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How Fukushima Changed Japan’s Energy Mix

How Fukushima Changed Japan’s Energy Mix

The 2011 Fukushima nuclear incident in Japan made international headlines for months, but it also changed Japanese attitudes towards nuclear energyAfter a devastating tsunami hit Japan on March 11, 2011, emergency generators cooling the Fukushima nuclear power plant gave out and caused a total of three nuclear meltdowns, explosions and the release of radioactive material into the surrounding areas.

Before the incident, the Japanese had been known as steadfast supporters of nuclear energy, taking previous nuclear catastrophes at Three Mile Island (USA) or Chernobyl (Ukraine) in stride. But a meltdown on their own soil changed the minds of many citizens and kicked the anti-nuclear power movement into gear.

After mass protests, the Japanese government under then Prime Minister Yoshihiko announced plans to make Japan nuclear free by 2030 and not to rebuild any of the damaged reactors. New Prime Minister Shinzo Abe has since tried to change the nation’s mind about nuclear energy by highlighting that the technology is indeed carbon neutral and well suited to reach emission goals.

As Statista’s Katharina Buchholz notes, despite one reactor restart at Sendai power plant in Southern Japan in 2015, nuclear energy has almost vanished from Japanese electricity generation. 

Infographic: How Fukushima Changed Japan's Energy Mix | Statista

You will find more infographics at Statista

In 2016 (latest available), only 2 percent of energy generated in Japan came from nuclear power plants.

Coal and natural gas picked up most of the slack, but renewable sources, mainly solar energy, also grew after 2011.

Evacuations Ordered As Japan Issues Tsunami Alert After Large Offshore Quake

Evacuations Ordered As Japan Issues Tsunami Alert After Large Offshore Quake

large magnitude 6.8 quake has struck off the northwestern coast of Japan. Kyodo news reports that authorities have issued a tsunami alert…

The quake hit at 22:22: 20 Japan time.

NHK reports than people working at ports on the northwest coast of Japan should evacuate, as tsunami warnings for waves as high as 1m are issued.

Additionally, NHK reports that there are no concerns over the nuclear reactors in Kashiwazaki.

Developing…

Trump Offered to Suspend Sanctions While Negotiating With Iran, Khamenei Rejected the Offer: More Attacks Expected

TRUMP OFFERED TO SUSPEND SANCTIONS WHILE NEGOTIATING WITH IRAN, KHAMENEI REJECTED THE OFFER: MORE ATTACKS EXPECTED

Japanese Prime Minister Abe Shinzo conveyed a message from US President Donald Trump to the Iranian leadership, asking the release of 5 US prisoners and inviting Iran to sit around a negotiation table, adding “he [Donald Trump] would be ready to suspend all sanctions only during the negotiations”. No guarantee was offered to freeze or revoke the sanctions. Sayyed Ali Khamenei, the Leader of the revolution, rejected the message and any dialogue with the US President and told his guest that he considers Trump unworthy to “to exchange a message with”.

Informed sources close to Iranian decision makers repeated the words of President Hassan Rouhani and the Iranian advisor to Sayyed Khamenei for international affairs, Ali Akbar Velayati, namely that  “if Iran can’t export oil through the Persian Gulf, no-one in the Middle East will be able do this”. The source “expects further attacks in the future, given the US decision to stop the flow of oil by all means at all costs. Thus, oil will stop being delivered to the world if Iran can’t export its two million barrels per day”.

Two tankers  – Kokuka Courageous and Font Altair – were attacked in the Gulf of Oman on Thursday, putting at risk the supply of oil to the West and making oil tanker navigation in the Middle East very unsafe. “One more attack and insurance companies are expected to increase their fees. More attacks and no insurance company will agree to cover any oil tanker navigating in Gulf waters, putting Iran and other oil-exporters at the same level. Moreover, let us see what justifications Trump and Europe will offer their people when the price of oil becomes unaffordable”, said the source.

 …click on the above link to read the rest of the article…

Japanese Tanker Owner Denies Ship Hit By Mine, Says Crew Saw “Flying Objects” Before Attack

Japanese Tanker Owner Denies Ship Hit By Mine, Says Crew Saw “Flying Objects” Before Attack

For a moment on Thursday, it appeared that the US Navy had produced the ‘smoking gun’ to which Secretary of State Mike Pompeo had alluded during his statement from earlier in the day: CENTCOM footage which the Navy said purported to show Iran’s IRGC ‘caught in the act’ of trying to remove an unexploded  mine from the Kokuka Courageous, one of the two tankers damaged in Thursday’s attacks.

CENTCOM said the video it released showed the IRGC removing an unexploded limpet mine from the side of one of the tankers, suggesting Tehran had sought to remove evidence from the scene.

Embedded video

Just in: Pentagon video of what it says is an Iranian boat removing an unexploded mine from one of the attacked oil tankers in the Gulf of Oman.

After the video’s release, Iran continued to deny any involvement in the attacks. And perhaps now we know why. 

Because in comments that cast the entire narrative promulgated by the US in doubt, Yutaka Katada, the president of Kokuka Sangyo, the owner and operator of the Kokuka Courageous, said Friday that he doesn’t completely believe Washington’s version of events.

Instead, he said he believes the vessel wasn’t damaged by a mine, but by some kind of projectile, like, say, a torpedo. He called reports of a mine attack “false.” One reason is because a mine doesn’t damage a ship above sea level, like what was seen with the Courageous. 

“A mine doesn’t damage a ship above sea level,” said Yutaka Katada, president of Kokuka Sangyo, the owner and operator of the vessel. “We aren’t sure exactly what hit, but it was something flying towards the ship,” he said.

 …click on the above link to read the rest of the article…

Bank of Japan & the Bond Crisis

Bank of Japan & the Bond Crisis 

BoJ Statement 4-24-2019

The Great Financial Unknown is now upon us. After 10 years of Quantitative Easing, the European Central Bank (ECB) in Europe owns 40% of the national debts in the EU and it can neither sell them nor stop buying without creating a Panic in Interest Rates. Likewise, the Bank of Japan (BoJ) owns between 70% and 80% of the ETF bond market in Japan. The Bank of Japan confirmed it is ending free market determination of interest rates for the municipal level and that they “will not require any procedures such as auction as the method of determining lending conditions.”  today it may introduce a lending facility for its exchange-traded fund buying program, which would allow it to temporarily lend ETFs to market participants.

4. Introduction of Exchange-Traded Fund (ETF) Lending Facility
The Bank will consider the introduction of ETF Lending Facility, which will make it possible
to temporarily lend ETFs that the Bank holds to market participants.

The statement at the end of the announcement on the last page on its monetary policy has left traders in shock. This appears that the BoJ realizes that it now effectively has destroyed its bond market and realizes that there is not only the end of a free market, but there is a contagion of surrounding lack of liquidity.

We have never before in the history of human society ever witnessed such a major financial crisis. The BoJ makes it clear it will continue its policy of Quantitative Easing. It stated plainly:

The Bank will continue with “Quantitative and Qualitative Monetary Easing (QQE) with
Yield Curve Control,” aiming to achieve the price stability target of 2 percent, as long as it is
necessary for maintaining that target in a stable manner.

 …click on the above link to read the rest of the article…

Japanified World Ahead

Japanified World Ahead

Losing Decades
Too Much, Too Fast
A $10 Trillion Federal Reserve Balance Sheet
Mastering Private Markets
Living on Puerto Rico Time

Regular readers may have noticed me slowly losing confidence in the economy. Your impression is correct and there’s a good reason for it, as I will explain today. The facts have changed so my conclusions are changing, too.

I still think the economy is okay for now. I still see recession odds rising considerably in 2020. Maybe it will get pushed back another year or two, but at some point this growth phase will end, either in recession or an extended flat period (even flatter than the last decade, which says a lot). And I still think we are headed toward a global credit crisis I’ve dubbed The Great Reset.

What’s evolved is my judgment on the coming slowdown’s severity and duration. I think the rest of the world will enter a period something like Japan endured following 1990, and is still grappling with today. It won’t be the end of the world; Japan is still there, but the little growth it’s had was due mainly to exports. That won’t work when every major economy is in the same position.

Describing this decline as “Japanification” may be unfair to Japan but it’s the best paradigm we have. The good news is it will spread slowly. The bad news is it will end slowly, too.

I believe we will avoid literal blood in the streets but it will be a challenging time. We’ll be discussing how to get through it more specifically at the Strategic Investment Conference next month. It is now sold out but you can still buy a Virtual Pass that includes audio and video of almost the whole event. Click here for information.

Losing Decades

 …click on the above link to read the rest of the article…

The Bank Of Japan Bought 5.6 Trillion Yen In Stocks Last Year

The Bank Of Japan Bought 5.6 Trillion Yen In Stocks Last Year

There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as the result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved.  

                – Ludwig von Mises, Human Action

In recent years, thanks to central bank intervention in virtually every asset class, writing about capital markets in the context of some valuation or fundamental analysis framework has become a laughable, surreal, and self-defeating exercise, and here is a perfect example why.

For one reason or another, overseas investors dumped Japanese stocks by the largest margin in 31 years in the fiscal year ended Sunday, according to official market data: specifically, market participants abroad unloaded about 5.63 trillion yen ($50 billion) worth of shares on a net basis, the Tokyo Stock Exchange reported Thursday, for a second straight year of net selling and the highest sell-off since 1987.

And yet this barely caused a ripple in asset prices for one simple reason: the Bank of Japan’s asset purchases absorbed all the bleeding, exposing the central bank’s outsize role in the market. Indeed, as the Nikkei adds, this near-record liquidation was matched nearly yen for yen by the BOJ’s pumping of money into the economy through asset purchases, with the central bank buying 5.65 trillion yen worth of equity!

Of course, there were legitimate reasons why foreign investors felt the urge to liquidate Japanese holdings: international investors unloaded Japanese shares as they became alarmed by concerns about a global slowdown. With many Japanese manufacturers reliant on exports, overseas analysts cut their recommendations for those stocks amid China’s decelerating economy and Beijing’s trade war with the US.

 …click on the above link to read the rest of the article…

The Japanification of the World

The Japanification of the World

Zombification / Japanification is not success; it is only the last desperate defense of a failing, brittle status quo by doing more of what’s failed.

A recent theme in the financial media is the Japanification of Europe.Japanification refers to a set of economic and financial conditions that have come to characterize Japan’s economy over the past 28 years: persistent stagnation and deflation, a low-growth and low-inflation economy, very loose monetary policy, a central bank that is actively monetizing debt, i.e. creating currency out of thin air to buy government debt and a government which funds “bridges to nowhere” and other stimulus spending to keep the economy from crashing into outright contraction.

The parallels with Europe are obvious, but they don’t stop there: the entire world is veering into a zombified financial, economic, social and political status quo that is the core of Japanification.

While most commentators focus on the economic characteristics of Japanification, social and political stagnation are equally consequential. If we only measure economic/financial stagnation, it appears as if Japan and Europe are holding their own, i.e.maintaining the status quo via near-zero growth and near-zero interest rates.

But if we measure social and political decay, the erosion is undeniable. Here’s one example. Few Americans have access to or watch Japanese TV, so they are unaware of the emergence of the homeless as a permanent feature of urban Japan. The central state propaganda media is focused on encouraging tourism, a rare bright spot in Japan’s moribund economy, and so you won’t find much media coverage of homelessness or other systemic signs of social breakdown.

If you watch Japanese detective / police procedural dramas, however, you’ll find constant references to homeless people and homeless encampments: detectives seek witnesses to a crime in the nearby homeless encampment; a homeless man living in an abandoned warehouse is found murdered, etc.

 …click on the above link to read the rest of the article…

Rabo: The World Is Banking On China (But Japan Points To Our Future)

Rabo: The World Is Banking On China (But Japan Points To Our Future)

Market comments

There is a saying in the market that if you want to see the future of monetary policy, you just have to look at Japan. Well, as expected, BoJ Governor Kuroda and his team decided to keep policy unchanged, despite a fresh downward adjustment of its economic assessment. Two out of the nine board members dissented, with one of them being very outspoken in favour of more easing, thus underlining the dovish slant. But, like in Europe, headwinds are mostly blowing from the external environment, leading to weaker exports and industrial output – according to the Bank. In essence, the Japanese economy is feeling the hurt from slower global growth as a result of Brexit, protectionism and the slowdown in China.

And apparently Japanese monetary policy makers still have some hope the economy can recover from this downdraft pretty quickly or that any ongoing weakness would be offset by a better domestic economy. But when many central banks are thinking like that, you can be sure it won’t add up! Or are we all banking on the Chinese now? Well, at least Mr. Draghi and Mr. Kuroda seem to be on the same page, with Kuroda saying this morning that “China’s stimulus is pretty big and will have an impact”.

Even more worrisome is that refraining from action whilst keeping up a brave face perhaps only highlights that the central bank has ran out of options. Despite being arguably the most aggressive central bank in terms of monetary easing since 2008, underlying inflation’s basically gone nowhere (inflation ex-food and energy being at a paltry 0.4% y/y). And while there is an increasing chorus –recently joined by finance minister Taro Aso– to lower or make more flexible the BoJ’s 2% inflation target, Mr. Kuroda confirmed this morning that this is not (yet) the way to go.

…click on the above link to read the rest of the article…

Japan Gives Up On Inflation, Now Wants Deflation (Sort Of) to Offset Tax Hikes

Today seems straight from the Twilight Zone: First the PPT and now Abenomics in full reverse.

Japan has virtually given up on reaching 2% inflation after nearly six years of trying. An argument gaining ground in Tokyo holds that the inflation goal, once seen as paramount, doesn’t matter so much after all. Inflation excluding volatile fresh food and energy prices was just 0.3% in November, and it has barely budged all year.

Mr. Abe has largely stopped discussing the dangers of deflation, and his government is actually trying to push some prices down ahead of a tax increase set to take effect in October 2019. Mr. Abe’s de facto No. 2, Chief Cabinet Secretary Yoshihide Suga, has called on mobile-phone carriers to lower fees by about 40%—a move that could knock a full percentage point off inflation, according to government estimates.

“There is no change to our stance of seeking the 2% price goal as soon as possible by patiently continuing powerful easing,” Mr. Kuroda said at a November press conference. At the same time, he has started talking more about the potential downsides of aggressive monetary easing,

Still, BOJ officials are hesitant to abandon the target altogether out of fear it could damage expectations and push the country back into deflation, said people familiar with the BOJ’s thinking.

Raising Prices

Torikizoku (Chicken Nobility), raised prices for the first time in 30 years last year, by the equivalent of 16 cents.

“Once prices went up, it wasn’t just the chickens that got skewered. Same-store sales at the chain have fallen more than 5% every month since May and profit fell 76% compared with a year earlier in the most recent quarter.”

…click on the above link to read the rest of the article…

For The First Time Ever, Bank Of Japan Total Assets Surpass Japan’s GDP

For the first time in history, a central bank has managed to print enough money to buy enough assets to surpass the nation’s annual GDP.

Under the watchful eye of Kuroda, and the overseeing (but independent) hand of Abe, The Bank of Japan’s balance sheet grew to 553.6 trillion yen as on November 10th – that is larger than Japan’s annualized nominal seasonally-adjusted GDP of 552.8 trillion yen (as of the end of June).

Some context for just how crazy this is, here is The Fed vs US GDP…

And putting it all together…

What happens next?

“Flashpoint For War”: U.S. And Japan Plan Military Response To Chinese Incursions Of Disputed Islands

Things are again rapidly heating up in the East China Sea amidst already heightened tensions in a region where Washington is increasingly asserting the right of navigation in international waters against broad Chinese claims and seeking to defend the territorial possessions of its allies.

According to a bombshell new Reuters report the tiny and rocky Senkaku Islands which lie between northern Taiwan and the Japanese home islands are “rapidly turning into a flashpoint for war”. Alarmingly, Japanese government sources have been quoted as saying Tokyo and the United States are drawing up an operations plan for an allied military response to Chinese threats to the disputed Senkaku Islands.

The Senkaku Islands, historically claimed by both Japan and China.

From nearly the start of his entering the White House, President Trump has said he’s committed to upholding Article 5 of the US-Japan security treaty signed the post-war years of the mid-20th century: “We are committed to the security of Japan and all areas under its administrative control and to further strengthening our very crucial alliance,” Trump had promised from the first official reception of Japanese Prime Minister Shinzo Abe back in February 2017, and since consistently maintained.

Japanese government sources have told regional media that the joint plan of response with the United States involves “how to respond in the event of an emergency on or around the uninhabited islands in the East China Sea” — which is set to be completed by next march, according to the statements.

Beijing claims the islands as part of its historical inheritance — as it does neighbouring Taiwan, despite failing to seize the protectorate during the Chinese Civil War.

Taiwan, however, was a Japanese protectorate before World War II.

…click on the above link to read the rest of the article…

China & Japan Dump Treasuries As Dollar’s Reserve Status Slumps To 5 Year Lows

Treasury International Capital flows showed Brazil the biggest buyer of Treasurys in August (followed by Ireland and France), but it was China and ‘ally’ Japan that dumped the most Treasurys in the month…

Brazil is Steve Mnuchin’s best friend…

As China reduced their holdings of US Treasurys for the 3rd straight month…

Japan flipped to a seller again in August back to the lowest holdings since October 2011…

And while the Saudis were buying in August…

the broad trend among other majors has been selling…

All of which has driven the USDollar’s share of global central bank reserve to its lowest since 2013

And, according to economist Zach Pandl at Goldman Sachs, Washington’s aggressive policy against Moscow could be the biggest driver behind the recent fall of the dollar’s share of global central-bank reserves, who noted that Russia’s Central Bank sold some $85 billion of its $150 billion holding of the US assets from April through June after the US Treasury Department announced new sanctions on Russian businessmen, companies and government officials.

At the beginning of April, as RT reports, Washington expanded its anti-Russian sanction list, including seven Russian tycoons, 12 companies and 17 senior government officials over alleged meddling in the 2016 US presidential election, and according to Pandl, the co-head of global FX and emerging-market strategy, the US policy of unilateral tariff hikes and sanctions is putting at risk the greenback that is still dominating the global currency reserves.

“The Central Bank of Russia likely sold a large portion of its dollar-denominated assets, and perhaps all of its US Treasuries held by US custodians, and transferred them to euro-denominated and yuan-denominated bonds in the second quarter,” the economist said.

“This would account for more than half of the decline in the share of dollar reserves during the quarter.”

…click on the above link to read the rest of the article…

 

Chinese Air Force Holds Live-Fire War Drill In South China Sea Days After US Exercise

China Central Television, as per the Twitter account of the official People’s Daily newspaper, reported Saturday that the Chinese military deployed fighter jets and bombers to conduct live-fire war drills in the disputed South China Sea, just days after the Japan Air Self-Defense Force and nuclear-capable US B-52 strategic bombers held exercises over the East China Sea and the Sea of Japan on September 27.

The report said dozens of jet fighters from the People’s Liberation Army Naval Air Force from the Southern Theater Command on early Saturday conducted “live-fire drills to tests pilots’ assault, penetration and precision-strike capabilities at sea,” said The Japan Times.

Beijing on Thursday blasted the US and Japan exercise over the East China Sea, calling them a “provocation.”

“China’s principle and standpoint on the South China Sea are always clear,” Defense Ministry spokesman Ren Guoqiang said, according to Chinese state-run media. “China firmly opposes U.S. military aircraft’s provocation in the South China Sea, and will take all necessary measures.”

Japan’s Mainichi Shimbun News said the joint drills between the US and Japan were highly “unusual,” as what we pointed out last week, a China-Japan maritime crisis is inevitable over the disputed Senkaku Islands.

It seems that Thursday’s move was aimed at keeping China in check amid increasing tensions between Beijing and Washington, including an intensifying trade war.

But in a tit-for-tat effort, China hit back with war drills of their own on Saturday.

Chinese Foreign Ministry spokesman Geng Shuang criticized unnamed countries (US, United Kingdom, and France) for using freedom of navigation and overflight as excuses to disrupt other countries’ sovereignty and security, disturbing regional peace and stability.

…click on the above link to read the rest of the article…

Japan Braces For Typhoon Trami: ‘Life Threatening Impacts’

Japan Braces For Typhoon Trami: ‘Life Threatening Impacts’

As Japan braces for typhoon Trami, weather experts are warning that this storm could have “life-threatening impacts” when it hits. Trami will slam into the Ryukyu Islands and barrel into mainland Japan with destructive winds, flooding rain, and an inundating storm surge Friday night into Monday.

According to AccuWeather, residents should be preparing themselves for what could be a major devastating event.  Residents should be making the necessary precautions to protect themselves and their property against this dangerous typhoon, which is equal to a category 3 hurricane. Those living in the coastal communities and in flood-prone areas should pay attention to local authorities and heed evacuation orders.

Experts have said that at this time, all locations in Japan are at risk for impacts from Trami in the coming days. “Trami remains on track to blast the Ryukyu Islands Friday night into Sunday morning, with mainland Japan bracing for the blow Sunday into Monday,” said AccuWeather Senior Meteorologist Kristina Pydynowski. “Time is running out for preparations in the Ryukyu Islands,” Pydynowski said.

Major flooding and mudslides are also possible and Pydynowski is warning everyone to not go outside. “Anyone outside during the height of the storm can endure bodily harm or be fatally struck by flying debris,” Pydynowski said. All of Kyushu, Shikoku and western Honshu will face torrential rain that can trigger widespread flooding and mudslides. This includes some of the same communities that endured the historic flooding over the summer.

The heaviest rain may fall north and west of Tokyo, but wind gusts of 95-145 km/h (60-90 mph) can still whip the city on Sunday night. Haneda Airport may be forced to shut down for a time. While the drier weather will quickly return for Monday, the morning commute and daily routines can still be disrupted due to any damage, littered roads or rail lines or power outages left in the wake of Trami.

 

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