Korea and China will be affected by the Japanese economic contraction.
From Reuters:
The Markit/JMMA Japan Manufacturing Purchasing Managers Index (PMI) fell to a seasonally adjusted 46.4 in March, the lowest since April 2009 and down from February's 52.9.
The data provided one of the first quantitative assessments of the severe damage to production from the March 11 quake and tsunami in northeast Japan, which triggered a nuclear safety crisis and widespread power shortages.
"The impact from the power outage, supply chain disruption and a halt of many factories' activity after the quake is large. There is a possibility that the PMI index will further weaken," said Takeshi Minami, chief economist at Norinchukin Research Institute in Tokyo.
"It is a major issue now how the nuclear crisis develops, and stock market players are also closely watching it. The outlook for business activity depends on progress in reconstruction and recovery."
Japan's government is struggling to contain the world's worst nuclear crisis in 25 years that triggered wide power outage, while carrying out a huge humanitarian relief effort following the March 11 quake and tsunami that devastated coastal areas of northeast Japan and left 27,500 people dead or missing.
It is set to compile several extra budgets to cope with the disaster with the first likely due next month but it will initially focus on urgent steps such as construction of temporary housing, leaving markets few clues about when reconstruction demand will start to give a much needed lift to the economy.
In the survey, the headline index slipped below the 50 threshold that separates contraction from expansion for the first time in three months, while the extent of the drop from the previous month exceeded those seen after the attacks of Sept. 11, 2001, and the collapse of Lehman Brothers in 2008.
"Suppliers' delivery times lengthened at a survey record pace amid widespread disruption in the supply chain resulting from the disaster," said Alex Hamilton, economist at Markit.
"These delays could affect production in coming months and drive input price inflation even higher than the two-and-a-half year peak seen in March."
The output component of the PMI index dropped to a two-year low of 37.7 in March from 53.9 in February, logging the fastest decline on record with a number of respondents saying rolling blackouts and logistical problems in their supply chains restricted production, the survey showed.
The index for new orders also dropped to a two-year low of 39.6 from February's 54.3. Some manufacturers responded that customers had to cancel or postpone orders.
http://www.reuters.com/article/2011/03/31/japan-economy-pmi-idUSL3E7EU3P420110331
Thursday, March 31, 2011
Wednesday, March 30, 2011
Korea GDP Grow 6.24% in 2010, Hitting 8-Year Peak
We have to look to the long run. If economic fundamentals don’t improve, temporarily increase in GDP won’t mean much.
From Yonhap News:
The South Korean economy grew 6.2 percent last year, the fastest expansion in eight years, as exports remained robust and facility investment jumped amid improved consumer spending, the central bank said Wednesday.
The country's gross domestic product (GDP), the broadest measure of economic performance, was revised up from an earlier estimate of 6.1 percent for last year, according to the Bank of Korea (BOK). It marked the fastest growth since Asia's fourth-largest economy expanded 7.2 percent in 2002.
In South Korea, however, oil price gains and continued economic growth are exerting upward pressure on inflation. BOK Gov. Kim Choong-soo said keeping price stability is "the greatest challenge" facing the economy as consumer prices will likely remain high for some time.
The BOK has hiked the key rate in four steps to 3 percent since July last year from a record low of 2 percent.
Exports of goods, which account for about 50 percent of the local economy, grew 15.8 percent last year, up from an earlier estimate of 14.1 percent. Private spending, one of the main growth engines of the Korean economy, expanded 4.1 percent in 2010, the same pace as earlier expected.
Facility investment jumped 25 percent, better than an earlier 24.5 percent expansion, while construction investment declined 1.4 percent, better than an earlier estimate of a 2.3 percent contraction.
http://english.yonhapnews.co.kr/business/2011/03/30/73/0503000000AEN20110330002100320F.HTML
From Korea Herald:
South Korea's top central banker has stressed the need to steadily tackle growing household debt, which market watchers fear will undercut the country's economic growth momentum.
South Korean household debts came to nearly 800 trillion won ($721.8 billion) as of the end of last year, which analysts say had been stoked by the country's low borrowing costs.
In a dinner meeting with reporters Tuesday to mark his first year in office, Bank of Korea (BOK) Gov. Kim Choong-soo said eurozone debt fears, Japan's nuclear crisis and ongoing political unrest in the Middle East and North Africa are uncontrolled factors, but that household debt and falling savings rates in the private sector are problems that authorities could "manage."
http://www.koreaherald.com/business/Detail.jsp?newsMLId=20110330000572
From Chosun Ilbo:
Korea is no longer one of the world's most frugal nations as figures show that household savings last year stood far below the average of other developed countries.
According to a report released by the OECD on Monday, Korea's household savings rate, which is savings divided by disposable income, came to 2.8 percent in 2010.
The rate is much lower than the 6.1 percent average of 20 OECD member countries.
The sharp drop is mainly due to slow income growth, tax burdens and falling interest rates.
http://english.chosun.com/site/data/html_dir/2011/03/08/2011030801403.html
From Yonhap News:
The South Korean economy grew 6.2 percent last year, the fastest expansion in eight years, as exports remained robust and facility investment jumped amid improved consumer spending, the central bank said Wednesday.
The country's gross domestic product (GDP), the broadest measure of economic performance, was revised up from an earlier estimate of 6.1 percent for last year, according to the Bank of Korea (BOK). It marked the fastest growth since Asia's fourth-largest economy expanded 7.2 percent in 2002.
In South Korea, however, oil price gains and continued economic growth are exerting upward pressure on inflation. BOK Gov. Kim Choong-soo said keeping price stability is "the greatest challenge" facing the economy as consumer prices will likely remain high for some time.
The BOK has hiked the key rate in four steps to 3 percent since July last year from a record low of 2 percent.
Exports of goods, which account for about 50 percent of the local economy, grew 15.8 percent last year, up from an earlier estimate of 14.1 percent. Private spending, one of the main growth engines of the Korean economy, expanded 4.1 percent in 2010, the same pace as earlier expected.
Facility investment jumped 25 percent, better than an earlier 24.5 percent expansion, while construction investment declined 1.4 percent, better than an earlier estimate of a 2.3 percent contraction.
http://english.yonhapnews.co.kr/business/2011/03/30/73/0503000000AEN20110330002100320F.HTML
From Korea Herald:
South Korea's top central banker has stressed the need to steadily tackle growing household debt, which market watchers fear will undercut the country's economic growth momentum.
South Korean household debts came to nearly 800 trillion won ($721.8 billion) as of the end of last year, which analysts say had been stoked by the country's low borrowing costs.
In a dinner meeting with reporters Tuesday to mark his first year in office, Bank of Korea (BOK) Gov. Kim Choong-soo said eurozone debt fears, Japan's nuclear crisis and ongoing political unrest in the Middle East and North Africa are uncontrolled factors, but that household debt and falling savings rates in the private sector are problems that authorities could "manage."
http://www.koreaherald.com/business/Detail.jsp?newsMLId=20110330000572
From Chosun Ilbo:
Korea is no longer one of the world's most frugal nations as figures show that household savings last year stood far below the average of other developed countries.
According to a report released by the OECD on Monday, Korea's household savings rate, which is savings divided by disposable income, came to 2.8 percent in 2010.
The rate is much lower than the 6.1 percent average of 20 OECD member countries.
The sharp drop is mainly due to slow income growth, tax burdens and falling interest rates.
http://english.chosun.com/site/data/html_dir/2011/03/08/2011030801403.html
Tuesday, March 29, 2011
Japan Update: Japan May Have Lost Race To Save Nuclear Reactor
We are aware and see nothing critical being done about the obvious problem.
From Guardian:
The radioactive core in a reactor at the crippled Fukushima nuclear power plant appears to have melted through the bottom of its containment vessel and on to a concrete floor, experts say, raising fears of a major release of radiation at the site.
The warning follows an analysis by a leading US expert of radiation levels at the plant. Readings from reactor two at the site have been made public by the Japanese authorities and Tepco, the utility that operates it.
Richard Lahey, who was head of safety research for boiling-water reactors at General Electric when the company installed the units at Fukushima, told the Guardian workers at the site appeared to have "lost the race" to save the reactor, but said there was no danger of a Chernobyl-style catastrophe.
Workers have been pumping water into three reactors at the stricken plant in a desperate bid to keep the fuel rods from melting down, but the fuel is at least partially exposed in all the reactors.
At least part of the molten core, which includes melted fuel rods and zirconium alloy cladding, seemed to have sunk through the steel "lower head" of the pressure vessel around reactor two, Lahey said.
"The indications we have, from the reactor to radiation readings and the materials they are seeing, suggest that the core has melted through the bottom of the pressure vessel in unit two, and at least some of it is down on the floor of the drywell," Lahey said. "I hope I am wrong, but that is certainly what the evidence is pointing towards."
The major concern when molten fuel breaches a containment vessel is that it reacts with the concrete floor of the drywell underneath, releasing radioactive gases into the surrounding area. At Fukushima, the drywell has been flooded with seawater, which will cool any molten fuel that escapes from the reactor and reduce the amount of radioactive gas released.
Lahey said: "It won't come out as one big glob; it'll come out like lava, and that is good because it's easier to cool."
The drywell is surrounded by a secondary steel-and-concrete structure designed to keep radioactive material from escaping into the environment. But an earlier hydrogen explosion at the reactor may have damaged this.
Robert Peter Gale, a US medical researcher who was brought in by Soviet authorities after the Chernobyl disaster, in 1986, has met Japanese cabinet ministers to discuss establishing an independent committee charged with taking radiation data from the site and translating it into clear public health advice.
"What is fundamentally disturbing the public is reports of drinking water one day being above some limit, and then a day or two later it's suddenly safe to drink. People don't know if the first instance was alarmist or whether the second one was untrue," said Gale.
"My recommendation is they should consider establishing a small commission to independently convert the data into comprehensible units of risk for the public so people know what they are dealing with and can take sensible decisions," he added.
http://www.guardian.co.uk/world/2011/mar/29/japan-lost-race-save-nuclear-reactor
From Guardian:
The radioactive core in a reactor at the crippled Fukushima nuclear power plant appears to have melted through the bottom of its containment vessel and on to a concrete floor, experts say, raising fears of a major release of radiation at the site.
The warning follows an analysis by a leading US expert of radiation levels at the plant. Readings from reactor two at the site have been made public by the Japanese authorities and Tepco, the utility that operates it.
Richard Lahey, who was head of safety research for boiling-water reactors at General Electric when the company installed the units at Fukushima, told the Guardian workers at the site appeared to have "lost the race" to save the reactor, but said there was no danger of a Chernobyl-style catastrophe.
Workers have been pumping water into three reactors at the stricken plant in a desperate bid to keep the fuel rods from melting down, but the fuel is at least partially exposed in all the reactors.
At least part of the molten core, which includes melted fuel rods and zirconium alloy cladding, seemed to have sunk through the steel "lower head" of the pressure vessel around reactor two, Lahey said.
"The indications we have, from the reactor to radiation readings and the materials they are seeing, suggest that the core has melted through the bottom of the pressure vessel in unit two, and at least some of it is down on the floor of the drywell," Lahey said. "I hope I am wrong, but that is certainly what the evidence is pointing towards."
The major concern when molten fuel breaches a containment vessel is that it reacts with the concrete floor of the drywell underneath, releasing radioactive gases into the surrounding area. At Fukushima, the drywell has been flooded with seawater, which will cool any molten fuel that escapes from the reactor and reduce the amount of radioactive gas released.
Lahey said: "It won't come out as one big glob; it'll come out like lava, and that is good because it's easier to cool."
The drywell is surrounded by a secondary steel-and-concrete structure designed to keep radioactive material from escaping into the environment. But an earlier hydrogen explosion at the reactor may have damaged this.
Robert Peter Gale, a US medical researcher who was brought in by Soviet authorities after the Chernobyl disaster, in 1986, has met Japanese cabinet ministers to discuss establishing an independent committee charged with taking radiation data from the site and translating it into clear public health advice.
"What is fundamentally disturbing the public is reports of drinking water one day being above some limit, and then a day or two later it's suddenly safe to drink. People don't know if the first instance was alarmist or whether the second one was untrue," said Gale.
"My recommendation is they should consider establishing a small commission to independently convert the data into comprehensible units of risk for the public so people know what they are dealing with and can take sensible decisions," he added.
http://www.guardian.co.uk/world/2011/mar/29/japan-lost-race-save-nuclear-reactor
Monday, March 28, 2011
Japanese Supply Chain Disruption
From Zero Hedge:
Following is a roundup of the impact of this month's devastating earthquake and tsunami on Japanese manufacturers of cars and electronics.
Plant shutdowns in Japan threaten supplies to manufacturers across the globe of items from semiconductors to car parts.
Japanese companies are not only reeling from damage to factories and suppliers in quake-hit northeastern Japan but are also suffering from fuel shortages nationwide and power outages in the Tokyo area that are affecting production, distribution and the ability of staff to get to work.
AUTO MAKERS
* Toyota Motor Corp halted most operations at 18 factories that assemble Toyota and Lexus vehicles in Japan. It has restarted production of three hybrid models, the Prius, Lexus HS250h and CT200h, from March 28 at two factories but will suspend output for one day this week, on March 30. Toyota is making car parts at plants near its base in Toyota City, central Japan, for overseas assembly facilities and for repair parts. Toyota will delay the launch of the Prius wagon and minivan models in Japan from the original plan for the end of April.
* Honda Motor Co extended its production halt in Japan to April 3. On Monday, Honda said a fifth of its Japan-based Tier 1 suppliers affected by the earthquake would take more than a week to recover. Honda made 69,170 cars in January in Japan, accounting for around a quarter of its production. On Thursday the company said it would resume production of motorcycles and power products at its Kumamoto plant in Kyushu, southern Japan.
* Nissan Motor Co resumed vehicle production at all assembly plants in Japan from Thursday, March 24, while supplies last. It resumed production of parts for overseas manufacturing and repair parts on March 21. Restoration continues at its damaged Iwaki engine factory in Tochigi prefecture, north of Tokyo. Nissan made 81,851 cars in January in Japan, where it manufactures 23 percent of its vehicles. Goldman Sachs has calculated that one day's lost production costs Nissan about 2 billion yen ($25 million) in profit.
* Mazda Motor Corp said on Thursday it would suspend production of vehicle repair parts and parts for overseas production at its Hofu factory in Yamaguchi on March 28, after having resumed limited operations there earlier this week. Its Hiroshima factory will continue limited production until further notice, a spokeswoman said.
* Suzuki Motor Corp will keep car production halted at its three assembly plants in Japan through March 29, and resume assembly of commercial trucks and vans at one of those plants for one shift on March 28 and 29. It will continue operating an engine factory using parts in its inventory. It has not decided on production plans for March 30 and beyond.
* Fuji Heavy Industries Co said all five of the car and parts-related plants for its Subaru-brand vehicles in Gunma prefecture, north of Tokyo, will be shut at least until Monday, pushing back a restart that had been due on Tuesday. Production of vehicle parts to be shipped to overseas manufacturing plants started on Wednesday and production of vehicle repair parts began Thursday.
ELECTRONICS MAKERS:
* Sony Corp said shortages of parts and raw materials would force it to suspend or reduce production at five plants in central and southern Japan making digital cameras, camera lenses, flat-screen televisions and other goods. Another plant may be affected by rolling power blackouts. Six production sites in northern Japan have been halted since the quake. If shortages continue, Sony may consider temporarily shifting some production overseas.
* Toshiba said output was suspended at a factory in Iwate prefecture making system LSI chips for microprocessors and image sensors, with no time frame yet for a resumption of output. An assembly line at a plant making small liquid crystal displays for smartphones and other devices will be closed for a month to repair damaged machinery.
* Canon said it re-started operations at two plants on Friday, but two camera plants remained closed and the company was not sure which factories it would be able to operate next week, amid a shortage of parts.
* Panasonic said some plants in northeast Japan remained closed including one making optical pick-ups and another assembling cameras and audio equipment.
* Renesas Electronics, the world's No.5 chipmaker, said production at three of its 22 factories in Japan is still halted while output at three other assembly plants has been affected by power outages imposed by utilities unable to meet electricity demand in the wake of the earthquake. OTHERS
* Shin-Etsu Chemical, the world's leading maker of silicon wafers, said its biggest wafer plant remained offline, along with a PVC factory. The firm has not said when it will restart operations. Some of the wafers made in Japan are shipped to chip companies overseas. Shin-Etsu is trying to boost production elsewhere, particularly of 300-mm wafers, to make up the shortfall.
http://www.zerohedge.com/article/latest-japanese-supply-chain-disruption-summary
Following is a roundup of the impact of this month's devastating earthquake and tsunami on Japanese manufacturers of cars and electronics.
Plant shutdowns in Japan threaten supplies to manufacturers across the globe of items from semiconductors to car parts.
Japanese companies are not only reeling from damage to factories and suppliers in quake-hit northeastern Japan but are also suffering from fuel shortages nationwide and power outages in the Tokyo area that are affecting production, distribution and the ability of staff to get to work.
AUTO MAKERS
* Toyota Motor Corp halted most operations at 18 factories that assemble Toyota and Lexus vehicles in Japan. It has restarted production of three hybrid models, the Prius, Lexus HS250h and CT200h, from March 28 at two factories but will suspend output for one day this week, on March 30. Toyota is making car parts at plants near its base in Toyota City, central Japan, for overseas assembly facilities and for repair parts. Toyota will delay the launch of the Prius wagon and minivan models in Japan from the original plan for the end of April.
* Honda Motor Co extended its production halt in Japan to April 3. On Monday, Honda said a fifth of its Japan-based Tier 1 suppliers affected by the earthquake would take more than a week to recover. Honda made 69,170 cars in January in Japan, accounting for around a quarter of its production. On Thursday the company said it would resume production of motorcycles and power products at its Kumamoto plant in Kyushu, southern Japan.
* Nissan Motor Co resumed vehicle production at all assembly plants in Japan from Thursday, March 24, while supplies last. It resumed production of parts for overseas manufacturing and repair parts on March 21. Restoration continues at its damaged Iwaki engine factory in Tochigi prefecture, north of Tokyo. Nissan made 81,851 cars in January in Japan, where it manufactures 23 percent of its vehicles. Goldman Sachs has calculated that one day's lost production costs Nissan about 2 billion yen ($25 million) in profit.
* Mazda Motor Corp said on Thursday it would suspend production of vehicle repair parts and parts for overseas production at its Hofu factory in Yamaguchi on March 28, after having resumed limited operations there earlier this week. Its Hiroshima factory will continue limited production until further notice, a spokeswoman said.
* Suzuki Motor Corp will keep car production halted at its three assembly plants in Japan through March 29, and resume assembly of commercial trucks and vans at one of those plants for one shift on March 28 and 29. It will continue operating an engine factory using parts in its inventory. It has not decided on production plans for March 30 and beyond.
* Fuji Heavy Industries Co said all five of the car and parts-related plants for its Subaru-brand vehicles in Gunma prefecture, north of Tokyo, will be shut at least until Monday, pushing back a restart that had been due on Tuesday. Production of vehicle parts to be shipped to overseas manufacturing plants started on Wednesday and production of vehicle repair parts began Thursday.
ELECTRONICS MAKERS:
* Sony Corp said shortages of parts and raw materials would force it to suspend or reduce production at five plants in central and southern Japan making digital cameras, camera lenses, flat-screen televisions and other goods. Another plant may be affected by rolling power blackouts. Six production sites in northern Japan have been halted since the quake. If shortages continue, Sony may consider temporarily shifting some production overseas.
* Toshiba said output was suspended at a factory in Iwate prefecture making system LSI chips for microprocessors and image sensors, with no time frame yet for a resumption of output. An assembly line at a plant making small liquid crystal displays for smartphones and other devices will be closed for a month to repair damaged machinery.
* Canon said it re-started operations at two plants on Friday, but two camera plants remained closed and the company was not sure which factories it would be able to operate next week, amid a shortage of parts.
* Panasonic said some plants in northeast Japan remained closed including one making optical pick-ups and another assembling cameras and audio equipment.
* Renesas Electronics, the world's No.5 chipmaker, said production at three of its 22 factories in Japan is still halted while output at three other assembly plants has been affected by power outages imposed by utilities unable to meet electricity demand in the wake of the earthquake. OTHERS
* Shin-Etsu Chemical, the world's leading maker of silicon wafers, said its biggest wafer plant remained offline, along with a PVC factory. The firm has not said when it will restart operations. Some of the wafers made in Japan are shipped to chip companies overseas. Shin-Etsu is trying to boost production elsewhere, particularly of 300-mm wafers, to make up the shortfall.
http://www.zerohedge.com/article/latest-japanese-supply-chain-disruption-summary
Radioactive Iodine Detected in Seoul
From Yonhap News:
Traces of radioactive iodine have been detected in Seoul following the nuclear crisis in quake-stricken Japan, a state-run nuclear safety agency said Tuesday.
The Korea Institute of Nuclear Safety (KINS) said that it started to analyze materials taken from the air in 12 places across the nation Monday and detected traces of radioactive iodine-131 in Seoul.
The amount, however, is so small that it does not pose any immediate risks to public health or the environment, the KINS said.
The detection came a day after KINS said it had discovered traces of radioactive xenon-133 in the northeastern part of South Korea.
http://english.yonhapnews.co.kr/national/2011/03/29/39/0302000000AEN20110329000300320F.HTML
Traces of radioactive iodine have been detected in Seoul following the nuclear crisis in quake-stricken Japan, a state-run nuclear safety agency said Tuesday.
The Korea Institute of Nuclear Safety (KINS) said that it started to analyze materials taken from the air in 12 places across the nation Monday and detected traces of radioactive iodine-131 in Seoul.
The amount, however, is so small that it does not pose any immediate risks to public health or the environment, the KINS said.
The detection came a day after KINS said it had discovered traces of radioactive xenon-133 in the northeastern part of South Korea.
http://english.yonhapnews.co.kr/national/2011/03/29/39/0302000000AEN20110329000300320F.HTML
Saturday, March 26, 2011
Friday, March 25, 2011
Fukushima Nuclear Fallout Nearing Chernobyl Levels
From New Scientist:
Japan's damaged nuclear plant in Fukushima has been emitting radioactive iodine and caesium at levels approaching those seen in the aftermath of the Chernobyl accident in 1986. Austrian researchers have used a worldwide network of radiation detectors – designed to spot clandestine nuclear bomb tests – to show that iodine-131 is being released at daily levels 73 per cent of those seen after the 1986 disaster. The daily amount of caesium-137 released from Fukushima Daiichi is around 60 per cent of the amount released from Chernobyl.
The difference between this accident and Chernobyl, they say, is that at Chernobyl a huge fire released large amounts of many radioactive materials, including fuel particles, in smoke. At Fukushima Daiichi, only the volatile elements, such as iodine and caesium, are bubbling off the damaged fuel. But these substances could nevertheless pose a significant health risk outside the plant.
The organisation set up to verify the Comprehensive Nuclear-Test-Ban Treaty (CTBT) has a global network of air samplers that monitor and trace the origin of around a dozen radionuclides, the radioactive elements released by atomic bomb blasts – and nuclear accidents. These measurements can be combined with wind observations to track where the radionuclides come from, and how much was released.
The level of radionuclides leaking from Fukushima Daiichi has been unclear, but the CTBT air samplers can shed some light, says Gerhard Wotawa of Austria's Central Institute for Meteorology and Geodynamics in Vienna.
For the first two days after the accident, the wind blew east from Fukushima towards monitoring stations on the US west coast; on the third day it blew south-west over the Japanese monitoring station at Takasaki, then swung east again. Each day, readings for iodine-131 at Sacramento in California, or at Takasaki, both suggested the same amount of iodine was coming out of Fukushima, says Wotawa: 1.2 to 1.3 × 1017 becquerels per day.
The agreement between the two "makes us confident that this is accurate", he says. So do similar readings at CTBT stations in Alaska, Hawaii and Montreal, Canada – readings at the latter, at least, show that the emissions have continued.
In the 10 days it burned, Chernobyl put out 1.76 × 1018 becquerels of iodine-131, which amounts to only 50 per cent more per day than has been calculated for Fukushima Daiichi. It is not yet clear how long emissions from the Japanese plant will continue.
Similarly, says Wotawa, caesium-137 emissions are on the same order of magnitude as at Chernobyl. The Sacramento readings suggest it has emitted 5 × 1015 becquerels of caesium-137 per day; Chernobyl put out 8.5 × 1016 in total – around 70 per cent more per day.
"This is not surprising," says Wotawa. "When the fuel is damaged there is no reason for the volatile elements not to escape," and the measured caesium and iodine are in the right ratios for the fuel used by the Fukushima Daiichi reactors. Also, the Fukushima plant has around 1760 tonnes of fresh and used nuclear fuel on site, and an unknown amount has been damaged. The Chernobyl reactor had only 180 tonnes.
The amounts being released, he says, are "entirely consistent" with the relatively low amounts of caesium and iodine being measured in soil, plants and water in Japan, because so much has blown out to sea. The amounts crossing the Pacific to places like Sacramento are vanishingly small – they were detected there because the CTBT network is designed to sniff out the tiniest traces.
Dangerous isotopes
The Chernobyl accident emitted much more radioactivity and a wider diversity of radioactive elements than Fukushima Daiichi has so far, but it was iodine and caesium that caused most of the health risk – especially outside the immediate area of the Chernobyl plant, says Malcolm Crick, secretary of a United Nations body that has just reviewed the health effects of Chernobyl. Unlike other elements, he says, they were carried far and wide by the wind.
Moreover the human body absorbs iodine and caesium readily. "Essentially all the iodine or caesium inhaled or swallowed crosses into the blood," says Keith Baverstock, former head of radiation protection for the World Health Organization's European office, who has studied Chernobyl's health effects.
Iodine is rapidly absorbed by the thyroid, and leaves only as it decays radioactively, with a half-life of eight days. Caesium is absorbed by muscles, where its half-life of 30 years means that it remains until it is excreted by the body. It takes between 10 and 100 days to excrete half of what has been consumed.
While in the body the isotopes' radioactive emissions can do significant damage, mainly to DNA. Children who ingest iodine-131 can develop thyroid cancer 10 or more years later; adults seem relatively resistant. A study published in the US last week found that iodine-131 from Chernobyl is still causing new cases of thyroid cancer to appear at an undiminished rate in the most heavily affected regions of Ukraine, Belarus and Russia.
Caesium-137 lingers in the environment because of its long half-life. Researchers are divided over how much damage environmental exposure to low doses has done since Chernobyl. Some researchers think it could still cause thousands of new cases of cancer across Europe.
http://www.newscientist.com/article/dn20285-fukushima-radioactive-fallout-nears-chernobyl-levels.html
Japan's damaged nuclear plant in Fukushima has been emitting radioactive iodine and caesium at levels approaching those seen in the aftermath of the Chernobyl accident in 1986. Austrian researchers have used a worldwide network of radiation detectors – designed to spot clandestine nuclear bomb tests – to show that iodine-131 is being released at daily levels 73 per cent of those seen after the 1986 disaster. The daily amount of caesium-137 released from Fukushima Daiichi is around 60 per cent of the amount released from Chernobyl.
The difference between this accident and Chernobyl, they say, is that at Chernobyl a huge fire released large amounts of many radioactive materials, including fuel particles, in smoke. At Fukushima Daiichi, only the volatile elements, such as iodine and caesium, are bubbling off the damaged fuel. But these substances could nevertheless pose a significant health risk outside the plant.
The organisation set up to verify the Comprehensive Nuclear-Test-Ban Treaty (CTBT) has a global network of air samplers that monitor and trace the origin of around a dozen radionuclides, the radioactive elements released by atomic bomb blasts – and nuclear accidents. These measurements can be combined with wind observations to track where the radionuclides come from, and how much was released.
The level of radionuclides leaking from Fukushima Daiichi has been unclear, but the CTBT air samplers can shed some light, says Gerhard Wotawa of Austria's Central Institute for Meteorology and Geodynamics in Vienna.
For the first two days after the accident, the wind blew east from Fukushima towards monitoring stations on the US west coast; on the third day it blew south-west over the Japanese monitoring station at Takasaki, then swung east again. Each day, readings for iodine-131 at Sacramento in California, or at Takasaki, both suggested the same amount of iodine was coming out of Fukushima, says Wotawa: 1.2 to 1.3 × 1017 becquerels per day.
The agreement between the two "makes us confident that this is accurate", he says. So do similar readings at CTBT stations in Alaska, Hawaii and Montreal, Canada – readings at the latter, at least, show that the emissions have continued.
In the 10 days it burned, Chernobyl put out 1.76 × 1018 becquerels of iodine-131, which amounts to only 50 per cent more per day than has been calculated for Fukushima Daiichi. It is not yet clear how long emissions from the Japanese plant will continue.
Similarly, says Wotawa, caesium-137 emissions are on the same order of magnitude as at Chernobyl. The Sacramento readings suggest it has emitted 5 × 1015 becquerels of caesium-137 per day; Chernobyl put out 8.5 × 1016 in total – around 70 per cent more per day.
"This is not surprising," says Wotawa. "When the fuel is damaged there is no reason for the volatile elements not to escape," and the measured caesium and iodine are in the right ratios for the fuel used by the Fukushima Daiichi reactors. Also, the Fukushima plant has around 1760 tonnes of fresh and used nuclear fuel on site, and an unknown amount has been damaged. The Chernobyl reactor had only 180 tonnes.
The amounts being released, he says, are "entirely consistent" with the relatively low amounts of caesium and iodine being measured in soil, plants and water in Japan, because so much has blown out to sea. The amounts crossing the Pacific to places like Sacramento are vanishingly small – they were detected there because the CTBT network is designed to sniff out the tiniest traces.
Dangerous isotopes
The Chernobyl accident emitted much more radioactivity and a wider diversity of radioactive elements than Fukushima Daiichi has so far, but it was iodine and caesium that caused most of the health risk – especially outside the immediate area of the Chernobyl plant, says Malcolm Crick, secretary of a United Nations body that has just reviewed the health effects of Chernobyl. Unlike other elements, he says, they were carried far and wide by the wind.
Moreover the human body absorbs iodine and caesium readily. "Essentially all the iodine or caesium inhaled or swallowed crosses into the blood," says Keith Baverstock, former head of radiation protection for the World Health Organization's European office, who has studied Chernobyl's health effects.
Iodine is rapidly absorbed by the thyroid, and leaves only as it decays radioactively, with a half-life of eight days. Caesium is absorbed by muscles, where its half-life of 30 years means that it remains until it is excreted by the body. It takes between 10 and 100 days to excrete half of what has been consumed.
While in the body the isotopes' radioactive emissions can do significant damage, mainly to DNA. Children who ingest iodine-131 can develop thyroid cancer 10 or more years later; adults seem relatively resistant. A study published in the US last week found that iodine-131 from Chernobyl is still causing new cases of thyroid cancer to appear at an undiminished rate in the most heavily affected regions of Ukraine, Belarus and Russia.
Caesium-137 lingers in the environment because of its long half-life. Researchers are divided over how much damage environmental exposure to low doses has done since Chernobyl. Some researchers think it could still cause thousands of new cases of cancer across Europe.
http://www.newscientist.com/article/dn20285-fukushima-radioactive-fallout-nears-chernobyl-levels.html
Wednesday, March 23, 2011
50 Workers Working at Fukushima nuclear plant
Amid the crisis worldwide, we go on with our lives. In the meantime, we appreciate the efforts made by those heroes working still on location and putting their lives on line to save their fellow citizens.
From Zero Hedge:
Whatever one thinks about the near-criminal strategy taking place behind the scenes as to how Japan is handling the bailout, one thing is certain: the 50 Tepco workers who are currently laboring at Fukushima, doing all they can to restore the plant back to life, even at the cost of their own lives, are doing a tremendous service to their fellow citizens (futile or otherwise), and deserve to be called heroes. The Mail has compiled what little information is available about these impromptu martyrs, of whom five are believed to have already died and 15 are injured while others have said they know the radiation will kill them, in a piece that everyone should read, especially those who are wondering just who it is that is doing everything in their power to offset Hitachi's criminal conduct in the construction of the power plant as disclosed earlier. "The darkness is broken only by the flashing torchlight of the heroes who stayed behind. These first images of inside the stricken Fukushima Dai-Ichi power plant reveal the terrifying conditions under which the brave men work to save their nation from full nuclear meltdown. The Fukushima Fifty - an anonymous band of lower and mid-level managers - have battled around the clock to cool overheating reactors and spent fuel rods since the disaster on March 11."
http://www.zerohedge.com/article/fukushima-fifty
From Zero Hedge:
Whatever one thinks about the near-criminal strategy taking place behind the scenes as to how Japan is handling the bailout, one thing is certain: the 50 Tepco workers who are currently laboring at Fukushima, doing all they can to restore the plant back to life, even at the cost of their own lives, are doing a tremendous service to their fellow citizens (futile or otherwise), and deserve to be called heroes. The Mail has compiled what little information is available about these impromptu martyrs, of whom five are believed to have already died and 15 are injured while others have said they know the radiation will kill them, in a piece that everyone should read, especially those who are wondering just who it is that is doing everything in their power to offset Hitachi's criminal conduct in the construction of the power plant as disclosed earlier. "The darkness is broken only by the flashing torchlight of the heroes who stayed behind. These first images of inside the stricken Fukushima Dai-Ichi power plant reveal the terrifying conditions under which the brave men work to save their nation from full nuclear meltdown. The Fukushima Fifty - an anonymous band of lower and mid-level managers - have battled around the clock to cool overheating reactors and spent fuel rods since the disaster on March 11."
http://www.zerohedge.com/article/fukushima-fifty
Monday, March 21, 2011
Richard Koo on the Japan Earthquake
We tend to agree with Koo’s view that Japan will recover from this disaster. The Japanese government has engaged in QE in its wake, despite their debt levels at about 200% of GDP. They may claim that they have no other choice but to kick the can. And yet, at what cost, and what is the side effect? We are already seeing soaring prices for food and natural resources. Further, aren’t we allowing the disaster to deepen for the future?
From his report:
In short, the view overseas is that a country with these national characteristics and this level of technical prowess is bound to recover. In that sense, I feel as though the world is supporting Japan from afar. This focus of global attention on Japan should reassure the government that it can take necessary fiscal measures without fear of being downgraded by overseas rating agencies. From an economic perspective, the short-term outlook is bleak, and demand fueled by reconstruction projects is unlikely to emerge for some time yet. But I am confident the Japanese economy will be able to pull through this disaster if the public, the government, and political parties on both sides of the aisle join together and work as one.
http://www.scribd.com/doc/51214712/51113641-Nomura-Richard-Koo-Eastern-Japan-Quake-Leaves-Massive-Damage-in-Its-Wake-15-Mar-2011
From his report:
In short, the view overseas is that a country with these national characteristics and this level of technical prowess is bound to recover. In that sense, I feel as though the world is supporting Japan from afar. This focus of global attention on Japan should reassure the government that it can take necessary fiscal measures without fear of being downgraded by overseas rating agencies. From an economic perspective, the short-term outlook is bleak, and demand fueled by reconstruction projects is unlikely to emerge for some time yet. But I am confident the Japanese economy will be able to pull through this disaster if the public, the government, and political parties on both sides of the aisle join together and work as one.
http://www.scribd.com/doc/51214712/51113641-Nomura-Richard-Koo-Eastern-Japan-Quake-Leaves-Massive-Damage-in-Its-Wake-15-Mar-2011
Sunday, March 20, 2011
Revisiting the Theme of Dissonance between Manufacturing and Financial Sectors
I have touched on this issue before.
Korea built its solid industrial base, but dissonance between Korea’s manufacturing and financial sectors was one of the major culprits for the 1997 financial crisis.
This problem still persists in Korea. On the surface, Korea has liberalized the banking sector since the 1997 financial crisis. Beneath the surface, its policy apparatus has bolstered the short-term strength of its export/growth engines with little regard to long-term consequences. The lack of financial structure and expertise has hampered productive capacities of Korea.
China is rigorously building its industrial base, while they are blowing asset bubbles fuelled by bank lending, which will result in large NPLs.
Again, productive capacities such as manufacturing and innovation are the wealth of a nation. I have discussed what has happened to the U.S. manufacturing and financial sectors many times. If any country guts its manufacturing sector, it is on a similar trajectory to decline.
Korea built its solid industrial base, but dissonance between Korea’s manufacturing and financial sectors was one of the major culprits for the 1997 financial crisis.
This problem still persists in Korea. On the surface, Korea has liberalized the banking sector since the 1997 financial crisis. Beneath the surface, its policy apparatus has bolstered the short-term strength of its export/growth engines with little regard to long-term consequences. The lack of financial structure and expertise has hampered productive capacities of Korea.
China is rigorously building its industrial base, while they are blowing asset bubbles fuelled by bank lending, which will result in large NPLs.
Again, productive capacities such as manufacturing and innovation are the wealth of a nation. I have discussed what has happened to the U.S. manufacturing and financial sectors many times. If any country guts its manufacturing sector, it is on a similar trajectory to decline.
Saturday, March 19, 2011
“Oh, the depths and the riches of the wisdom and knowledge of God. How unsearchable are his judgments, and how unfathomable his ways. For who has known the mind of the Lord, or who has been his counselor? Or who has first given to him that it might be paid back to him again? For from him, and through him, and to him are all things. To him be the glory and the power forever.”
Romans 11:33-36
일본 사태로 어지러운 요즘 우리는 묵묵히 일상을 소화해야기에 백혈병 진단을 받은 영희씨가 입원 중인 보라매 시립병원에 다녀왔다.
영희씨는 만성 골수암으로 이번 주부터 항암치료를 받고 있는데 많이 여위었지만 잘 견뎌내고 있었고 삶에 대한 의지가 강해 안심도 되고 숙연해지기도 했다. 아직 의학적으로나 경제적으로 갈 길이 멀지만 담당의사도 만나 뵙고 병과 치료 진행상황에 대해 자세히 듣고 택시기사 하시는 동생분이 와계셨는데 (이분도 쉬셔야 할 터인데...피곤해 보이셨다.) 많이 고마워하셔서 마음이 짠했다. 아주 아주 작은일일뿐인데…
정상인인 우리는 매일 매일 겸허하면서도 감사하게 생활해야 하리라.
Romans 11:33-36
일본 사태로 어지러운 요즘 우리는 묵묵히 일상을 소화해야기에 백혈병 진단을 받은 영희씨가 입원 중인 보라매 시립병원에 다녀왔다.
영희씨는 만성 골수암으로 이번 주부터 항암치료를 받고 있는데 많이 여위었지만 잘 견뎌내고 있었고 삶에 대한 의지가 강해 안심도 되고 숙연해지기도 했다. 아직 의학적으로나 경제적으로 갈 길이 멀지만 담당의사도 만나 뵙고 병과 치료 진행상황에 대해 자세히 듣고 택시기사 하시는 동생분이 와계셨는데 (이분도 쉬셔야 할 터인데...피곤해 보이셨다.) 많이 고마워하셔서 마음이 짠했다. 아주 아주 작은일일뿐인데…
정상인인 우리는 매일 매일 겸허하면서도 감사하게 생활해야 하리라.
Thursday, March 17, 2011
No Surprise as Japan Engages in Massive Quantitative Easing and FX Intervention: Japan To Issue ¥10 Trillion in Bonds and Intervene in FX Market
As Japan’s nuclear crisis unfolds, we are concerned about the consequences of economic moves by the Japanese government as well as the effects of radiation exposure.
From Zero Hedge:
And we are off. The JPYUSD is up nearly 200 pips as the Bank of Japan buys billions in dollars, using freshly printed Yen, following an agreement with the G7 which will likely see a new plaza accord to keep the Yen low despite ongoing repatriation. This follows earlier news that the BOJ will underwrite a ¥10 trillion in earthquake recovery bonds as Japan is now lurching from one monetization step to another. Keep an eye out for intervention aftershocks as the BOJ now can not allow the USDJPY to drop below 80 or it will be all over. This is what global reflation gone nuts looks like. On the other hand, if the BOJ fails to keep the USDJPY above 80 following this action, and the inflows of yen are far greater than anyone expected, most certainly the G7, then we have big problems.
http://www.zerohedge.com/article/we-are-races-boj-intervenes-fx-market-sends-nikkei-surging-g7-agree-plaza-accord-v2
From Zero Hedge:
And we are off. The JPYUSD is up nearly 200 pips as the Bank of Japan buys billions in dollars, using freshly printed Yen, following an agreement with the G7 which will likely see a new plaza accord to keep the Yen low despite ongoing repatriation. This follows earlier news that the BOJ will underwrite a ¥10 trillion in earthquake recovery bonds as Japan is now lurching from one monetization step to another. Keep an eye out for intervention aftershocks as the BOJ now can not allow the USDJPY to drop below 80 or it will be all over. This is what global reflation gone nuts looks like. On the other hand, if the BOJ fails to keep the USDJPY above 80 following this action, and the inflows of yen are far greater than anyone expected, most certainly the G7, then we have big problems.
http://www.zerohedge.com/article/we-are-races-boj-intervenes-fx-market-sends-nikkei-surging-g7-agree-plaza-accord-v2
Wednesday, March 16, 2011
Chris Martenson: Nuclear (and Economic) Meltdown in Progress
From his blog:
It is with a heavy heart that I am now issuing the highest level alert to my readers than I have to date. The threshold for an alert is one or more world events that personally cause me to take action.
I'm making this alert publicly available less than 36 hours after releasing it to my enrolled subscribers given its importance and the speed at which events are accelerating.
The substance of this alert centers on the unknown aftershocks that may result from the world's third largest economy, Japan, rapidly shifting from an exporter of funding to a consumer of it. In situations like these, we are by definition operating with incomplete and often confusing information, and events are developing more rapidly than they can be fully analyzed and internalized. We regret in advance any mistakes that we might make due to making calls and decisions in this highly fluid environment.
This alert warns you that major world-changing events are now underway and that your personal preparations for an uncertain future should either be completed or take on a new sense of urgency. On the basis of the information contained here and in the past two days of posts, I am personally ratcheting up my preparations, making purchases, and topping off what needs to be topped off.
Important caveat: At this point in time, I cannot fully support 100% of my concerns with hard data and evidence. Some of what has tipped me into this state of urgency is data, evidence, and stories that I can point to. Some is due to the absence of data or information, the remainder results from watching market gyrations and correlations shift into new patterns, which tell me something is afoot.
I have not been this concerned since October of 2008.
http://www.chrismartenson.com/blog/alert-nuclear-economic-meltdown-in-progress
It is with a heavy heart that I am now issuing the highest level alert to my readers than I have to date. The threshold for an alert is one or more world events that personally cause me to take action.
I'm making this alert publicly available less than 36 hours after releasing it to my enrolled subscribers given its importance and the speed at which events are accelerating.
The substance of this alert centers on the unknown aftershocks that may result from the world's third largest economy, Japan, rapidly shifting from an exporter of funding to a consumer of it. In situations like these, we are by definition operating with incomplete and often confusing information, and events are developing more rapidly than they can be fully analyzed and internalized. We regret in advance any mistakes that we might make due to making calls and decisions in this highly fluid environment.
This alert warns you that major world-changing events are now underway and that your personal preparations for an uncertain future should either be completed or take on a new sense of urgency. On the basis of the information contained here and in the past two days of posts, I am personally ratcheting up my preparations, making purchases, and topping off what needs to be topped off.
Important caveat: At this point in time, I cannot fully support 100% of my concerns with hard data and evidence. Some of what has tipped me into this state of urgency is data, evidence, and stories that I can point to. Some is due to the absence of data or information, the remainder results from watching market gyrations and correlations shift into new patterns, which tell me something is afoot.
I have not been this concerned since October of 2008.
http://www.chrismartenson.com/blog/alert-nuclear-economic-meltdown-in-progress
Tuesday, March 15, 2011
Number of Workers Employed by Large Korean Firms Declines in 2010
From Yonhap News:
The number of workers employed by large businesses in South Korea declined for the first time in three years in 2010 despite the overall economic recovery, data showed Tuesday.
The number of people working for large companies -- those with more than 300 employees -- stood at 1.95 million at the end of last year, down 31,000 from the same period a year earlier, according to the data by Statistics Korea.
The 2010 fall is attributable in part to the trend among large conglomerates to improve labor productivity rather than to recruit workers in their efforts to overcome the latest economic crisis, experts said.
http://english.yonhapnews.co.kr/national/2011/03/15/95/0302000000AEN20110315001500320F.HTML
The number of workers employed by large businesses in South Korea declined for the first time in three years in 2010 despite the overall economic recovery, data showed Tuesday.
The number of people working for large companies -- those with more than 300 employees -- stood at 1.95 million at the end of last year, down 31,000 from the same period a year earlier, according to the data by Statistics Korea.
The 2010 fall is attributable in part to the trend among large conglomerates to improve labor productivity rather than to recruit workers in their efforts to overcome the latest economic crisis, experts said.
http://english.yonhapnews.co.kr/national/2011/03/15/95/0302000000AEN20110315001500320F.HTML
Monday, March 14, 2011
Jeffrey Sachs, Professor of Economics at Columbia University: America in Decline; Congress Represents Big Interests
Is The U.S. becoming more like a third world banana republic?
From Yahoo finance:
Jeffrey Sachs, professor of economics at Columbia University, agrees, but says President Obama is part of the problem, too, because of his failure to lead on budget issues.
“What they are doing is taking cuts out of the hide of the poorest people in this country….[leaving] those who have massive wealth completely unscathed,” he says. “It is all a game for next year’s campaign financing: In other words, don’t touch the big boys, they got to pay for your campaign.”
“There is such a disconnect between what the American people say, and what Washington does, you wonder if this is a democracy,” Sachs says. “The American people say 'get out of Afghanistan, stop wasting money on the military, raise taxes on the rich and [opt for a] public option on health care.' Of course, the interests, the powers that be oppose all of that.”
“I think we are in a decline because our political class is so dishonest right now and so disconnected from American values that we are not finding a way forward,” says Sachs. “In the long-term America will continue in decline as long as we play these games.”
http://finance.yahoo.com/tech-ticker/d.c.-disconnect-congress-represents-big-interests-not-your-interests-sachs-says-536023.html?tickers=%5EDJI,%5EGSPC,%5EIXIC,%5ESPY,%5ETLT,%5ETLT,GLD
From Yahoo finance:
Jeffrey Sachs, professor of economics at Columbia University, agrees, but says President Obama is part of the problem, too, because of his failure to lead on budget issues.
“What they are doing is taking cuts out of the hide of the poorest people in this country….[leaving] those who have massive wealth completely unscathed,” he says. “It is all a game for next year’s campaign financing: In other words, don’t touch the big boys, they got to pay for your campaign.”
“There is such a disconnect between what the American people say, and what Washington does, you wonder if this is a democracy,” Sachs says. “The American people say 'get out of Afghanistan, stop wasting money on the military, raise taxes on the rich and [opt for a] public option on health care.' Of course, the interests, the powers that be oppose all of that.”
“I think we are in a decline because our political class is so dishonest right now and so disconnected from American values that we are not finding a way forward,” says Sachs. “In the long-term America will continue in decline as long as we play these games.”
http://finance.yahoo.com/tech-ticker/d.c.-disconnect-congress-represents-big-interests-not-your-interests-sachs-says-536023.html?tickers=%5EDJI,%5EGSPC,%5EIXIC,%5ESPY,%5ETLT,%5ETLT,GLD
Saturday, March 12, 2011
Charles Hugh Smith: the Consequences of Japan's Massive Earthquake
Prayers for All Affected in Japan
From Of Two Minds:
Though China gets all the media attention, Japan is still a critical supplier of numerous high-tech parts in the global supply chain. The Japanese global corporations have learned from experience that anything they make in China will soon be pirated, so they have withdrawn all the really high-tech manufacturing to the home islands. I suspect most analysts are complacent about the possible global ripple effects of these quakes, simply because Kansai and Tokyo were largely spared. Given its great stability and wealth, Japan seems an unlikely candidate for social or financial changes triggered by a natural disaster. I am not so sure it is immune to these forces, given the fragility of its central State and local government finances and its sclerotic Power Elites and political machinery. The quiet stoicism of the next few months may give way to more systemic and possibly transformational forces than most observers believe possible.
http://www.oftwominds.com/blogmar11/thoughts-on-Japan3-11.html
From Of Two Minds:
Though China gets all the media attention, Japan is still a critical supplier of numerous high-tech parts in the global supply chain. The Japanese global corporations have learned from experience that anything they make in China will soon be pirated, so they have withdrawn all the really high-tech manufacturing to the home islands. I suspect most analysts are complacent about the possible global ripple effects of these quakes, simply because Kansai and Tokyo were largely spared. Given its great stability and wealth, Japan seems an unlikely candidate for social or financial changes triggered by a natural disaster. I am not so sure it is immune to these forces, given the fragility of its central State and local government finances and its sclerotic Power Elites and political machinery. The quiet stoicism of the next few months may give way to more systemic and possibly transformational forces than most observers believe possible.
http://www.oftwominds.com/blogmar11/thoughts-on-Japan3-11.html
Thursday, March 10, 2011
Bank of Korea Raises Key Rate to 3% To Tackle Inflation
The Western media as well as the Korean media are not reporting what's really stoking massive inflation around the globe. Of course, an increase in oil prices is only one factor.
From Bloomberg:
The Bank of Korea raised interest rates for the second time this year after inflation exceeded its target ceiling for two consecutive months.
Governor Kim Choong Soo boosted the benchmark seven-day repurchase rate to 3 percent from 2.75 percent, the central bank said in a statement in Seoul today. The decision was predicted by all 15 economists surveyed by Bloomberg News.
South Korea joined Thailand and Vietnam in raising borrowing costs this week as a surge in oil prices threatens the exacerbate inflation pressures throughout the region. In South Korea, the BOK faces the challenge of taming inflation without choking off an export-led recovery that has bolstered profits at automakers including Hyundai Motor Co.
“The question is how aggressive the BOK would be to raise rates further in a fight against inflation,” said Lee Sang Jae, an economist at Hyundai Securities Co. in Seoul. “It depends on how much higher oil prices would affect the global economy, especially the U.S. and other advanced countries.”
The won dropped 0.5 percent to 1,121.35 per dollar as of 1:08 p.m. in Seoul, according to data compiled by Bloomberg, while the Kospi benchmark index fell 1 percent.
Consumer prices climbed 4.5 percent in February from a year earlier, breaching the central bank’s target of average inflation between 2 percent to 4 percent through 2012. The monetary authority predicts inflation will accelerate to 3.5 percent this year from 2.9 percent in 2010.
Price expectations are climbing in the Asia’s fourth- largest economy, adding to signs the BOK is behind in raising the rate from a record low. President Lee Myung Bak has declared “war” on inflation, saying it must be contained at 3 percent, a level exceeded in each of the past six months.
“The Bank of Korea, along with other central banks in the region, will remain on a tightening trajectory throughout this year,” said David Cohen, head of Asian forecasting at Action Economics LLC in Singapore.
The central bank today also boosted the interest rate for loans extended to small-sized companies through commercial banks to 1.5 percent from 1.25 percent. It raised the benchmark rate by 25 basis points each in July, November and January from a record-low 2 percent.
South Korea’s economy expanded 0.5 percent in the three months through December from the previous quarter, when it grew 0.7 percent. For the whole of 2010, gross domestic product increased 6.1 percent, the fastest pace since 2002. The Bank of Korea forecasts 4.5 percent economic expansion in 2011.
http://www.bloomberg.com/news/2011-03-10/bank-of-korea-raises-key-interest-rate-to-3-as-inflation-exceeds-target.html
From Bloomberg:
The Bank of Korea raised interest rates for the second time this year after inflation exceeded its target ceiling for two consecutive months.
Governor Kim Choong Soo boosted the benchmark seven-day repurchase rate to 3 percent from 2.75 percent, the central bank said in a statement in Seoul today. The decision was predicted by all 15 economists surveyed by Bloomberg News.
South Korea joined Thailand and Vietnam in raising borrowing costs this week as a surge in oil prices threatens the exacerbate inflation pressures throughout the region. In South Korea, the BOK faces the challenge of taming inflation without choking off an export-led recovery that has bolstered profits at automakers including Hyundai Motor Co.
“The question is how aggressive the BOK would be to raise rates further in a fight against inflation,” said Lee Sang Jae, an economist at Hyundai Securities Co. in Seoul. “It depends on how much higher oil prices would affect the global economy, especially the U.S. and other advanced countries.”
The won dropped 0.5 percent to 1,121.35 per dollar as of 1:08 p.m. in Seoul, according to data compiled by Bloomberg, while the Kospi benchmark index fell 1 percent.
Consumer prices climbed 4.5 percent in February from a year earlier, breaching the central bank’s target of average inflation between 2 percent to 4 percent through 2012. The monetary authority predicts inflation will accelerate to 3.5 percent this year from 2.9 percent in 2010.
Price expectations are climbing in the Asia’s fourth- largest economy, adding to signs the BOK is behind in raising the rate from a record low. President Lee Myung Bak has declared “war” on inflation, saying it must be contained at 3 percent, a level exceeded in each of the past six months.
“The Bank of Korea, along with other central banks in the region, will remain on a tightening trajectory throughout this year,” said David Cohen, head of Asian forecasting at Action Economics LLC in Singapore.
The central bank today also boosted the interest rate for loans extended to small-sized companies through commercial banks to 1.5 percent from 1.25 percent. It raised the benchmark rate by 25 basis points each in July, November and January from a record-low 2 percent.
South Korea’s economy expanded 0.5 percent in the three months through December from the previous quarter, when it grew 0.7 percent. For the whole of 2010, gross domestic product increased 6.1 percent, the fastest pace since 2002. The Bank of Korea forecasts 4.5 percent economic expansion in 2011.
http://www.bloomberg.com/news/2011-03-10/bank-of-korea-raises-key-interest-rate-to-3-as-inflation-exceeds-target.html
Wednesday, March 9, 2011
US Dollar Long Term Chart
From Jesse's Cafe:
The weakness with this US Dollar DX index is that it is highly weighted to the developed economies of Europe and Japan. As such it may not reflect erosion of dollar purchasing power vis a vis the BRICs, and external measures such as gold, oil, and silver. It may be masked by the mutual weakness of central banks all inflating their currencies in unison.
This is what the Federal Reserve desires: to repair its economy and unpayable debts by expanding its monetary base while exporting much of the negative effects of such monetary inflation to the rest of the world, keeping things relatively stable to maintain confidence in their paper. And this is why the central banks attempt to control the price of less manageable currencies such as gold and silver. Silver is the most problematic because its supplies are difficult for the banks, as they have none of their own, and the world has largely depleted its discretionary strategic stockpiles of this metal. Long term price suppression breeds underinvestment and the inevitable shortages of real goods.
Rather than rallies through economic vitality and recovery, the dollar rallies have been marked by relative declines primarily in the euro on their sovereign debt problems. It is almost like a couple of drunks leaning on each other for support, except that the US is picking the Eurozone's pockets while they do it.
The weakness with this US Dollar DX index is that it is highly weighted to the developed economies of Europe and Japan. As such it may not reflect erosion of dollar purchasing power vis a vis the BRICs, and external measures such as gold, oil, and silver. It may be masked by the mutual weakness of central banks all inflating their currencies in unison.
This is what the Federal Reserve desires: to repair its economy and unpayable debts by expanding its monetary base while exporting much of the negative effects of such monetary inflation to the rest of the world, keeping things relatively stable to maintain confidence in their paper. And this is why the central banks attempt to control the price of less manageable currencies such as gold and silver. Silver is the most problematic because its supplies are difficult for the banks, as they have none of their own, and the world has largely depleted its discretionary strategic stockpiles of this metal. Long term price suppression breeds underinvestment and the inevitable shortages of real goods.
Rather than rallies through economic vitality and recovery, the dollar rallies have been marked by relative declines primarily in the euro on their sovereign debt problems. It is almost like a couple of drunks leaning on each other for support, except that the US is picking the Eurozone's pockets while they do it.
Tuesday, March 8, 2011
Korea’s Savings Rate Is on the Decline
There are many indicators telling the Korean economy is in trouble. This is one of them.
From Yonhap News:
South Korea's household savings rate stayed far below the average for major economies in the world, a report showed Monday, apparently indicating that the latest economic crisis resulted in a decline in income reserved for bank savings.
According to the report by the Organization for Economic Cooperation and Development (OECD), South Korea's household savings rate -- the ratio of savings to total disposable income -- stood at 2.8 percent last year.
It is far below the OECD average of 6.1 percent, which is based on related data from 20 member nations, the report showed.
South Korea had the fifth-lowest savings rate after Denmark with minus 1.2 percent, the Czech Republic with 1.3 percent, Australia with 2.2 percent and Japan with 2.7 percent, respectively. It was also lower than the U.S.'s 5.7 percent.
South Koreans had long been known for their passion for saving.
The nation's savings rate stood at 24 percent in 1987, the highest among OECD countries, and retained the top spot for 13 years. In 1988, the country posted a record high 25.9 percent.
But the figure plunged to 0.4 percent in 2002 when the nation was in the midst of a credit card crisis before rising to 9.2 percent in 2004. It had stayed in the 2-3 percent range in recent years.
Sluggish income growth amid the economic slowdown, increased livelihood expenses and protracted low interest rates discouraged households from keeping their money in bank accounts, causing the savings rate last year to remain among the lowest in the OECD, experts said.
http://english.yonhapnews.co.kr/business/2011/03/07/8/0503000000AEN20110307001600320F.HTML
From Yonhap News:
South Korea's household savings rate stayed far below the average for major economies in the world, a report showed Monday, apparently indicating that the latest economic crisis resulted in a decline in income reserved for bank savings.
According to the report by the Organization for Economic Cooperation and Development (OECD), South Korea's household savings rate -- the ratio of savings to total disposable income -- stood at 2.8 percent last year.
It is far below the OECD average of 6.1 percent, which is based on related data from 20 member nations, the report showed.
South Korea had the fifth-lowest savings rate after Denmark with minus 1.2 percent, the Czech Republic with 1.3 percent, Australia with 2.2 percent and Japan with 2.7 percent, respectively. It was also lower than the U.S.'s 5.7 percent.
South Koreans had long been known for their passion for saving.
The nation's savings rate stood at 24 percent in 1987, the highest among OECD countries, and retained the top spot for 13 years. In 1988, the country posted a record high 25.9 percent.
But the figure plunged to 0.4 percent in 2002 when the nation was in the midst of a credit card crisis before rising to 9.2 percent in 2004. It had stayed in the 2-3 percent range in recent years.
Sluggish income growth amid the economic slowdown, increased livelihood expenses and protracted low interest rates discouraged households from keeping their money in bank accounts, causing the savings rate last year to remain among the lowest in the OECD, experts said.
http://english.yonhapnews.co.kr/business/2011/03/07/8/0503000000AEN20110307001600320F.HTML
Sunday, March 6, 2011
Differences in Growth Trajectory between Korea and China
I have discussed the similarities between Korea and China in terms of their innovation and growth trajectories.
What has been the difference, then?
One of the major differences lies in that high levels of capital inflows have played a major role in China’s exponential growth, while international capital inflows to Korea had been limited until the 1997 financial crisis. Of course, capital in both countries has been controlled by the state.
China has built its industrial capacity quiet fast. How has China been able to become the world’s largest export country in a relatively short timeframe?
Firms in the East like Japan and Korea and in the West like the U.S. started to move parts of their manufacturing operations to China largely due to the currency and tax policy of the U.S.
The MNCs have used China to increase their profits and China has built its industrial base in return for that.
Cheap money has been both the source of rapid growth and potential problems facing China.
China has bought the U.S. debt, which has been driving their low-cost export industry. Their wealth has been largely based on their surplus of the USD. China has used cheap capital on productive economy since they needed the means of production. In the meantime, they have squandered them on unproductive asset bubbles.
China has embarked on the faster development path than Korea. Yes, they have built their industrial capacity on their own terms. And yet, their economic model is under stress due to the very underlying factors which have made their exponential growth possible.
In a sense, Korea became a victim of its own success. So did Japan. Korea’s case in terms of the financial crisis and high tech development they have experienced can provide useful insights into the current conundrums of China.
Again, innovation, industrial capacity building, and economic growth in a country are closely intertwined with political economy and policy undertaking, along with geopolitical dynamics.
What has been the difference, then?
One of the major differences lies in that high levels of capital inflows have played a major role in China’s exponential growth, while international capital inflows to Korea had been limited until the 1997 financial crisis. Of course, capital in both countries has been controlled by the state.
China has built its industrial capacity quiet fast. How has China been able to become the world’s largest export country in a relatively short timeframe?
Firms in the East like Japan and Korea and in the West like the U.S. started to move parts of their manufacturing operations to China largely due to the currency and tax policy of the U.S.
The MNCs have used China to increase their profits and China has built its industrial base in return for that.
Cheap money has been both the source of rapid growth and potential problems facing China.
China has bought the U.S. debt, which has been driving their low-cost export industry. Their wealth has been largely based on their surplus of the USD. China has used cheap capital on productive economy since they needed the means of production. In the meantime, they have squandered them on unproductive asset bubbles.
China has embarked on the faster development path than Korea. Yes, they have built their industrial capacity on their own terms. And yet, their economic model is under stress due to the very underlying factors which have made their exponential growth possible.
In a sense, Korea became a victim of its own success. So did Japan. Korea’s case in terms of the financial crisis and high tech development they have experienced can provide useful insights into the current conundrums of China.
Again, innovation, industrial capacity building, and economic growth in a country are closely intertwined with political economy and policy undertaking, along with geopolitical dynamics.
Saturday, March 5, 2011
“And then he spoke to them, saying: ‘Blessed are the poor in spirit, for theirs is the kingdom of heaven. Blesses are those who mourn, for they shall be comforted. Blesses are the meek, for they shall inherit the earth. Blessed are those who hunger and thirst for righteousness, for they shall be filled. Blessed are the merciful, for they shall obtain mercy. Blessed are the pure in heart, for they shall see God. Blessed are the peacemakers, for they shall be called children of God.”
Matthew 5:1-12
2월초에 장염을 앓은 것을 시작으로 작은 사고가 있어 얼굴을 다쳐 응급실에 가고 검사를 받는 과정에서 또 안 좋은 게 발견되어 내과를 다니는 등 일이 많았다. 하여 자원봉사 나가는 장애우 시설에 처음으로 한 달 이상을 가지 못하다가 아이들도 많이 보고 싶고 해서 다녀왔다. 너무나 반가워서 내 손을 꼭 잡고 놓칠 않았다.
지난번에 병원에 검사 받으러 John과 함께 데려갔었고, 심장판막증을 갖고 있는 영희씨가 백혈병 진단을 받아 병원에 입원했다는 소식을 접했다. 나를 보면 제일 먼저 내 손을 잡았던 말도 잘 못하는 영희씨, 하나님, 당신의 특별하신 은총을 간구합니다.
세계 경제 현황을 잘 알고 있는 우리는 매일 매일 감사하면서 우리에게 주어진 귀한 시간을 소중하게 가꾸어 나가야 하리라.
Matthew 5:1-12
2월초에 장염을 앓은 것을 시작으로 작은 사고가 있어 얼굴을 다쳐 응급실에 가고 검사를 받는 과정에서 또 안 좋은 게 발견되어 내과를 다니는 등 일이 많았다. 하여 자원봉사 나가는 장애우 시설에 처음으로 한 달 이상을 가지 못하다가 아이들도 많이 보고 싶고 해서 다녀왔다. 너무나 반가워서 내 손을 꼭 잡고 놓칠 않았다.
지난번에 병원에 검사 받으러 John과 함께 데려갔었고, 심장판막증을 갖고 있는 영희씨가 백혈병 진단을 받아 병원에 입원했다는 소식을 접했다. 나를 보면 제일 먼저 내 손을 잡았던 말도 잘 못하는 영희씨, 하나님, 당신의 특별하신 은총을 간구합니다.
세계 경제 현황을 잘 알고 있는 우리는 매일 매일 감사하면서 우리에게 주어진 귀한 시간을 소중하게 가꾸어 나가야 하리라.
Thursday, March 3, 2011
Conflicting Data Points on Korea
There have been bank runs and increases in consumer prices and debt levels, as covered on this blog.
In the meantime, Korea’s industrial output reportedly continues to grow for the 19th straight month in January
We have to learn to look behind many conflicting data points, between the lines.
Like the U.S. and China, Korea has engaged in an easy monetary policy. The costs of this policy have outweighed the benefits.
In the meantime, Korea’s industrial output reportedly continues to grow for the 19th straight month in January
We have to learn to look behind many conflicting data points, between the lines.
Like the U.S. and China, Korea has engaged in an easy monetary policy. The costs of this policy have outweighed the benefits.
Wednesday, March 2, 2011
Financial Picture of the U.S. Inc.
From Mish’s Global Economic Trend Analysis:
Inquiring minds are digging deep into a 266 page PDF called USA Inc. a basic summary of America's financial statements.
It is loaded with stunning graphs and charts on Social Security, Medicare, Medicaid, TARP Bailouts, Fannie Mae and Freddie Mac, military spending, tax revenues, and various projections. Here are a few images, but please give the document a closer look when you have a few moments.
By 2025, entitlements plus net interest payments will absorb all – yes, all – of USA Inc.'s revenue, per CBO.
Less than 15 years from now, in other words, USA Inc. – based on current forecasts for revenue and expenses - would have nothing left over to spend on defense, education, infrastructure, and R&D, which today account for only 32% of USA Inc. spending, down from 69% forty years ago.
This critical juncture is getting ever closer. Just ten years ago, the CBO thought federal revenue would support entitlement spending and interest payments until 2060 – 35 years beyond its current projection.
http://globaleconomicanalysis.blogspot.com/2011/03/usa-incorporated-grim-look-at-financial.html
Inquiring minds are digging deep into a 266 page PDF called USA Inc. a basic summary of America's financial statements.
It is loaded with stunning graphs and charts on Social Security, Medicare, Medicaid, TARP Bailouts, Fannie Mae and Freddie Mac, military spending, tax revenues, and various projections. Here are a few images, but please give the document a closer look when you have a few moments.
By 2025, entitlements plus net interest payments will absorb all – yes, all – of USA Inc.'s revenue, per CBO.
Less than 15 years from now, in other words, USA Inc. – based on current forecasts for revenue and expenses - would have nothing left over to spend on defense, education, infrastructure, and R&D, which today account for only 32% of USA Inc. spending, down from 69% forty years ago.
This critical juncture is getting ever closer. Just ten years ago, the CBO thought federal revenue would support entitlement spending and interest payments until 2060 – 35 years beyond its current projection.
http://globaleconomicanalysis.blogspot.com/2011/03/usa-incorporated-grim-look-at-financial.html
Korea’s Consumer Prices Rise 4.5% in February
We understand what is mainly driving inflationary pressure around the globe. This will continue.
From Yonhap News:
South Korea's consumer prices made their biggest jump in 27 months in February mainly due to soaring food and energy-related product costs, adding to concerns that mounting inflationary pressure could undercut the nation's economic recovery, a government report showed Wednesday.
According to the report by Statistics Korea, the country's consumer price index surged 4.5 percent last month from a year earlier, marking the sharpest growth since November 2008. The figure is higher than the 4.1 percent spike in January, and it also stayed much higher than the government's 2011 inflation target of 3 percent.
http://english.yonhapnews.co.kr/news/2011/03/02/0200000000AEN20110302005500320.HTML
From Yonhap News:
South Korea's consumer prices made their biggest jump in 27 months in February mainly due to soaring food and energy-related product costs, adding to concerns that mounting inflationary pressure could undercut the nation's economic recovery, a government report showed Wednesday.
According to the report by Statistics Korea, the country's consumer price index surged 4.5 percent last month from a year earlier, marking the sharpest growth since November 2008. The figure is higher than the 4.1 percent spike in January, and it also stayed much higher than the government's 2011 inflation target of 3 percent.
http://english.yonhapnews.co.kr/news/2011/03/02/0200000000AEN20110302005500320.HTML
Tuesday, March 1, 2011
What Korea could (or shouldn’t) have done since the 1997 financial crisis?
As I have pointed out on more than a few occasions, the 1997 financial crisis could have been a blessing in disguise for Korea.
The worldwide crisis is progressing as expected, with the financial crisis deepening. It is leading to tensions across the world. The intensity of a crisis would depend on how Korea prepare for the crisis during the final years of the unraveling.
What Korea could have done (or shouldn’t have done), then?
-Could have fortified economic fundamentals and rebuilt on the basics
-Could have revamped its innovation engine; again, Korea hasn’t come up with the future growth platforms.
-Could have retained and grown manufacturing jobs to maintain a middle class society, and the standard of living that accompanies that class
-Could have grown competitive SMEs given they are the engine of hiring and pursued policies to have them compete at the level playing field.
-Could have reined in international capital inflows to a certain degree since they have been largely detrimental to a healthy Korean economy due to their speculative nature
-Could have pursued tough monetary policy
-Could have managed the debt levels; could have pursued sound fiscal policies.
-Shouldn’t have engaged in distorting interventions (e.g., bail out failing companies).
-Could have made an effort to overcome shortcomings in its mercantilist policy and should have developed public policy to make a transition to an economy that is sustainable even after the unraveling stage of global bubbles
-Could have reformed financial sector
-Could have upgraded its educational system: for instance, Korea’s engineering schools aren’t up to par to the West.
-Could have reformed the bloated public sector
The worldwide crisis is progressing as expected, with the financial crisis deepening. It is leading to tensions across the world. The intensity of a crisis would depend on how Korea prepare for the crisis during the final years of the unraveling.
What Korea could have done (or shouldn’t have done), then?
-Could have fortified economic fundamentals and rebuilt on the basics
-Could have revamped its innovation engine; again, Korea hasn’t come up with the future growth platforms.
-Could have retained and grown manufacturing jobs to maintain a middle class society, and the standard of living that accompanies that class
-Could have grown competitive SMEs given they are the engine of hiring and pursued policies to have them compete at the level playing field.
-Could have reined in international capital inflows to a certain degree since they have been largely detrimental to a healthy Korean economy due to their speculative nature
-Could have pursued tough monetary policy
-Could have managed the debt levels; could have pursued sound fiscal policies.
-Shouldn’t have engaged in distorting interventions (e.g., bail out failing companies).
-Could have made an effort to overcome shortcomings in its mercantilist policy and should have developed public policy to make a transition to an economy that is sustainable even after the unraveling stage of global bubbles
-Could have reformed financial sector
-Could have upgraded its educational system: for instance, Korea’s engineering schools aren’t up to par to the West.
-Could have reformed the bloated public sector
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