28.html
April 8, 2011
Micheal Ruppert talks about the forthcoming economic collapse from effects of the Great Japanese Earthquake. Global GDP, quarterly reports, component shortage, supply line disruptions, overleverage.
The nuclear catastrophe in Japan is very important news since it is part of a global energy problem which highlights the many bad choices we have today when it comes to living a modern civilization style of life which is very energy-hungry from top to bottom. Just as anything impacting the price of oil ripples very powerfully through money markets, the food chain and social systems, so does catastrophes like the one in the Japanese nuclear power plant ripple through seemingly unrelated sectors.
The first world nations working in tandem created several noxious nuclear-meltdown prone systems. There is the mortgage markets which were mostly unregulated and allowed to rise in temperature until they went nuclear and melted down entire nations leading them into penury.
Then there was the new creation of this paper entity I call the ‘Derivatives Beast’ that had so little connection to anything real, it could balloon in size from just $1 billion to unguessable amounts around $66 or 600 trillion in just 30 years. One of the worst ‘hockey stick’ doubling in size of any entity created by humans.
There is the floating fiat currency system set up by Nixon in 1972 that ditched the restrictive gold standard for settling world trade and this insidious system is creating increasing instability in world trade markets and has detached ‘money’ from anything real leading to a vapidity that is very, very explosive. Right now, to stabilize this toxic pool of paper money, all nations on earth except the US store immense amounts of this meaningless paper in FOREX accounts where it will all very suddenly erupt when the US gets hit with say, a major earthquake/tsunami/nuclear power plant event in southern California (which, incidentally, is inevitable).
We have set many systems into this dangerous, ‘explode very suddenly’ mode. One of the most dangerous such systems remains the UN Security Council member nation’s immense hoard of nuclear missiles with the US having the most on the most hair trigger launch capacity. All we need is some stupid diplomatic slip up or ridiculous assassination (the US and Israel are very big on assassinations) to have a full blown nuclear war come crashing down on all the cities and nuclear power plants in first world countries.
This blog is called ‘Culture of Life News’ because I believe in warning people about incoming events before they happen. This means watching things develop and then predicting future events from present news and a close analysis of past events. The US can’t shrug off Japan’s nuke catastrophe because the US Nuke Plants Store More Spent Fuel Than Japan! Is there nuclear waste in your state? – CBS Evening News
The storage tanks were never meant to be a permanent solution. The nation’s oldest operating reactor, Oyster Creek in New Jersey, has stored some spent fuel for 41 years – 20 years longer than expected….An estimated 66,000 metric tons of spent fuel rods are stored at 77 sites around the country – that’s more than 145 million pounds. Imagine an entire football field full of spent fuel rods, seven yards high.
As we see on this map, in general, the greater concentration of population, the greater the nuclear waste being hazardously stored. This waste was supposed to go to Yucca Mountain in Nevada but the voters there were against it. We could ship it to Alaska. But you can bet even Republicans there would be against this. Ditto, Montana or the other GOP states.
The Democrats who support nuclear power in lieu of coal power have to be more honest with their own voters and talk about how Japan’s disasters can and probably eventually will happen in the dark brown states in the above map. The potential for this ‘clean’ (sic) power to go very, very dirty very, very fast should be a grave concern for NY, Pennsylvania, North and South Carolina and Illinois.
The first WWII reactor research was in Chicago and upstate NY. The concentration of medical equipment with radiation parts is concentrated in these areas too since it has been manufactured there for a long time. The point here is, there is nothing ‘clean’ about radiation. Yes, there is natural radiation in the environment. I even mention the natural radiation in those fashionable but perhaps rather not so nice an ornament granite kitchen counters in so many modern homes.
But this is like saying, it is OK to pollute the air with coal burning just because there is other sources of smoke in the environment. Denying one while decrying the other is dishonest and no industry is more dishonest than any industry even faintly connected with anything nuclear or emitting radiation. People wore radiation-emitting glow in the dark dial watches for years and workers died who painted these watches due to radiation poisoning.
The problem with handling radiation is its invisibility. You really can’t tell you are being killed until it is years too late! You can run from it easily, hide from it unless you wear lead suits and you can’t smell it, either. More U.S. states find traces of radiation from Japan.
Now take a good look at what a week of slow destruction with lots of radiation looks like: Japan nuclear crisis: Fukushima Fifty pictures from inside nuclear power plant | Mail Online
I remember early on. Experts warned us that the #3 reactor was the most dangerous. The black smoking ruin here is what little is left of this reactor. This is the MOV one which was being refitted with plutonium. Wow. Isn’t this hideous? It looks like…Chernobyl! And it is. Totally Chernobyl. Each day, each reactor looks more and more ruined, more and more desolate. They look like a fast forward film of slow organic destruction over centuries only this is over days. With water being pumped in as fast as possible, they continue to devolve and collapse, the plutonium one, rather thoroughly and fastest of all.
Just three days ago, it had this stream of steam coming out of just one small hole. Now, it is twisted wreckage. This was no ‘explosion’ but rather, the natural evolution of plutonium as it has a meltdown. Do we know when this process will end?
Nope. We can’t know. We do know from Chernobyl that it might not end. It might go on and on and has to be put in a crypt which deteriorates rather rapidly due to the internal mess. When that crypt was made at great worker expense, they though they put the nuclear genie back into its cement bottle. But this didn’t last long and every 5-10 years there has to be a discussion about how to keep this bottle from erupting into more plutonic nuclear mayhem.
Not exploding but simply pouring out that invisible force that acts so energetically on our genes. Here is a story I can’t vouch for but it does show the uncertainty factor of trying to quantify what is going on when we have a full blown nuclear fire/meltdown/catastrophe: Fukushima Now 72,000 Times Hiroshima Radiation
Dr. Chris Busby verified today in an email that three spent fuel pools are totally blasted away and burned up. That puts the approximate radiation levels at 24,000 HIROSHIMAS x 3 = 72,000 times the radiation of Hiroshima now in the atmosphere..
The destruction from the first A-bombs was swift and very violent but there was far less nuclear material used in these blasts than are stored in nuclear power plants today. The resulting firestorms created by the nukes dropped on Japanese civilians was extremely destructive. Interestingly, the #3 Fukushima plant looks like it was hit by a nuclear bomb circa 1945. A big box harboring a large cement structure inside is now a twisted pile of girders and debris that is far more destroyed than by a mere fire.
This news from Japan is most interesting to those of us who don’t worship nuclear power as the savior of humanity and all living things: Neutron beam observed 13 times at crippled Fukushima nuke plant › Japan Today: Japan News and Discussion
TEPCO, the operator of the nuclear plant, said the neutron beam (ELAINE: or ‘flux’ in this case) measured about 1.5 kilometers southwest of the plant’s No. 1 and 2 reactors over three days from March 13 and is equivalent to 0.01 to 0.02 microsieverts per hour and that this is not a dangerous level.
The utility firm said it will measure uranium and plutonium, which could emit a neutron beam, as well.
In the 1999 criticality accident at a nuclear fuel processing plant run by JCO Co in Tokaimura, Ibaraki Prefecture, uranium broke apart continually in nuclear fission, causing a massive amount of neutron beams.
In the latest case at the Fukushima Daiichi nuclear plant, such a criticality accident has yet to happen.
But the measured neutron beam may be evidence that uranium and plutonium leaked from the plant’s nuclear reactors and spent nuclear fuels have discharged a small amount of neutron beams through nuclear fission.
This really sets my teeth on edge. I can’t imagine any sane person reviewing this information making a claim that nuclear power is safe as well as beneficial. We are talking about processes that happen in stars that are being crushed or violently blowing up. This does have medical use in modern hospitals. That is, a carefully calibrated stream of this energy can kill cancer cells.
Of course, the obverse it true: an uncontrolled stream of this energy kills cells and thus, living organisms and causes cancers. Neutron beam dosimetry at the NRL cyclotron
A 35 MeV deuteron beam impinging upon a thick Be target is being employed to generate a neutron beam for radiobiological experiments of relevance to later possible fast neutron therapy trials. The primary calibration of the beam has been based upon tissue-equivalent plastic ionization chambers, calibrated in turn with 60Co gamma -rays. CaF2:Mn and 7LiF (TLD-700) thermoluminescent dosemeters have been employed to determine the gamma -ray dose component in the neutron beam, by a method depending upon the ratio of fast neutron sensitivities of the two phosphors.
When the core of a massive star undergoes gravitational collapse at the end of its life, protons and electrons are literally scrunched together, leaving behind one of nature’s most wondrous creations: a neutron star. Neutron stars cram roughly 1.3 to 2.5 solar masses into a city-sized sphere perhaps 20 kilometers (12 miles) across. Matter is packed so tightly that a sugar-cube-sized amount of material would weigh more than 1 billion tons, about the same as Mount Everest!
“With neutron stars, we’re seeing a combination of strong gravity, powerful magnetic and electric fields, and high velocities. They are laboratories for extreme physics and conditions that we cannot reproduce here on Earth,” says Large Area Telescope (LAT) science team member David Thompson of NASA’s Goddard Space Flight Center in Greenbelt, Md.
Neutron stars are interesting in outer space. They are distressing here on earth. The extreme physics interest people so scientists work to try to reproduce some of this if not all of this here on our home planet. This is why we have to think about limits to what we can do. Sometimes, things get out of control. When dealing with the elements at the high end of the atomic count of the elements, we have to be extremely careful. And all we are are naked monkeys with only slightly more control over our impulses to wreck things or knock things down.
I take that back on behalf of the simians who are not homo sapiens: we are MORE prone to wreck things or knock things down. All the more reason to not go full nuclear power.
P.O. BOX 483
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Make checks out to ‘Elaine Supkis’
by Jim Willie
The entire world struggles to determine the fallout effects of the Japanese earthquake and tsunami, along with the ensuing problems. The effects are so pervasive, so profound, so critical, that it is no wonder the news networks focus on two things only. They have switched emphasis to the Libyan civil war, a pitched battle to retain a tyrant and his larcenous rule. But the news stories out of Japan focus 98% on their Fukushima nuclear complex, with hardly a peep about the long list of other economic and financial effects. This article will focus on what they leave out, dutifully reporting amidst the purposeful new vacuum in a grand distraction. The Japanese factor in early 2011 will turn out to be the most important factor to influence major global economies and the financial markets since the death of the US banking system in September 2008. Gold investors should not expect a similar commodity price meltdown like in 2008 after the Wall Street death event. Gold & Silver each sold off sharply during the ensuing months after the collapse of the US banking system, as a liquidity drain was joined by a Wall Street attack of hedge funds. This time is totally opposite. Back in 2008 no Quantitative Easing program was in place, as hyper-inflation engines had not been turned on like now. QE will be global next. The central banker pact not only endorses the monetary hyper-inflation by the USFed, it extends it globally with a loud ring. What comes next is a global inflationary recession with gusto and power. The path had already been clearly entered, but now it is fully engaged with a jet assist. Great confusion comes, equal to the harmful momentum from numerous fronts.
The impact is comprehensive and profound as several important triggers have been hit simultaneously. Economic fallout is greatest inside Japan itself. The financial impact is greatest with the United States and Japan. A point to never lose sight of in the last two weeks is that the USGovt manages a monetary nuclear reactor that is also in core meltdown, with USTreasury Bonds as the fuel rods whose radiation has a USDollar odor. The accelerating piles of debt and money have been routinely spread systematically in a grand complicated coordinated reaction, the core of which is the United States. Watch for any interruption to the massive flow of funds into the reactor, which the G-7 central bankers were keenly aware of last week, but without mention. As with all asset bubbles, the required funds grows exponentially to maintain the asset bubble, here the USTreasury Bond. The reactor cannot lose its flow, or else a meltdown occurs. An interruption had begun, was addressed, but they will not be capable of replacing it except with more toxic money, the fiat funds. The pressure on the USFed will be shared across the major central bank offices. The inflation engineers and high priests who preach on asset bubbles will face enormous challenges to avoid a nuclear financial core meltdown. They will not succeed, and Gold & Silver will be the meter for the failed efforts that lead to meltdown. Both precious metals will double in price in the next few years. Nothing is fixed and Mother Nature just kicked the elite bankers in the shins, or a point one meter higher if the truth be told.
The recession will be deeper from the supply chain disruption and higher cost structure. The monetary inflation will be more uniform and with greater volume. The major currencies within the global monetary system will suffer much more debasement, as value erodes badly. At the same time, the boogeyman image of the US Federal Reserve will be mitigated by the full chorus of central bankers eagerly coming to the Yen currency rescue. Witness Global Quantitative Easing with extreme force, the printing presses in high gear straining to produce enough funny money to build seawalls strong enough to withstand the destructive tsunami. Wreckage from previous overwhelmed platforms has begun after three decades of funny money abuse, whose waves of busted bubbles and failed assets have been doling out powerful blows for over three years. Witness the Global QE, as all major nations will help the USFed to print money, wreck currencies, destroy capital, ruin businesses, and cause an easily recognized price inflation. Of course, they will continue to aid the elite bankers who are mostly responsible for ruin. Notice how the USDollar continued to decline, going below the 76 support level for the DX index. Despite the weak futile pathetic rebound, the DX index remains the former support under 76. Three imagines come to mind on the destructive forces: a gattling gun, a daisy chain centrifuge, and overhead office building spray.
The amazing storm will contain a nasty paradox, as the Yen currency will not stop rising. Japan as a nation will lose the ability to purchase foreign assets, a means by which they could keep their currency down. A vicious cycle has begun to take shape. Inflation will originate from the four corners of the earth, come in many forms, and have staggering effect on both the global recession and global price inflation. Assets and incomes will go into worse decline, while commodities including Gold & Silver rise powerful. Actually, Gold & Silver are money, the great anti-bubble. The USTreasury Bond will be under absolute siege for months until a climax conclusion in the near future. Consider the following major effects and forces, presented in an order to reflect their importance, not their flow of domino effects in sequential destruction. For those who grow weary of Jackass comments about destruction and ruin, it is time to wake up to reality as the nightmare persists during the waking hours. Darwin is at work, removing the failures from the gene pool, including those who refuse to acknowledge the unfolding disaster and fail to take proper defensive action. Nature is very busy challenging the managers of the earth. The people must defend and salvage their life savings before it is forfeited to a unique combination of natural asset bubble wreckage forces and syndicate planned duplicity, swindles, and seizures. Beware of false messages.
YEN CARRY TRADE CLIMAX EFFECT
- The trade was to borrow near 0% Japanese Yen and fund USTBonds and US Stocks for many years. Still amazing that many elite analysts have never heard of it. The Japanese situation hastens the fast retreat. The late sellers will be ruined.
- The reversal unwind of the Yen Carry Trade appears to be entering its third and possibly final phase. The unwind has required over 12 years to complete. The YCTrade took 15 to 20 years to build into the largest, most powerful, and significant financial engine of multi-$trillion phony wealth the world has ever witnessed. Japan might next face a liquidation similar to what the United States has suffered.
- The nation of Japan will not recover from the Yen Carry Trade unwind, which will be relentless. Its creation and sustained operation kept the Japanese Industrial Miracle going for three decades. It has finished, and run its course.
- The YCTrade unwind is to be assured by the heavy Japanese selling of USTreasurys by the a wide assortment of Japanese financial entities. Call it a major unintended consequence. The unwind spells major problems for the Japanese export industries, but also for the USTreasury Bond complex.
- The entire world will continue to abandon the USTreasurys except for a few nations that wish to openly protect their export trade.
JAPAN TRIGGERS GLOBAL QE3
- Call it the EMERGENCY G-7 YEN SELLING PACT or coordinated Japanese support, no matter. It will become the biggest, most grandiose coordinated monetary initiative in modern history.
- The emergency meeting of G-7 nations was given a general purpose of dealing with Japan, but it was all about the rapid unwind of the Yen Carry Trade without a single mention of the vast perverse engine. The accord resulted in a global consensus that all nations would help to purchase USTBonds sold by Japan, from the unwind of the YCTrade.
- The G7 Yen weakening accord is a disguised USDollar rescue, since a rising Yen goes with a falling USDollar. Attempts are made to avoid the USFed being isolated as the sole buyer of USTBonds, which is inevitable. They can rescue the Yen, but not the USDollar, the new toilet paper with green embroidery.
- The USFed must monetize all the foreign central bank asset purchases of USTBonds ordered abroad, or face higher US interest rates and threatened USGovt debt default. Huge amounts of money will be handed through the New York Fed window, directly from the Printing Pre$$, a process well underway.
- A USTreasury auction was postponed so as to enable more efficient printing operations. The sales in Brussels, London, and Tokyo will be covered by the USFed. Thus foreign currency exchange rates are rising versus the USDollar still.
- The Yen Selling Pact by the G-7 emergency is better described as a Global QE3. Monetary expansion cannot be concealed, since out in the open, and blessed with global consent. The USFed is somewhat off the hook for its monetary inflation and the associated destructive effects. The major central banks have blessed the inflation as a necessity, with urgency.
- A risk of a global central bank franchise model destruction could be in intermediary stage. The monetary system is at risk of greater and sudden fractures. If sovereign bonds have been on the defensive in the last year or more, watch how central bankers will be on the defensive in upcoming months. They manage an exploit of wealth, control the power centers, oversee failure, and dole out poverty even as they corrupt markets.
EMERGENCY FUNDS FOR SUPPORT
- Tremendous emergency funds have been appropriated and set aside by the Japanese Govt for financial market rescue & support. More funds have been devoted for relief efforts, worker crews, earthquake & tsunami cleanup, body retrieval & searches, and reconstruction. The price will be even larger than reconstruction & relief efforts. A total national meltdown is being averted, or delayed.
- The initial pledge of funds was for $86 billion, to stabilize their financial market, to make regional bank liquidity available, and to fund relief efforts. They reacted to factory shutdowns, a curtailment of distribution channels, and rolling electrical blackouts. The next pledge of funds was for $183 billion, to further stabilize markets and banks. The support continued until the latest total amount is reported to be 55.6 trillion Yen, equal to almost US$700.
- No expense will be spared, as the flood of money will follow the tsunami flood waters. The price tag grows leaps and bounds on a daily basis. The deficit will be large, adding to an already enormous cumulative national debt. Japan must rebuild infrastructure as well as supply delivery systems for basics like food and factory material input.
SALE OF FOREIGN ASSETS
- Given the overloaded saturated debt situation in Japan, many assets must be sold in order to raise cash, mostly foreign. Without sales of existing actual assets, the size of the crisis and its funding aftermath would produce significant and immediate price inflation.
- Japan will sell a large hoard of USTreasury Bonds, USAgency Bonds, and possibly US Corporate Bonds. They will sell EuroBonds and UKGilts. They will sell anything that does not bear a Japan label. If they could, they would sell assets behind the Somali and Yemeni sovereign wealth funds.
- The Japanese insurance companies must also raise cash to pay for claims from the widespread damage, including to businesses. They will sell US$-based bonds and more.
- An unintended consequence is for a pinprick of the USTBond asset bubble, which has been puffed for over two years. Unlimited funds will be made available to offset the USTBond dumps in an emergency setting.
- Compounding the current situation with flow of funds is the annual migration. The March 31st deadline approaches for the annual Japan Repatriation of cash held in foreign accounts. The requirement will add to the inflow of money into Japan from overseas.
- This annual return migration involves funds held in all foreign lands, and will force the calling home of funds from Europe, England, Asia, and the Persian Gulf.
- The effect will cause the Yen currency to strengthen relative to all fiat currencies, rendering harm to Japan’s export industries. The world annually goes through this required effect, but this year should be more pronounced. Bad timing!
COMMODITY DEMAND EFFECT
- The rush to undertake reconstruction will require a wide array of commodities at a time when the commodity market is afire in price increases. From steel to cement to lumber to fuel products, the major commodities will be in enormous demand. This demand at the margin will have an aggravated effect on price.
- The effect on commodity prices will be sizeable and noticeably attributed to Japan. It will be felt primarily after the landscape settles enough for work crews to begin the massive rebuilding efforts.
- Already, critical supply shortages have been reported. They include industries not in Japan. The demand will be across the board, including food, which has an immediate effect on survival.
FOOD PRICE EFFECT
- The shortage of foodstuffs comes from both disrupted original growing locations and disrupted supply chain in delivery systems. Again, a wide variety of foodstuffs will be in enormous demand, all on a marginal increase basis.
- The region to the north where the nuclear reactor damage occurred is the site of a concentrated food growing farms.
- The price effect on several items within the commodity array will be sizeable and noticeably attributed to Japan. Global relief efforts will only aggravate the price effects.
PRICE INFLATION EFFECT
- Japan stands at risk of a hyper-inflation episode with more punch than what has begun to unfold in the USEconomy. The emergency funding for both reconstruction and financial market support will unleash price inflation from the inevitable spillover, a financial tsunami of funds.
- Also, the rising demand and supply shortage with intensify the price inflation. The tangible response of purchase at the margin will have an intense effect. The shortages are widespread already, also to be aggravated.
- Since the Japanese Debt/GDP ratio is near 200%, they cannot hike interest rates without causing a default on their bonds. The Bank of Japan will monetize the required funds to rebuild their country and later worry about consequences of hyper-inflation. If foreign asset sales are not ordered, and fresh debt monetization occurs, the price inflation will be power packed and doubly significant. So they sell assets.
- When a nation reaches saturation on debt, the new debt is monetized and hits the main street as inflation rapidly. However, it is hard for hyper-inflation to strike a nation with a rising currency. Incredibly strange crosswinds are at work. Japan has rapidly crossed the bridge from deflation to inflation.
EXPORT TRADE EFFECT
- The redemption of US$-based bonds will be staggering and sudden, compounded by the sale of other US$ assets. The effect will be a steady relentless significant rise in the Japanese Yen, a decline in the US$/Yen exchange rate, with a powerful effect on the Japanese export industries.
- A big trade deficit is coming to Japan, a new concept. The system will work to bring the Yen currency down on the tangible side while the financial side actually pushes the Yen up. A big conflict and paradox comes. The industrial factor will be perplexing, powerful, and paradoxical. Most consensus thinking will be wrong.
- As the Japanese trade deficit worsens, and gains publicity, it will result in a Yen that rises to confuse many analysts. The Yen will rise with surprising gusto and power, invited more coordinated global actions. The central bankers will be on the defensive. Diverse Japanese entities will be in a race to sell foreign assets, as the Yen rise intensifies.
- Japan will lose the funds from trade surplus used to purchase foreign assets, useful in keeping the Yen currency down. The suppression tool will vanish!!
- The lost surplus is a direct result of the rise of Chinese industry, aided by Japanese firms in important technology transfer. The newly arriving trade deficit could easily become a permanent fixture, and its funding will render damage side by side to the high government debt burden. Japan will suffer from broad deficits. Industry damage comes.
- The collateral damage to the global economy will be vast supply chain damage, both from interrupted supply and higher cost supply. As Japan slides into an inflationary recession, as industrial suppliers are strained, some will go out of business and shut down unless they receive subsidies. Those subsidies might actually come from foreign companies, who must save their suppliers that cannot be replaced easily or at all.
- Just today a friend from an upscale condominium complex reported that a certain device to maintain water & sewer levels in his complex had broken. Its replacement must come from Japan. The vendor said it will come at an indefinite future time. Ditto for General Motors on parts and thousands of other businesses that are dependent upon the high quality and reliable supply chain from Japanese industries.
GOLD & SILVER EFFECT
- With all the newly created money from Japan in direct inflation, with all the USTBond sales to undermine the USDollar, with the coordinated central bank assistance in USDollar creation, with all the commodity demand in reconstruction, the overall effect on demand for Gold & Silver will be positive and powerful but a little delayed. A giant tsunami lift has begun in precious metals prices.
- One can smell a monster midyear rally in Gold & Silver after some time to gather facts, assess the situation, and detect the positive winds. The rally might have started this week, as the evidence is just too plain and simple to the thinking man. A price breakout is seen in both monetary metals. The distractions from Wall Street and the lapdog US press must be ignored.
- The entire Japan story is huge bullish for Gold and extremely bearish for all paper currencies certain to be debased further. The G-7 Yen Selling Pact is all about coordinated currency dilution. With Japan, the United States, and the EuroZone all printing money, global monetary hyper-inflation cannot be avoided. It will be endorsed and welcomed. Gold & Silver will react.
- Attempts to deal with the economic breakdown and industrial disruptions will contribute to global systemic price inflation, which has already been initiated. Gold & Silver will react.
- Holdouts on expecting the monetary system to recover, and fiat paper currencies to stabilize, and the banking sector to revive, and the housing market to bounce back, they will totally give up and surrender. They will enter into Gold and especially Silver. Better late than never.
- Confirmation has come that mining firms are bypassing the COMEX. They choose to sell Gold & Silver mining output to investment funds like the Sprott Fund. The COMEX will find itself in increasing isolation. Their artificially low price paid for metal has sparked a wide reaction. Unknown is the amount paid in premiums over spot prices by the funds in order to facilitate the purchases. The premium prices indicate the true price, not the nonsensical price discovery at the COMEX under suppression, cash settlement, and other crooked devices.
- A quantum jump, threshold leap, and paradigm shift has taken place. The Japan incident with its staggering financial fallout represents in my opinion the most important and influential factor in global finance since the US banking system death in September 2008, complete with distraction, possibly even cover-up.
See the March Gold & Currency reports within the Hat Trick Letter after placing a subscription order. A more full analysis of the rapidly deteriorating Yen Carry Trade is provided in the proprietary Gold report. This carry trade is so critical, so devastating to currency markets, such a grand threat to the USTreasury Bond bubble, that the G-7 Finance Ministers did not address it, cite its unwind, or give it any mention. Their Yen Selling Pact was all about preventing a system blowout at the USDollar nuclear reactor. Their pact was a disguised USDollar rescue doomed to failure. They must have discussed the Yen Carry Trade unwind effect at half the meeting. The Japanese fallout could be the exogenous force that breaks the USTBond bubble. It will take time. At the least they have lit a gigantic bonfire under Gold & Silver markets, where precious little metals exists in the COMEX or LBMA. The global financial crisis is spreading in a horrible contagion. Big powerful price breakouts are to be expected for Gold & Silver in the coming weeks and months. They notice the grand debasement of money, even if for emergency purposes.
The USFed is no longer isolated in the monetary hyper-inflation. However, even as a group central banks cannot stop what comes, the ruin of fiat paper, both the currencies and the sovereign debt that supports the global monetary system. In fact, their group central bank actions intensify the ruin of money itself from prolific debasement. The meter, the measuring device on the wall, is the Gold & Silver price. Today, each metal registered new record high prices for the last couple decades. By year end, look for a Gold price around $1550 to $1600 and a Silver price at least $50. Gains in silver will triple gains in Gold. The quantum jump really means that enormous breath-taking huge upward moves can and should be expected. Do not be surprised if the Gold price rises $50 in a single day, or the Silver price to rise by $2.00 on a single day, in the near future. A systemic breakdown is occurring, in the Weimarization of the USDollar. Last Thursday, the world went Weimar. Gold noticed, and its scout Silver pulls the golden bridle bit.
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Can’t we just drop Pee Wee Herman on Tripoli? Surely this shocking manifestation of everything toxic in America’s existential zeitgeist arsenal would send the Gadhafi corps shrieking for the blank Saharan interior – somewhere between Murzuk and Timbuktu – where timeless dunes shift in the eternal wind, and the cares of modern life, armies, geopolitics, banks, bombs, and crusaders in red bowties are but grains of sand under the uncountable stars. To recline there, outside the tent, in the bracing chill of the desert night, against the warm backrest of a sleeping camel, with a glass of strong tea, would bring one into communion with the peace of Allah – don’t you think?
But it appears we’re going for the heavy ordnance instead, aided by the latest and greatest in video-gaming technology, and, by Gawd (yes, that one, ours, the one Michelangelo painted in Rome) we are going to give this cheeky Gadhafi fellow something like a Semtex colonoscopy and few around the wide world will shed a tear as he is translated into just another late-night snack for the rats and scorpions.
Good gracious what an exhausting month this has been!
Most remarkable in the tsunami of events last week was the peculiar dearth of actual reported news – as in hard, reliable information. CNN played the same loop all weekend of brave Japanese firemen marshalling outside the Fukushima reactors, trotting this way and that way in disciplined ranks, while alarms went out about radioactivity showing up here and there, in milk, spinach (did it grow overnight?), and on airline customers de-planing in the otherwise spotless reaches of Dallas, Texas. My correspondents tell me that the radioactive scare meme is way overblown, with the number of actual dead so far at exactly zero from the whole reactor event- and they may be right, or not, though it is hard to imagine no severe consequences at all over time from this disgusting mess. More to the point perhaps is the loss of about 30 percent of Japan’s electric power. What will they do in the long agony of sorting things out there?
I have a peculiar fantasy about Japan. It burbled up in my mind even before the earthquake-tsunami-reactor disaster, and I conceived it in rumination upon Japan’s weird twenty-year-long economic malaise, as the nation’s population shrank, and its debt climbed to astronomical heights, and its young people lost heart, and it seemed just to go through the motions of whatever modernity required of them – ship the cars, package the robot parts, show up at the salaryman drinking contest, get stuffed into another late-night commuter train. I don’t claim to be a Japan expert, but I think all this was getting to them in a deep, major way. I think they perhaps secretly longed to get back to something like an older traditional Japanese society – the one before car assembly plants, big steel ships, chain reactions, and fluorescently-lighted pachinko parlors, back to the society that blossomed and fruited in cycles of centuries on those beautiful rocky, sea-washed islands into a culture saturated in artistry – unencumbered by idiot religions or the bothersome neediness of other nations.
I can’t shake the odd feeling that Japan was looking for a way to get back to the 19th century, and perhaps even deeper beyond that – to the dream-time before they made the fateful decision to industrialize. The earthquake-tsunami-reactor moment is their chance now to begin that journey. Frankly, I don’t know what else they can do. Japan imports over 95 percent of the fossil fuels it uses (that would be oil, coal, and natural gas). Does anyone think they’ll be able to continue that indefinitely? Sorry, I just don’t see it under any circumstances. And, anyway, the geographic region where the bulk of the world’s oil comes from is in the process of blowing up. The Middle East and North Africa (MENA) are like some kind of mansion where fire has broken out simultaneously in the kitchen, the conservatory, the media room, the master bathroom, the chauffeur’s apartment over the garage, and the pool house, and whenever the flames are doused in one spot, they break out in another. Yesterday it was Syria and Yemen. Bahrain is under lockdown. The Egyptians are having second thoughts about the loss of a grinding stability, trouble is stirring up in Kuwait, Iraq is like a crazy person in the rubber room of history, and who knows what kind of spells the vizeer Mahmoud Ahmadinejad is laying out in his Kevlar sanctum. There is just too much tension in the world and it is demanding release in the most vexing ways.
So, I can see the Japanese people – a deeply homogenous society – veering toward an as yet un-articulated consensus: let’s just get out of the modern world. Let’s go back home. Let’s don the kimono and the hakama, get us some horses, sharpen the katana, and kick back in the chaniwa garden with a bowl of green tea – and forget about all that dirty, disgusting, dangerous, heavy manufacturing-for-export (to an insane world) nonsense. History may record their industrial adventure as a weird blip of activity in a much longer timeline. As it will for us and everybody else, I believe. In fact, this fantasy about the Japanese shrugging off the toils of modernity is exactly what all the other so-called advanced nations of the world will find themselves doing sooner rather than later as we all take the road back to a world made by hand. The Japanese may just be the pioneering exemplars of the universal process.
What we’re seeing these days is an epochal unspooling of hypercomplexity. The world just can’t take anymore of it. The world is telling us to cut it out or it is going to kick our upright bipedal asses. Of course, America may be absolutely the last society to get this message. We’ll receive it in the car-wash, no doubt. On our iPhones.
by Eric Blair, Activist Post – March 18th, 2011
Planet Earth has experienced a very noticeable up-tick in earthquake activity and intensity over the last five years. Leading up to the great Japan quake, we’ve witnessed the utter devastation from the 2004 Indian Ocean megathrust earthquake and tsunami, the catastrophic Haiti quake, an axis-moving Chile quake in 2010, massive and multiple quakes in New Zealand, and record earthquake swarms hitting Yellowstone and the New Madrid Fault line in middle America culminating with the worst earthquake in 35 years to hit the area, and many more.
The devastating effects on human civilization are on full display in the most recent 8.9 earthquake in Japan. The powerful quake and corresponding tsunami showed that not even a fully developed nation with the world’s third largest economy can withstand nature’s fury. This was also evident in the New Zealand quakes which continue to demolish the first-world city of Christchurch.
Evidence of increased tectonic activity aside, the great Japan quake of 2011 will go down as the event that finally woke up humanity from their slumber to recognize the potential damage quakes can and will cause. The huge quakes in Haiti and Chile last year indicated the power of such activity, but the effects of the nuclear meltdown happening in Japan will likely have global consequences that force society to challenge our conventional path.
This new awareness of our fragile existence in the face of such powerful forces of nature has brought about many theories as to why earthquake activity is increasing. Many will brush it off as natural occurrences without understanding that everything in nature is caused by something, whether or not it can be seen or measured. Indeed, we are witnessing many earth changes happening for the first time in modern history. And perhaps all of these anomalies are connected in some way, or at least compounding nature’s fury.
Here are five theories as to the cause of increased earthquake activity:
Solar and Lunar Activity: Meteorologist and astrophysicist Piers Corbyn claims a combination of solar activity and the extreme lunar cycle is the cause of the increased earthquakes. He’s not alone. On March 9th, NASA reported a powerful solar flare, an X1.5-class explosion from behemoth sunspot 1166 around 2323 UT, which they said would cause ‘global disturbances’. On March 10th, Space.com posed the question “Will March 19 ‘Supermoon’ Trigger Natural Disasters?” The very next day, the third largest earthquake ever recorded struck Japan. Many scientist have speculated the “Supermoon”, set for peak arrival tomorrow, is causing gravitational disturbances because it is the closest the celestial body has been to the Earth in 18 years.
As the magnetic pole continues to wander rapidly toward Russia, it has led to speculation that this might be leading to the record number of earthquakes seen in 2010, as well as the recent mega-quakes. According to proponents of this theory, pole shift is a geomagnetic event that exerts pressure on the Earth’s tectonic plates. As the pole wanders, the core and plates realign producing fluctuations and great upheaval until the crust can stabilize. The lights in the sky that have been recorded just prior to earthquakes may be evidence of the natural harmonic activity of the geomagnetic flux.
Geomagnetic Pole Shift/Wikimedia Image
Researchers into the potential for earthquake creation cite HAARP and its various counterpart arrays around the world as a principal theory for recent mega-quakes such as those in Haiti, Chile, and now Japan. HAARP is a billion watt microwave that bounces frequencies off the ionosphere. Admitted functions are for ground penetrating radar, which some believe is a dangerous application that involves using frequencies that can disrupt the Earth’s natural magnetic field. In fact, the Department of Defense gave a briefing on the subject while discussing weapons of mass destruction in 1997. As observable evidence of such atmospheric tampering, researchers point to the correlations between visual anomalies such as colorful light displays and a characteristic wave pattern with a “punch hole” evident in cloud formations associated with these recent mega-quakes.
Climate Change: Some climatologists believe that shifting ice caps can have an effect on tectonic activity because the massive weight of the ice is changing locations. Global warming alarmists have sought to pin the great Japan quake on the disappearing ice, however they seem to lose some credibility as polar ice is actually increasing according to U.S. Navy Polar Ice Prediction System. Yet, it seems feasible that even shifting ice, which appears to be moving in the direction of the North Pole shift, may indeed affect the flotation of the earth’s outer crust. This could conceivably cause some tectonic movement and be partially related to some earthquake activity.
More On “Chernobyl Solution” At Fukushima As Prime Minister Says Japan Releasing All Information It Has
Following now pervaseive allegations of a massive Fukushima accident cover up by the Japanese government including non-disclosure of real radioactive levels, the Japanese Prime Minister Naoto Kan said on Friday that the government has been dislosing all the information it has on the accident at the Fukushima Daiichi nuclear power plant according to Reuters. “We have been honestly saying that the situation with the nuclear plant accident remains very serious,” he said in a televised address to the Japanese people marking one week since a devastating earthquake and tsunami struck northeast Japan. At this point we are willing to believe him: judging by the increasingly improvised Japanese response to the catastrophe nobody has any idea what is really going on or how to handle it properly. Which is why very expect to hear increasingly more about the “Chernobyl solution” – or the shotgun “resolution” of the problem by literally burying it in sand. From Reuters: “A “Chernobyl solution” may be the last resort for dealing with Japan’s stricken nuclear plant, but burying it in sand and concrete is a messy fix that might leave part of the country as an off-limits radioactive sore for decades. Japanese authorities say it is still too early to talk about long-term measures while cooling the plant’s six reactors and associated fuel-storage pools, comes first. “It is not impossible to encase the reactors in
concrete, but our priority right now is to try and cool them down
first,” a Tokyo Electric Power official told a briefing on Friday.” Alas if and when the plan to restore power to blown up cooling plants (has anyone actually seen the before and after pics of the reactor) fails, this will be the only option.
“It’s just not that easy,” Murray Jennex, a professor at San Diego State University in California, said when asked about the so-called Chernobyl option for dealing with damaged reactors, named after the Ukrainian nuclear plant that exploded in 1986.
“They (reactors) are kind of like a coffee maker. If you leave it on the heat, they boil dry and then they crack,” he said.
“Putting concrete on that wouldn’t help keep your coffee maker safe. But eventually, yes, you could build a concrete shield and be done with it.”
Experts say the cores at the six battered reactors at the Fukushima Daiichi power plant, 240 km (150 miles) north of Tokyo, are likely to be safely contained, but worry about the cooling pools for spent fuel, one of which contains plutonium.
So far, authorities have failed to cool the pools, where normally water circulates continuously, keeping racks of spent nuclear fuel rods at a benign temperature.
Helicopters and water cannon trucks have dumped tonnes of water on the reactors, but still the water in the pools is evaporating and the rods are heating up. It is also feared that the quake has smashed the rods into each other, which could cause a nuclear reaction.
“It is not impossible to encase the reactors in concrete, but our priority right now is to try and cool them down first,” a Tokyo Electric Power official told a briefing on Friday.
The only problem with the Chernobyl Solution is that it doesn’t really ever work out quite as planned.
At Chernobyl, an army of workers conscripted by the then Soviet government buried the reactor in tonnes of sand, then threw together a concrete container known as the “sarcophagus” within months of the fire and explosion there.
It failed to set properly and it cracked, leaking radiation into the atmosphere and water. Partly supported by the damaged walls of the reactor building, it has had to be reinforced.
Under a new plan for Chernobyl, a massive structure will be assembled away from the reactor at a cost of billions of dollars, then slid into place over the existing sarcophagus.
Chernobyl-style methods would be even more difficult at Fukushima Daiichi, given the number of reactors involved.
As Japanese officials have said, cooling is still the top priority. Pouring sand onto hot fuel could theoretically produce glass, and that same heat would prevent working on a durable concrete shell.
That means the stricken complex is likely to become an open sore, leaking radioactive particles into the atmosphere, for weeks and possibly months before the Chernobyl solution could even be implemented.
Authorities say radiation outside the Japanese plant is not high enough to cause harm. Still, the 20 km (12 mile) exclusion zone around the plant may end up as a permanent no-man’s land, a major problem for small, populous country.
A 30 km (19 mile) exclusion zone remains around Chernobyl.
There is supposedly good news though…
Tokyo, though, is likely to remain largely unscathed no matter what happens because of its distance from the reactors, no matter how nervous its citizens may be.
It is not accidental that the nuclear plant was built so far away from Japan’s biggest city, said Yuki Karakawa, international coordinator at the International Association of Emergency Managers, an extension of the U.S. Federal Emergency Management Agency.
“Those reactors in Fukushima are there for Tokyo’s power and Tokyo’s benefit, not for Fukushima’s,” he added. “After all, Tokyo is more than 200 kilometres away.”
We wonder which expert was consulted on the “Tokyo is safe” determination considering the prime minister of the crisis stricken country still has no idea what is going on. But yes, massive media propaganda certainly was another side effect of the Chernobyl Solution, and unfortunately so were up to a million deaths.
GEAB No. 53 is Available! Global Systemic Crisis: Second Half of 2011 – Get Ready For Meltdown of Market for U.S. Treasury Bonds
Public announcement GEAB N°53 (March 17, 2011)
Beyond its tragic human consequences (1), the terrible disaster that has just hit Japan weakens the shaky US Treasury Bond market a little more. In the GEAB No. 52, our team had already explained how the sequence of Arab revolutions, this fall of the “petro-dollar” wall (2), would translate during 2011 into the cessation of the massive purchases of US Treasury Bonds by the Gulf States. In this issue, we anticipate that the sudden shock experienced by the Japanese economy will lead not only to the halt in US T-Bond purchases by Japan, but it will force the authorities in Tokyo to make substantial sales of a significant portion of their US Treasury Bond reserves to finance the enormous cost of stabilization, reconstruction and revival of the Japanese economy (3).
With Japan and the Gulf States alone accounting for 25% of the total 4.4 trillion USD of US federal debt (December 2010), LEAP/E2020 believes that this new situation which is asserting itself during the first quarter of 2011, against a background of China’s increasing reluctance (holding 20% of US Treasury Bonds) to continue to invest in US government debt (4), carries the seeds for the collapse of the US Treasury Bond market in the second half of 2011, a market that now has only a single buyer: the US Federal Reserve (5).
It is certain that the context of the crisis of US local authority securities (Munis) and European government debt (the entire periphery of the EU, including the United Kingdom) that our team anticipated for this timeframe (see GEAB N°50 ), will only exacerbate the event. Moreover, it is highly significant that PIMCO the world’s largest bond fund manager decided, at the end of February 2011, to liquidate its US Treasury Bond holdings. And that was before the disaster in Japan (6)!
. the introduction of budget austerity in the US (as anticipated in GEAB No. 47) which condemns US local authorities to a major crisis in the market for their debt (“Munis”)
. impossible for the Fed to introduce QE3
. the inevitable rise in interest rates against a backdrop of global inflation
. the end of safe-haven status for the US currency.
Of course, these events are related and, characteristic of a major crisis, we are entering a period that will see a mutual strengthening of their effects, leading to this sudden shock in the second quarter of 2011. Incidentally, we could add a fifth event: the complete decisional paralysis of the US powers. The daily confrontation on virtually all subjects, between Republicans (hardened by the “Tea Parties”) and Democrats (demoralized by an Obama administration that has betrayed the substance of its campaign promises (7)), tends to show, a little more each day, that Washington has become a sort of “Ship of Fools “, tossed about by events, without any strategy, without willpower, incapable of action(8); in other words, according to LEAP/E2020, when the US Treasury Bond collapse begins, one cannot expect anything from Washington other than a colossal squawking that will only worsen the crisis.
In this issue’s public announcement, we have chosen to present our anticipation of the Japanese shock on a global scale, in particular in terms of inflation and geopolitics, in more detail. The other events that lead to the collapse of the US Treasury Bond market in the second half of 2011 are analyzed in this issue, where we also set out our recommendations to address the clear worsening of the global geopolitical dislocation process.
The triple disaster that has just hit Japan (earthquake, tsunami and nuclear accident) is a crucial event that will accelerate and intensify the global systemic crisis, and in particular the process of global geopolitical dislocation.
The scale of destruction, the direct impact on the energy infrastructure of the third (or fourth) largest economy in the world (9), the severity of the accidents at the nuclear power plants (10), … is one of the major shocks which the current international system is no longer able to withstand as we anticipated in the GEAB N° 51 (“2011: The Ruthless Year “). Japan, already seriously weakened by a chronic economic crisis that has lasted for twenty years and whose government debt is one of the largest in the world, now finds itself faced with the need to both finance a large-scale reconstruction and secure major change over an indefinite period characterized by a limitation of available energy and the disruption of commercial and industrial supply chains. Yet Japan is a fundamental part of the system of global governance of recent decades. Tokyo is one of the world’s major financial centers, one of the three management hubs of the foreign exchange markets (along with London and New York) and the Japanese economy supplies a quantity of electronic components vital to the global economy. Finally, as we have analyzed in past issues, it is, with the United Kingdom, one of the two “floats” (11) that has allowed the US to manage global economic, monetary and financial affairs for over fifty years.
For several years now this “float” has been increasingly attracted to the Chinese sphere of influence, keeping pace with China’s increasing strength and the weakening of the United States. The crisis triggered by the earthquake will, according to LEAP/E2020, greatly accelerate this trend particularly because today, only China has the capacity to provide massive financial aid to Japan (12), while directly helping its economy by opening the huge Chinese market to Japanese business even more (13).
• the abrupt end to the policy of the expansion of the civil nuclear industry worldwide (14) will rapidly increase pressure on the price of oil (15), gas and coal
• the shortage of many vital electronic parts which will mean higher prices for electronic equipment (from computers to flat screen TVs (16)) because of power cuts that affect plants and transport disruption (17)
• increased pressure on world food and energy prices (18) due to a significant increase in Japanese food imports (especially rice) since the area affected is one of the country’s major agricultural regions (see map below)
• a further decline in the world economy following the global consequences of the near-halt of the Japanese economy, champion of both exports and “just-in-time” delivery (19), which will limit as much the “deflation” effect of globalized trade (20)
• and finally, a double phenomenon of a falling yen due to massive injections of liquidity by the Bank of Japan and the immediate increase in the worldwide “borrowing cost” of money (higher interest rates) because of Japan’s huge needs to carry out its reconstruction.
Whist hoping that this extreme situation doesn’t materialize, our team believes that the shock that has taken place will, therefore, result in a sudden worsening of the global systemic crisis and that the US Treasury Bond market will be the first major collateral casualty from the second half of 2011, as we analyze in detail in this issue. Thankfully the worst situation may not happen but, on the other hand, there’s no doubt that it’s very serious.
(1) In these tragic circumstances, the LEAP/E2020 team would like to express its solidarity with the people of Japan and in particular with our numerous Japanese subscribers and visitors to our website. We would also like to emphasize that our very “clinical” analysis of the consequences of the catastrophe that Japan has just suffered is not a mark of indifference but simply the respect of our methodology which aims to limit the subjective elements at the heart of our anticipations to the strict minimum likely.
(2) Even the Telegraph of 02/24/2011 now interprets the grassroots Arab revolution as the fall of the Middle Eastern US empire.
(3) Source: JapanToday, 03/14/2011
(4) According to the German edition of the FT, the Chinese central bank has even been given instructions to not buy any at all anymore. Source : FT Deutschland, 10/03/2011
(5) Before the Japanese disaster, it was estimated that the Fed had become the primary holder of US Treasury Bonds, having already purchased more than 70% of new issue. In the coming weeks this proportion will, step-by-step, approach 90% to 95%. Because, even despite its docility vis-à-vis US pressure, the United Kingdom which each day sinks a little further into the new phase of the crisis, the “double-dip-flation” as our team calls it, can no longer afford to buy US Treasury Bonds: it is too busy repurchasing its own government debt. Moreover, according to Karen Ward, one of HSBC’s main economists, the British government could face hunger riots if food price continue to soar the way they have been doing in the past few weeks. Source: SkyNews, 03/09/2011
(6) In the short term, the flight from stocks (Japanese and others) will benefit US Treasury Bonds, but it’s a temporary event. Source : CNBC, 03/09/2011
(7) The latest is the reopening of the Guantanamo trials whilst he had promised the closure of the prison within a year after his election at the latest, thus drawing millions of voters from the left of the Democratic Party.
(8) France is the other major western country whose leadership finds itself in the same situation.
(9) Depending on whether one considers Euroland as an economy on its own. Yet the March 11 summit that continued to tighten the budgetary and financial integration of Eurozone countries makes the position of wanting to continue to separately count the Eurozone countries’ combined major economic numbers more and more absurd. Thus, with a GDP of €8.4 trillion, Euroland is in second place behind the US (€10.428 trillion) at a current exchange rate of 1 €/$ 1.4, and way ahead of China (€4.1 trillion) and Japan (€3.85 trillion). Sources: Wikipedia, Eurozone, Countries listed by GDP.
(10) Without even mentioning at this stage the risk of partial or complete neutralization of the Tokyo region, one of the key cities of the world in recent decades, due to nuclear contamination.
(11) Like a trimaran.
(12) Keep in mind that Beijing seeks by all means to quickly, but profitably, get rid of its mountain of Treasury Bonds and US Dollars. The cataclysm that Japan is currently suffering will thus offer Chinese leaders a unique opportunity to strategically align Tokyo with Beijing.
(13) Conversely, the highly controversial US troop presence in Japan will materialize in Japanese public opinion, as all the more anachronistic and useless in the face of the current disaster. This is another example, as we have already seen in the case of the Arab revolution, of the growing uselessness of the huge US military machine: in crisis after crisis, it is becoming obvious that it is of virtually no use in enabling the US government to influence events.
(14) It is in fact certain that civil nuclear power has just come to a sudden halt from which it will be very hard to recover, especially because this disaster now joined in the conflict between the elite and public opinion that the global systemic crisis exacerbates a little more on a daily basis. We can already include France amongst the countries that will suffer the full brunt of this “revolution” vis-à-vis nuclear energy which has, for nearly fifty years of civil nuclear energy, made it one of the jewels of its technology and exports. Source: Spiegel, 03/14/2011
(15) One factor that will strengthen the inexorable progression in the Gulf region towards a situation of chaos, even direct conflict between Shiites and Sunnis, between the people of the region and their leaders, between Iran and Saudi Arabia. Sending Saudi troops to Bahrain is an indication of the escalating risks in the region just as the financial implications for the UAE who are trying to urgently alleviate forty years of neglect of entire segments of their population. Sources: AlJazeera, 03/15/2011; New York Times, 03/10/2011; AlJazeera, 03/10/2011
(16) One of the few “bearish” sectors which allowed the soaring price of food and energy at the core of many price indices to be hidden. So even in China and throughout Southeast Asia, the impact of Japanese spare-part shortages is already being felt with immediate price rises as the Japanese electronics industry has massively relocated entire parts of its production throughout Asia while keeping strategic manufacturing in Japan. Source: China Daily, 03/15/2011
(17) Around the world we will experience shortages of Japanese cars and spare parts for them. Given the global importance of the Japanese automobile industry, there will be no solution of an easy alternative which can be implemented. Thus, even in India, yet little dependent on Japanese brands, the impact is already being directly felt with the cancellation of sales and promotion of new models by the major Japanese manufacturers. Source: Times of India, 03/15/2011
(18) Several Japanese refineries have been destroyed. That implies increased Japanese imports of refined products which are already causing petrol price rises in the US. Source: USAToday, 03/14/2011
(19) The Chinese and German export economies (as well as those of South Korea, Taiwan…) will also suffer the negative consequences of this development.
(20) It is important to keep in mind that the decline in the globalization of trade in favor of a focus on regional economic zones endowed with a single or dominant currency (EU, Asia, Latin America …) involves a simultaneous decrease in the need for US Dollars to finance international trade. See previous GEAB issues.
(21) This would also lead to international consequences in terms of radioactive fallout.