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