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Measuring the economic aftershocks

Stephanie Flanders | 10:47 UK time, Monday, 14 March 2011

The Japanese will be counting the human cost of the earthquake for many years. But when the world's third largest economy suffers such a catastrophe, it's natural for economists to wonder about the economic impact - for Japan and for the world.

Like the implications for the nuclear industry, there is already a range of views about what those economic consequences will be.

In the short term, all agree that the disaster will hit Japan's output, conceivably tipping it formally into another recession. GDP shrank in the last three months of 2010. It is possible that output will now shrink in the first quarter of this year as well.

Everyone can also agree that the Bank of Japan will do all it can to prevent the Japanese currency rising in response to the crisis. Bonds fell after the Kobe earthquake in 1995, but the yen rose to a record high as the economy moved into deflation. The BoJ doesn't want that to happen this time.

We have already seen Japan's central bank inject an extra 15 trillion yen (£114bn;$183bn) into the economy this morning. It also offered to buy an additional 3 trillion yen of government bonds. This has helped to reverse the rally in the currency you saw in the early hours after the quake.

Finally, everyone agrees that the government will fund the vast majority of the reconstruction effort, almost certainly through some form of emergency stimulus programme, and that this is likely to boost GDP over the course of the next year or so. Chile's economy shrank by 1.3%, on a quarterly basis, when it had its earthquake a year ago. It grew by more than 4.5% the following quarter.

As I see it, there are two big imponderables on the economic front, which won't get resolved for some time.

First, will this ultimately, be deflationary for Japan, or inflationary? Some will consider it bad taste to raise the question. In years to come, few will want to say the disaster was good for Japan.

Nevertheless, as Robert Cookson and David Pilling point out in today's Financial Times, Japan has been trapped in its deflationary malaise for so long, officials have often talked in the past about the need for some kind of major economic shock to bring the country out of it. Even now, there are those who see this silver lining in the horrific events of the past few days.

Some say this misunderstands the economic impact of reconstruction. The national accounts don't show a fall in GDP when infrastructure is destroyed by a natural disaster - only the subsequent rise, when that infrastructure is replaced. In that sense, you can say the post-crisis rebound in GDP is a statistical artefact that "doesn't make anyone richer".

But, as the economist, John Maynard Keynes would have been the first to point out, there are times when digging up roads - or re-building them - can create more wealth than the earthquake destroyed. (In technical terms, when the fiscal multiplier is well over one.) That may well be true of Japan today.

The trouble is that the reconstruction effort must still be paid for, at a time when the government is already running a deficit of nearly 10% of GDP and the debt ratio is heading to 230% of national income. There was a lot more room for extra borrowing when Kobe was hit in 1995.

That brings me to the second question: does this raise the chances of a fiscal crisis in Japan? I am tempted to say yes - how could it not? But whether it increases them substantially depends on the broader macroeconomic impact.

As Robert Peston notes in his blog, global investors have been relaxed in the face of Japan's extraordinary funding needs, because the government doesn't need to rely on the global market to buy their bonds. The nation's desire to save is as large as the government's need to borrow (though household saving has also fallen since 1995).

Even another downgrade of Japan's bonds would not seriously endanger the government's ability to fund itself. But Japan is on uncharted ground. No developed country, in peacetime, has ever built up such a gargantuan debt to the future. In that sense, Japan is a test case and not a welcome one.

What does it all mean for the rest of the global economy? As I said at the start, this is all going to take time to play out.

It's a bad time for another surprise - either for the real economy or the financial markets. But if we're lucky, the long-term consequences at a global level will be more micro than macro, with certain sectors, such as the energy industry, affected more deeply than others. (I'm excluding here the possibility of a fundamental re-assessment of the costs and benefits of nuclear power, which would obviously have macro implications as well).

Short-term, global inflationary pressures will surely be a little stronger in 2011 than they would have been, due to the damage to Japan's energy supplies, and the short-term stimulus from reconstruction. Whether the long-term impact is deflationary or inflationary will depend, in large part, on the reaction of the Japanese people themselves.

Comments

  • Comment number 1.

    What prevents the Japanese government from paying for reconstruction in a new "Reconstruction Yen" that they create for the purpose? The RY could be used by anyone in Japan directly involved in this work to pay all their taxes (including businesses) and could be used as an internal temporary currency if people and companies not directly involved in reconstruction could use RY to pay a percentage of their taxes. The RY would be "destroyed" as it returned to the government. No interest as not borrowed.

    I am not an economist (as any economist will point out as they rip this idea to shreds) but why can a government not act this way?

  • Comment number 2.

    The Japanese economic situation resulting from the terrible events of the last few days is compounded by the twenty years of inaction to fix the excessive private debt problem - in short they are stuck with private housing debt on piles of matchwood around Sendai and in the rest of the county hugely overpriced property which will continue to cripple the country's economy.

    They are in short in exactly the same economic position as we are - the capitalist system lives on un-repayable debt - that is to say that it overprices scarce assets and so destroys capitalism - unless the financial regulators keep their heads and deflate the debt bubble. Neither Japan nor the UK can afford NOT to fix the problem of overpriced assets. My worst fear is that both countries know that have a problem, but neither has the guts to fix it!

    The short term action of the Bank of Japan of injecting over £100 bn must be short term, but if it is used not to prop up the banks but to invest in building or replacing infrastructure then it will help Japan and the World, but if, as one has every reason to fear, the money simply vanishes into propping up the un-supportable financial sector they it will compound the mess. (Just as it did in the UK and we did not have a physical disaster to use as an excuse!)

    Remember: real businesses make a profit and generate cash!

  • Comment number 3.

    2. At 12:15pm on 14 Mar 2011, John_from_Hendon wrote:

    Japan the same as the UK, I think not, please research prior to making comparisons that just do not stand up!

  • Comment number 4.

    First, will this ultimately, be deflationary for Japan, or inflationary? Some will consider it bad taste to raise the question. In years to come, few will want to say the disaster was good for Japan.

    Nevertheless, as Robert Cookson and David Pilling point out in today's Financial Times, Japan has been trapped in its deflationary malaise for so long, officials have often talked in the past about the need for some kind of major economic shock to bring the country out of it. Even now, there are those who see this silver lining in the horrific events of the past few days.

    One knows it has to happen - people and more so, corporations, will always profit from disaster but this is like one of those wrist-watch ads turned sick.
    No matter about the folk wandering round, stomachs knotted and close to suicidal, looking, NOT for their cash cards but their sons and daughters, desperately hoping to find them; likewise sons and daughters searching for their parents knowing they are unlikely to be alive.....
    Notice, though, that Sony, Toyota, Yamaha, Hitachi etc etc are still working and making a profit...
    Yet more confirmation that humans, their needs and aspirations are no longer important in the world. They're just numbers and when 10,000 of them die or get made redundant, so what? That isn't a corporation problem. Money has to flow on...
    In time those humans will be replaced by machines then they can go where they like.

  • Comment number 5.

    #2. John_from_Hendon wrote:

    They are in short in exactly the same economic position as we are - the capitalist system lives on un-repayable debt - that is to say that it overprices scarce assets and so destroys capitalism...

    Using this humanitarian disaster for political point-scoring is despicable.

    Is it something about Hendon that brings out the worst in people? Even WOTW hasn't yet blamed the capitalists for this catastrophe.

  • Comment number 6.

    3. At 12:26pm on 14 Mar 2011, Chris London wrote:
    2. At 12:15pm on 14 Mar 2011, John_from_Hendon wrote:

    John's financial comparison is valid.

  • Comment number 7.

    Shogo Maeda, head of Japanese equities at Schroders said the yen had strengthened slightly on anticipated repatriation of money by Japanese companies. it is clear in the short term that uncertainty will persist, as Japan implements a massive relief operation to look after the people most affected by the disaster. But"Based on the information currently available, we do not believe there has been serious overall damage to the business sustainability of many Japanese companies. As more information becomes available from the companies with regard to the damage caused, we think the market will become more stable."
    http://www.mindfulmoney.co.uk/3662/investing-strategy/earthquake-could-break-japans-fragile-economic-recovery.html

    "Interactive" Photos of Japan before and after the Quake -
    http://www.nytimes.com/interactive/2011/03/13/world/asia/satellite-photos-japan-before-and-after-tsunami.html?hp
    I didn’t immediately realise but you can drag the blue bar down the middle of the photos - very interesting and awful realisation of the sheer devastation – makes it hard to believe that the economy won’t be ‘that badly’ effected!

  • Comment number 8.

    Your article just reinforces the moral bankruptcy of capitalism.

    The tone is one of 'OK vast numbers have died, but business goes on'.

    This is more evidence that the world just revolves around money, more specifically profit.
    And your analysis is wanted by those with money & who handle money for the rich.

    Isn't economics suppose to be about scare resources?
    If so, what amount the needs of the survivors & what the world can do to help?
    Oh, I forgot, capitalism only allocates scare resources based upon profit, i.e. the returns to those who already have too much money.

  • Comment number 9.

    The Japanese economy will come out of this very strong as the disaster will make them pull together and develop new skills and the re-investment will strengthen their domestic economy in the next 5 years .. as the increased activity will encourage sustainability and new ideas and the Japanese will re-learn how to innovate.

  • Comment number 10.

    No. 5 - Obviously JfH is not blaming the disaster on capitalism and if he is making a political (or is it economic) point he is doing no more than many commentators are doing with the disaster. My question is that given that the level debt is unsustainable and it is desirable to reduce it what practicable policies can an elected government pursue to secure a rapid and substantial reduction in debt. Obviously a rapid increase in interest rates could be catastrophic for many people although I would not mind getting 6%+ on my savings!

  • Comment number 11.

    I am not an economist, also. However, I do live in Japan. I definitely think that the economic impact question is an important one. I just hope that this does shock Japan out of the deflationary whirlpool it has been in.

    On the same day the earthquake struck (of course after recovering from the shock of the `quack and tsunami) I was talking to my wife about the cost of clearing and rebuilding and also about the long term effects. We both thought that it could be good for the econmy in the long run (increased spending, construction etc etc).

    However, if the government raises taxes around the country for the rebuilding costs. Apart from the areas with rebuilding done, everyone else will be out of pocket???

    Final point, my deepest condolences to affected and those that are still missing I hope they turn up safely.

  • Comment number 12.

    I would like to express my deep sympathy for those who are affected by this natural disaster in Japan. Unfortunately there will be economic effects as well. Stephanie seems to think that just because an economy supports a lot of government debt it can support as much as it likes! A more logical person would wonder how far the elastic can stretch.....
    An analysis of the situation I was reading earlier expressed some concerns on this point.
    "However as circumstances have evolved they have quite a few problems.
    a. Japanese tax revenues for 2011 are expected to be around 41,000 billion Yen
    b. Japanese government bond issuance is likely to be 44,300 billion Yen.
    These numbers have serious implications....."
    http://t.co/LW6rO7e

    So even before the earthquake and tsunami Japanese government bond issuance was projected to be higher than her tax revenues. As tax receipts will fall and spending will rise because of this disaster then many can see the problem which might unfold.


  • Comment number 13.

    I think this is one of those times when the economics measures obviously don't capture everything - an economic "silver lining"? - tasteless, this isn't a car scrappage scheme.

    I don't think economics really gets the human and social capital measures that well, however hard it tries. Prior to this natural disaster there were homeless in Tokyo (just walk around the outskirts of Ueno station, I don't know about the north) due to the economic circumstances but these people live with more pride, organisation, caring, community, decency - an immensely impressive spirit - than I have seen in some employed & housed within, say, the UK. If one must talk of a silver lining it is the spirit and strength of the Japanese people.

    [And on the nuclear point, the powerstations have almost stood up to a once in a thousand years disaster - well done engineers and good luck with your continuing efforts].

  • Comment number 14.

    Since Japanese citizens are apparently happy to lend their savings to their government, presumably with little chance of it ever being repaid, would they not be equally happy to pay at least some of it in higher taxes?

  • Comment number 15.

    It always seems rather demented to say that a major catastrophe like an earthquake, a tsunami or a nuclear meltdown could in some ways be good for an economy. As Bill Bryson observed, GDP doesn't distinguish between "good" expenditure and "bad" expenditure: spending on earthquake recovery is just as big a contributor to growth as spending on curing cancer or developing alternative energy sources.

    If we were to apply the same logic to the UK floods of 2007 (which cost £3 billion, according to the insurers), are we as a nation better for that expenditure? Of course, I am sure some will say that this is not a fair comparison because this occurred shortly before the last credit crunch and all of that expenditure was dwarfed by the bank bailouts. If that is true, do the bank bailouts provide the kind of economic "shock" we need to come out of this stronger and more economically sound? So far, the evidence says no, so does this suggest that if a "shock" is simply too big it does nobody good? I'll be interested to see what happens to Japan...

  • Comment number 16.

    The article says:

    "However, as the economist, John Maynard Keynes would have been the first to point out, there are times when digging up roads - or re-building them - can create more wealth than the earthquake destroyed. (In technical terms, when the fiscal multiplier is well over one.) That may well be true of Japan today."

    However, there are also likely to be times when the fiscal multiplier is likely to be less than 1.0, for instance when profits from projects are re-invested abroad or used to pay off other debts. Since the days of Keynes it has become a lot easier for labour and capital to cross national boundaries.
    It is dangerous to suggest that pouring government money into the construction industry will necessarily be beneficial to a country. I was in Madrid last year when large parts of the city had been turned into a building site. Now the country has massive debts and still has high unemployment.
    Elsewhere I have read of disruptions to production at Sony and Panasonic, who have a factory in the region of the Fukushima reactor. Let's hope they can find a way of getting their staff back to work and in the long term. paying down their debt, rather than adding more to it.

  • Comment number 17.

    "We have already seen Japan's central bank inject an extra 15 trillion yen (£114bn;$183bn) into the economy this morning. It also offered to buy an additional 3 trillion yen of government bonds."

    Does this mean that the Central Bank of Japan has got Yen sitting in a Bank Vault. Or does it mean that it will create this Yen out of thin Air which the Japanese people will have to pay back with Interest?

    "Finally, everyone agrees that the government will fund the vast majority of the reconstruction effort, almost certainly through some form of emergency stimulus programme, and that this is likely to boost GDP over the course of the next year or so."

    Surely you mean the Japanese people will fund the vast majority of the reconstruction effort. The government is selling Bonds to the Central Bank, therefore all this stimulus will be created through debt to the BoJ and Money Printing which the Japanese people will have to pay for.

    Stephanie, You paint a picture of the Central Bank "Helping" the Japanese people in their hour of need. The Central Bank is the only institution in Japan to benefit from all this carnage.

    They will lend money to Japan, but they ain't doing it for free. Unless they are giving the Japanese people Gold Bullion - at least that would justify an interest payment. How much is the Central Bank likely to make in interest payments from all this "Help" created at no cost to themselves?

    As usual, a Central Bank feeding off the misery of human suffering like some giant leech.

  • Comment number 18.

    Am I the only one to find it in very bad taste for both of the BBC's main economic bloggers to start blathering on about the financial impact of Friday afternoon's disaster first thing Monday morning? I realise it's your (and Robert P's) job but did you have to start counting the Yen quite so quickly? There are 1000's of people dead, 10's of 1000's of people still missing, bereaved or orphaned, 100,000's displaced or made homeless and you're worried about the millions of notes it's going to cost.

    Isn't this extremely disrepectful or at best very poor timing? There are plenty of other economic subjects you could have covered and then talked about Japan at a more appropriate time in the future. I've come to the conclusion that the only qualification required to become an economist must be to have a swinging brick for a heart.

  • Comment number 19.

    #5

    Nobody is saying the Capitalism caused the distaster, but the sharks that swim in capitalism will be circling Japan.

    http://www.naomiklein.org/shock-doctrine/the-book

    Also there is more and more evidence that the Sun is powering earthquakes and volcanoes on earth, they are no completely random and the next two years there will be an increase in bigger earthquakes and volcanic activity.

    America may well be due a big quake this year which could be the tipping point that collapses the American economy.

  • Comment number 20.

    Stephanie, you said:

    "However, as the economist, John Maynard Keynes would have been the first to point out, there are times when digging up roads - or re-building them - can create more wealth than the earthquake destroyed. (In technical terms, when the fiscal multiplier is well over one.) That may well be true of Japan today."

    Do you know what type of man John Maynard Keynes was?

    "It has been nearly sixty years since the Keynesian revolution. The effects of the "short- run" and "childless" philosophy of Mr. Keynes are clear: nearly all western governments have followed the Keynesian prescription of spending and consumption, and have run large annual budget deficits for decades. In Canada, the federal debt is now approaching a staggering 550 billion dollars, and the country is joining the ranks of Third World nations in terms of its level of public debt (we are just behind Burundi and just ahead of Morocco). Interest payments on the Canadian federal debt are now the largest single government expenditure."


  • Comment number 21.

    Stephanie,

    More about Keynes's philosophy:

    "The message is clear: for Keynes, self-denial is bad and self-indulgence is good. That this "immoralist" religious premise undergirds the Keynesian economic theory seems undeniable. For it is the same man, wearing his economist's hat, that tells us that "capital is brought into existence not by the propensity to save" but rather by "prospective consumption." His theories propose that consumption (at least under most circumstances) will actually lead to more capital accumulation, more employment and more prosperity! What stands in the way of economic paradise, according to Keynes the economist, is not a scarcity of resources but the inhibition to consume. The solution? Keynes proposed that governments spend and create credit. Government spending on anything - even digging holes in the ground - would do just fine since it mattered not what the consumption was for, but only that resources be consumed and not reserved for a future time. As Henry Hazlitt, one of Keynes's most thorough critics, summarized:The General Theory is a "transvaluation of all values. The great virtue is Consumption, extravagance, improvidence. The great vice is Saving, thrift, "financial prudence.""


    "Homosexuality, according to Keynes and his sometimes lover Lytton Strachey, was the supreme state of existence, "passing Christian understanding," and superior to heterosexual relationships. The ethical superiority of homosexuality lay in its striking opposition to the external morals of the Victorian era, and the moral laws of God. As Deacon surmised, Keynes' homosexuality was ultimately a rebellion "against the Puritan ethic: he hated Puritanism in any form....""


    John Maynard Keynes thought "The ethical superiority of homosexuality lay in its striking opposition to the external morals of the Victorian era".

    Still a supporter of Keynes?

    "At the core of many of Keynes' writings was an obsession with the subject of savings (thrift). It is a prominent part of nearly all of his economic works, and it lies at the heart of The General Theory. He rightly understood that the "virtue" of saving was related to the Christian worldview. He wrote that "The morals, the politics, the literature, and the religion of the age [are] joined in a grand conspiracy for the promotion of saving.""

    He thought that promoting Savings was a conspiracy. He rejected Christianity, therefore he also despised savers.

    And this is the man you quote. Keynesianism means - consumption at any cost. Debt Good - Savings Bad.

    Please tell that to all your Pensioner readers. At least be honest about who's economic theory you promote.

    Thank you.

  • Comment number 22.

    Stephanie & Robert:
    I am a capitalist but this is first & foremost a human disaster events are still playing out in Japan with the problems with the nuclear plants yet both of you are merely concerned with the economic impact. If this was the South Coast of Britain and 10,000 or more had just lost their lives would you just be talking about money?
    Those that Japan owes the money to will need to wait longer, hell they may even need to put their hand in their pockets again but the time to discuss this is when all threats to human life have resonably past and currently that is not the case.
    Have some soul clearly too many here only think of life as cash.

  • Comment number 23.

    Stephanie,
    I realise this is an economics blog - but I can't find a suitable science blog with an article covering the unfolding story about the crisis in Japan's nuclear plants and have so far been really disappointed with the analysis of the situation the BBC news output has provided.

    Here hoping someone within the BBC will pass on some of these questions to ask the expert nuclear commentators that so far I haven't seen addressed:
    1) Is the flooding of seawater within the pressure vessel of around it? What would the implication be in both cases?
    2) I've read elsewhere that using seawater to cool the reactor is suboptimal as the impurities and salt in the water will more readily transfer radioactive particles within the cooling liquid. Is this the
    case?
    3) If (2) above is the case then as they continue to vent steam from the reactor vessel won't seawater steam potentially be more radioactive than pure water steam resulting in increasing amounts of radiation being emitted.
    4) The longer the fuel rods are exposed won't this result in more harmful radioactive substances being emitted in the form of steam into the atmosphere - assuming steam venting will have to continue.
    5) How long will steam venting have to continue? Does each steam vent carry with it the risk of a hydrogen explosion?
    6) In it the case that the outer building of the reactors is normally maintained at a pressure slightly below atmospheric pressure, to inhibit radioactive leaks and the air within the building is passed
    through filters to remove radioactive elements before venting outside. Without the building haven't we lost this containment - so the loss of the outer structure does have some significance?
    7) What about the spent fuel rods which are stored within the reactor building. Don't they need continuous water circulating to stop them overheating. Could this be a problem?
    8) How long does it take before the fuel rods (within the reactor and spent rods in storage) will no longer need cooling?
    9) Why is the 20km evacuation zone considered safe when the US navy is pulling out from 100km at sea because of radioactive contamination. If the wind changes couldn't very large urban populations been in danger of nuclear contamination?
    10) When nuclear commentators talk about exposure equivalent to an X-ray is the big difference that with X-rays you are only exposed for a very brief period of time, whereas with nuclear contamination that
    level of exposure is continuous?
    11) I'd like to hear information about the type of radioactive particles that could or have been emitted and what are the dangers and time periods over which they remain dangerous. I'm particularly concerned with the potential particles which might be emitted from the plutonium enriched fuelled station.
    12) Is it the case that it's going to become increasingly difficult to manage the situation within the effected power stations as the levels of radioactivity increase making it increasingly difficult or impossible for humans to fix, patch or maintain the stressed systems.
    13) Why are there so few facts emerging from the stations. With each emerging factoid destroying the "reassuring" previous statement. Why aren't the plant operators providing footage of the situation in the
    power-plants and providing engineers to explain the situation and the reasons for the choices they are making? Why is the nuclear industry so secretive if the situation is under control?
    14) In the case of a melt-down is there a chance that sufficient quantity of nuclear material could become sufficiently concentrated to start an uncontrolled fission reaction? If so what would would be the
    consequences?

    Hope that some BBC output somewhere can provide the answers, or perhaps I've missed it and some kind soul one can point me in the right direction.

    Thanks

    Nick

  • Comment number 24.

    On this occassion I am in total agreement with Mike3 and davidbrent on this issue. Yes there will be economic consequences from this disaster but it is too soon to be debating them here.

  • Comment number 25.

    Paul Krugman blog September 9, 2010:

    "So: Japan does suffer from inadequate demand; this is why it faces persistent deflation, why ever-fewer workers can get long-term employment, why unemployment has risen and working hours fallen.
    My point was, however, that Japan’s demand failure hasn’t been as severe as the raw numbers on GDP might suggest. Most of the relative decline of Japanese GDP compared with the US would probably have happened even if economic policy had managed to avoid the deflationary trap. Japan is a depressed economy, but not in a depression.
    And by the same token, Japan’s fiscal policies haven’t been as utter a failure as they’re often portrayed. They haven’t created self-sustaining growth, because they’ve never been enough to restore full employment and get the economy out of deflation. But they have kept the economy afloat.
    Oh, and about that debt; it’s not good — but net debt is about 100 percent of GDP, not 200, because the BOJ holds so much of it.
    The point is that it’s a more nuanced story than you usually hear — not a good story by any stretch of the imagination, but not as terrible as you may have heard. And given the way we’re responding to our own burst bubble, I think we need to stop being so hard on the Japanese."

    Again, March 13, 2011:

    "One interesting note: the catastrophe will, of course, require large public spending to aid recovery, even as it depresses Japan’s economy and reduces revenue. And Japan already has a very high debt level. So you might have expected the bond vigilantes to strike, driving bond prices down and interest rates up. You’d be wrong: at least so far, rates are actually down, presumably on the view that monetary policy will remain loose even longer than previously expected."

  • Comment number 26.

    #3. Chris London wrote:

    "#2. John_from_Hendon wrote:

    Japan the same as the UK, I think not, please research prior to making comparisons that just do not stand up!"

    OK you are right we are in far worse a condition, but I was trying to be kind to the UK.

  • Comment number 27.

    #5. rbs_temp wrote:

    "#2. John_from_Hendon wrote:

    They are in short in exactly the same economic position as we are - the capitalist system lives on un-repayable debt - that is to say that it overprices scarce assets and so destroys capitalism...

    Using this humanitarian disaster for political point-scoring is despicable.

    Is it something about Hendon that brings out the worst in people? Even WOTW hasn't yet blamed the capitalists for this catastrophe.
    "

    This I remind you is an economics blog not an humanitarian blog - of course ones sympathy and condolences go out to all those who have suffered and are continuing to suffer, but the economics is the subject here.

  • Comment number 28.

    14. At 1:32pm on 14 Mar 2011, AnotherEngineer wrote:
    Since Japanese citizens are apparently happy to lend their savings to their government, presumably with little chance of it ever being repaid, would they not be equally happy to pay at least some of it in higher taxes?

    -----------------------------------------------------------
    I think they expect it to be repaid A.E.
    I wonder if Japanese Government debt held by its citizens is index linked to inflation?

  • Comment number 29.

    Watch out for the next asset bubble as worldwide people realise that governments' printing of enormous piles of money means that money has no intrinsic value and is merely a 'medium of exchange.' Anyone saving piles of this worthless, depreciating asset for their retirement is a fool.

  • Comment number 30.

    As we have all been a part of the ruthless bankers and investors of this world it is understandable that no one would count of them to show some compassion for the situation in Japan as they certainly haven't shown it in any other country. Bankers and investors always leave the wounded behind.
    This may be an opportunity for the Japanese people to benefit from their insistence on maintaining a mono-culture. The Japanese will resolve this matter mainly by relying on their own people. This will also provide the opportunity for Japan to confront political and private sector corruption for the good of the nation.
    Tragedies also bring opportunities and this may begin the rebuilding of the Japanese economy and Japan.
    My sympathy goes out to the people of Japan.

  • Comment number 31.

    Those who are genuinely interested in the impact of the current crisis on Japan may be interested in an 11 March interview in Paris with Ken Courtis, ex Goldman who has lived part-time in Japan for 25 years or so and with whom some of you may be familar:

    http://www.abc.net.au/lateline/content/2011/s3162193.htm

    PS With no disrespect for the suffering of Japanese people or the widespread concern about the devastation there, for those not watching markets, a noteworthy event that occured on Friday was the initial investment fund response: gold and Swiss francs rose but USD was sold down.

  • Comment number 32.

    #29. DemoDave wrote:

    "Anyone saving piles of this worthless, depreciating asset for their retirement is a fool"

    Yes that is the message that is shouts itself lound and clear from the battlements of Threadneedle Street.

    Might I also add that the way that the 'Fools' are conducting their duty to regulate the price of money is also destroying the insurance and pensions business and not only the idea of personal savings and what is more; what is the point of making lots of it by running a business if it is worthless! We need to shout this loud and clear until they change their ways!

  • Comment number 33.

    26. At 2:46pm on 14 Mar 2011, John_from_Hendon wrote:
    "#3. Chris London wrote:
    "#2. John_from_Hendon wrote:
    Japan the same as the UK, I think not, please research prior to making comparisons that just do not stand up!"

    Taking this comment out of context, Japan is certainly different from the UK. I went on a fact finding visit to Japan in the 90's and was struck by the Just in Time nature of much of their manufacturing and retail operations.

    These rolling power cuts and the loss of manufacturing capacity will surely disrupt their clockwork approach to their economic machine.

    However JfH is certainly correct in that Japan still has fully addressed their 80's bubble, which was far worse than our housing bubble in the Noughties - the Tokyo Palace was at on point worth more than California!

    However my sympathies go out to the Japanese. I hope they recover from this traumatic catastrophe.

  • Comment number 34.

    Japan's central bank is back into QE (a wopping $184B into money markets).
    First day of trading: The Nikkei 225 stock average slid 6.2%.
    Concerns escalate re
    - the financial and economic fallout — plus
    - the risk of meltdown at damaged nuclear power reactors.
    The Topix Index lost 7.5%.
    Rebuilding/repairing will most likely run Japan's economy into the ground with all the other devastation.
    The Bank of Japan moved quickly to flood the banking system with cash. The hope, I guess, that banks will continue to lend and therefore, meet the demand. The Bank of Japan expanded the size of an existing program to buy assets — such as government & corporate bonds. The expansion was humunguous (5 trillion yen to 40 trillion yen). The Bank of Japan also kept its interest rate at a virtual zero.
    Economists seem to think that Japan's economy will shrink for two straight quarters. Painful!
    The Japanese economy had already been struggling for two straight decades, barely managing to eke out any growth. The Japanese economy is laden with a massive public debt that, at 200% of GDP - the biggest among industrialized nations.
    In addition, the nuclear threat has the potential to keep the Japanese foreign nvestment restricted. Among the hardest hit on the stock exchange were the shares of The Tokyo Electric Power Co. which plunged 23%.
    What has saved Japan's economy (in a sad sort of way) is that the 4 most severely affected states in the northeast — Iwate, Miyagi, Fukushima and Ibaraki — account for only about 6% of Japan's total economy, but the northeast is a major centre for car production, with a myriad of parts suppliers and a network of roads and ports for efficient shipping.
    The aftermath is being felt nationwide. And of course the 4 nuclear plants were damaged, causing widespread power shortages.
    Billions of dollars are expected to be needed to rebuild homes, roads and other infrastructure requiring public spending that will benefit construction companies but ADD and ADD to the national debt.
    I've read that 77 Nations have made pledges; rather than pledges (so many of which are often forgotten in due course, or somehow reduced in transit), why can't these pledging countries - whichever, wherever - to whom Japan owes debt, forgive Japan her debt(s) so that Japan can spend her own money, helping her own people, in the best way Japan knows how?

  • Comment number 35.

    #32 sorry for the typos...

    try...

    Yes that is the message that shouts itself loud and clear from the battlements of Threadneedle Street.

  • Comment number 36.

    davidbrent @ 18 wrote:

    "Isn't this extremely disrepectful or at best very poor timing? There are plenty of other economic subjects you could have covered and then talked about Japan at a more appropriate time in the future."

    Have to say I agree..........proof of the detached view of the economist.

  • Comment number 37.

    @34. At 5:12pm on 14 Mar 2011, BluesBerry wrote:

    "I've read that 77 Nations have made pledges; rather than pledges (so many of which are often forgotten in due course, or somehow reduced in transit), why can't these pledging countries - whichever, wherever - to whom Japan owes debt, forgive Japan her debt(s) so that Japan can spend her own money, helping her own people, in the best way Japan knows how?"

    I'll second that.

  • Comment number 38.

    Anyone seriously wanting to understand whether Japan can go broke or not should understand difference between currency issuer and currency user. There are no financial constraints on sovereign, currency-issuing nation. Government checks don't bounce.

    http://moslereconomics.com/wp-content/powerpoints/7DIF.pdf

  • Comment number 39.

    I would imagine that the scale of Japan's debts make debt forgiveness out of the question although rescheduling might be possible. It has been after all hard enough to get much lower debts forgiven for much poorer nations whose challenges are far more severe on a year to year basis than the tsunami is in comparative terms to Japan as tough as this is to them.

  • Comment number 40.

    Now here's a brain teaser for you all. Japan has over trillion dollars in currency reserves (source: http://en.wikipedia.org/wiki/Foreign_exchange_reserves). Why don't Japan use these massive reserves to pay down its debt?

  • Comment number 41.

    38. At 6:26pm on 14 Mar 2011, zfvr
    Thank you zfvr. Keep making the point.

    40 zyvr
    Because they don't need to

  • Comment number 42.

    While I do feel for these poor people losing your family and your lifes possessions is horrible for any family to go through. What has to be learnt from this mess :-
    1) Never ever build nuclear reactors in high risk earth quake zones no matter how confident the engineering team is in providing reassurances.
    2) Japans economy was suffering from intolerable levels of debt which could simply not be paid back (very similar to most western nations). You only need one disaster like this and your countries economy is down the pan.
    3) It will take years to rebuild the infrastructure look at the Southern States of America there still not sorted and rebuilt even now.
    4) The rush by western companies to switch manufacturing activities into the Pacific Rim has now put loads of economies at risk. Virtually all of the manufacturing is now carried out in the Pacific Rim which due to globalization leaves us all vulnerable. Honda, Sony and many other companies will feel it hit bottom line shortly.
    5) Its not good for any economy to run such high levels of personal debt.

  • Comment number 43.

    #40 Because they don't want the US to remove their protection of them?

  • Comment number 44.

    42. At 6:44pm on 14 Mar 2011, KeithRodgers wrote:
    5) Its not good for any economy to run such high levels of personal debt.

    Since when has Japan had high levels of private debt ?
    They save, Keith.. a lot.

  • Comment number 45.

    typical of todays money ridden society, thousands killed homeless no food no water and we are worried about is the effect it might have on world markets..who gives a stuff, what ever happens joe public in the uk will get ripped off. I feel for the people suffering in japan not the greedy fat cats in the uk.

  • Comment number 46.

    VERTUMNUS - Look it up pompeii & get back to work.

  • Comment number 47.

    #18 totally agree..there is another qualification that economists need , apart from being greedy.. selfish.with a heart of stone, that is to be rubbish at maths.

  • Comment number 48.

    While I share many posters distaste that this colossal tragedy brings us to discuss economies and costs and financial effects, I would point out that markets react to news. Always have done. Always will.

    What would have cheered me somewhat more would have been the major trading nations, G20 or G20+, deciding to suspend market activity for a period. Three days might have been the limit, and quite respectful too, but in the case of some things like Forex, it might be near impossible to do it for as long as that. A week or even two strikes me as even more appropriate period as, hopefully, there will be miraculous rescues over that period. I guess that would be impossible to do. Perhaps those posters with trading experience might comment.

    I note the decisive response of Japan's Central Bank. I have a high regard for several things Japanese. Their quick and decisive Bank action may be added to the list.

  • Comment number 49.

    1. ".....global investors have been relaxed in the face of Japan's extraordinary funding needs, because the government doesn't need to rely on the global market to buy their bonds."

    Japan's domestic savings ratios are in long-term decline, a factor exacerbated by demographic change. The markets and the rating agencies know this. Further downgrades seem likelier than not. This will push up interest rates, which could in turn make the yen more highly valued than is desirable for trade.

    2. The point about infrastructure destruction not showing up in GDP whereas reconstruction does shows a paradox in economics. Essentially, economists look at income accounts rather than the balance sheet because so much of the national asset base (the housing stock, infrastructure, etc) is unsaleable and hence impossible to value.

    The same applies to natural resources. If, let us say, a country produces a lot of oil without discovering new oil to replace it, the income is higher (from the proceeds of selling the oil) but the country is poorer in balance sheet terms (oil reserves saleable in the future have declined).

    Lesson: don't ignore the balance sheet even if the numbers we can attach to it are incomplete. Pay attention to *external debt*, as a multiple of GDP. (Britain is in a lot of trouble on this measure, by the way).

    3. The critical issue here is energy. How, and at what cost, can Japan replace lost nuclear capacity? And what will this do to global energy prices?

    Replacing nukes takes many years. Diesel generation can be installed more quickly, and use of more LNG is also quicker. Overall, my guess is that, in anything other than the short term, this event pushes up future energy prices.

    4. I cannot close this without expressing my horror at what has happened in Japan, and my admiration at the solidarity and dignity of the Japanese public in the face of this catastrophe.

  • Comment number 50.

    " 49. At 7:48pm on 14 Mar 2011, Friendlycard wrote:
    Japan's domestic savings ratios are in long-term decline, a factor exacerbated by demographic change. "

    That will automatically improve Japan's fiscal situation. Government deficits provide money for the private sector's savings, not the other way around.

    "The amount of borrowing government has to do to keep GDP from falling is exactly equal to the excess savings of private sector of the same economy. " - Richard Koo

  • Comment number 51.

    SF,

    The tsunami has been a terrible tragedy, but forgive me if I veer off-topic and more towards the general topic of your blog.

    Reading between the lines of your entries, and those of your contributors, I gather the following:

    'Inflation', like so many words in economics, is slightly misleading when not qualified. Currently, we are experiencing price inflation - our weekly shopping bill is going up, petrol prices are going up. But we don't have much wage inflation - wages aren't going up much, and besides, they tend to get set once a year, unlike prices.

    The general feeling (largely unspoken), seems to be that a bit of price inflation AND wage inflation might not be a bad thing, given that it might help deflate away personal debts. (In simple terms, if you have a two grand loan, then that sum becomes increasingly easy to pay if your wage keeps going up and the amount you owe stays the same).

    Of course, that only works if the lenders keep their interest rates low, while wages rise. In the case of unsecured personal debt, these things tend to be a fixed rate, so debtors would benefit. Mortgages, on the other hand, are more closely tied to Bank of England interest rates, so any threat to put up the rate is a serious threat to home owners. (I assume - I don't own a house, so I don't know exactly). Wise home owners will perhaps have taken advantage of the recent low rates to increase their repayments and eat away their debt faster, in preparation for the higher rates that will follow eventually.

    Pensioners are reasonably well protected by the Coalition's linking of pensions to what appear to be generous terms of interest rates.

    Benefit claimants should do quite well from being linked to CPI as long the housing market stays depressed.

    So the best thing for everyone (except perhaps people who have a lot of private savings invested in a savings account, rather than cleverly moving them around between rising currency and commodity prices or whatever) would be a period of wage and price inflation. Perhaps followed by a rise in the central bank rate.

    Wage inflation is currently a problem in this scenario (i.e. it's not happening), as companies have either lost confidence and are drawing in their spending (probably SMEs) or are being greedy (probably larger companies). While the economy at large is suffering, it appears that there are some elite private sector board members who are creaming off quite breath-taking proportions of their companies' profits.

    So the government and the country seem to be lacking a lever to force private enterprise to take on more workers and pay them more money. This could be achieved with what I gather is a somewhat 'Keynesian' approach of pumping money into the public sector and allowing them to reduce the surplus workforce and drive up wages. But so far, that's not been the Coalition's approach, and given that we seem to be at the bottom of the business cycle with some hefty national debt, I can see why they might shy away from that idea.

    As ever, I'm not an economist, so I'm sure I've missed something important here. It seems to be a pattern with economics that if someone if benefiting from a particular economic climate, someone else must suffer.

    So... what have I not considered?

  • Comment number 52.


    51. At 9:22pm on 14 Mar 2011, Fair Pay wrote:
    So... what have I not considered?
    -------------------------------------------------
    Perhaps this:

    Where the speed of transaction and the overall propensity to save, spend and consume is reasonably constant, then:

    The overall price level of all items = (Total amount of money) / (Supply of all available items to purchase)

    We have inflation because we have an increase in the amount of money.
    And the increase in money is created by the increases in debt bearing interest.

    Some would say, 'Debt Slavery', is what you've missed.

  • Comment number 53.

    40. At 6:36pm on 14 Mar 2011, zfvr wrote:
    Now here's a brain teaser for you all. Japan has over trillion dollars in currency reserves (source: http://en.wikipedia.org/wiki/Foreign_exchange_reserves). Why don't Japan use these massive reserves to pay down its debt?

    ---------------------------------------------------------

    The currency reserves they hold are only the promises to pay of others.
    It's all based on future promises......Debt.

  • Comment number 54.

    45. At 7:01pm on 14 Mar 2011, ronnieboy1 wrote:
    typical of todays money ridden society, thousands killed homeless no food no water and we are worried about is the effect it might have on world markets..who gives a stuff, what ever happens joe public in the uk will get ripped off. I feel for the people suffering in japan not the greedy fat cats in the uk.

    - - - - - - - -

    I may not entirely agree with your sequitur but certainly agree with your feelings. I mean, here we are, maybe 10,000 dead and millions displaced and suffering in the icy nights there... Shame but... but... is the money okay? Ahhhh, that's good. As long as we keep tabs on the money... I mean, how mercenary have people become?

  • Comment number 55.

    All this user's posts have been removed.Why?

  • Comment number 56.

    52. At 10:10pm on 14 Mar 2011, Dempster wrote:


    51. At 9:22pm on 14 Mar 2011, Fair Pay wrote:
    So... what have I not considered?
    -------------------------------------------------
    Perhaps this:

    Where the speed of transaction and the overall propensity to save, spend and consume is reasonably constant, then:

    The overall price level of all items = (Total amount of money) / (Supply of all available items to purchase)

    We have inflation because we have an increase in the amount of money.
    And the increase in money is created by the increases in debt bearing interest.

    Some would say, 'Debt Slavery', is what you've missed.


    Assuming your premise is correct, then speed of transaction is reasonably stable, but the other factors you mention tend to fluctuate over generations, depending on how well one generation of sharks suckers in the next generation of consumers to take their credit, and thus finance the debts that generation inherited from the previous one. PFI being one example. I guess my generation is saddled with that, so we can either grin and bear it or pull other similarly devious scheme and let the next generation decide what to do about it (or possibly try to throw it off via legal action, though I doubt that would work).

    I say 'we', but really the people who get to decide probably couldn't be further removed from the 'common man' if they tried.

    This is all quite a simplistic way of looking at things, of course, and tends to feed the inter-generational war aspect of economics, which sells a few books but perhaps isn't helpful in the long run.

    For one thing, the rate of things available to purchase can vary, as can the demand for those things. The country of origin can vary, with customers tending to buy from the cheapest source, but influenced by word-of-mouth recommendation and various media propaganda to vary that pattern. The price of foreign goods depends on exchange rates, and also on the relative cost of living in the trading countries.

    I don't know much about economics, but I know that such a simple equation could never hope to come close to modeling the complexity of the system that has arisen from the simple principle of charging lending with interest.

    As a nation we've been buying an awful lot of cheap electrical goods from China lately, but I was genuinely surprised when I did some research into cost of living and discovered that it appears that a Chinese factory worker making Apple iPods had a slightly better lifestyle than I did, as a recipient of UK benefits as a carer of an incapacitated relative.

    Not that I disagree with the idea of equalising wealth amongst nations, but it's interesting nonetheless to see how far we've come and where we are now.

    I suspect we're at a point where we need to rebuild our own domestic wealth and standard of living, before people start getting seriously pissed off.

  • Comment number 57.

    #2 >>The short term action of the Bank of Japan of injecting over £100 bn must be short term, but if it is used not to prop up the banks but to invest in building or replacing infrastructure then it will help Japan and the World, but if, as one has every reason to fear, the money simply vanishes into propping up the un-supportable financial sector they it will compound the mess. (Just as it did in the UK and we did not have a physical disaster to use as an excuse!)

    THe "new" government of Prime Minister Kan is supposed to have broken up the cozy arrangement between the MITI and the "Big Boys". They are intended on stopping the socialising of private debts. I doubt that they will use the money to prop up banks (or, more importantly, insurance companies, who will be hit hardest in this disaster) !! I think they will use the money for reconstruction since that will be a sure vote-winner !!

  • Comment number 58.

    #4 >>Notice, though, that Sony, Toyota, Yamaha, Hitachi etc etc are still working and making a profit...

    ~8 >>The tone is one of 'OK vast numbers have died, but business goes on'.

    So you expect the whole nation to grind to a halt because of that disaster ?? Did the whole of Britain grind to a halt because of 7/7 ??

    As someone said above, it's dispicable to use a disaster for political point scoring !!

  • Comment number 59.

    #10 >>My question is that given that the level debt is unsustainable and it is desirable to reduce it what practicable policies can an elected government pursue to secure a rapid and substantial reduction in debt.

    From what I can understand, the Japanes government has already tried to sever links between their treasury and "privately-owned" giants. THe Liberal Democratic Party of Japan, despite its name, is an ultra-conservative party. The DPJ (the current government) is actually the more liberal party. They do not have the strong links to "Big Boys" as the LDP has/had. Therefore, it is hoped that they will use whatever means available to re-privatise the socialised debts and, therefore, reduce Japan's overall national debt !!

    BTW, nothing will be done "rapidly" since anything done with thinking/working out the consequences will have side-effects that are probably more undesirable that the problem itself.

  • Comment number 60.

    #12 >>As tax receipts will fall and spending will rise because of this disaster then many can see the problem which might unfold.

    If the government funds are spent totally on reconstruction, then the tax receipts will actually RISE, since it will help reduce Japan's unemployment problem !!

  • Comment number 61.

    #40 >>Now here's a brain teaser for you all. Japan has over trillion dollars in currency reserves (source: http://en.wikipedia.org/wiki/Foreign_exchange_reserves). Why don't Japan use these massive reserves to pay down its debt?

    It's because the Septics have been begging them for years *NEVER* to do that !! Most of what they hold are in US$ debts !! If the Japanese dump a massive amount US$ debts onto the market, the US$ will drop like a stone, especially in light of the massive printing of paper money, oops sorry, I mean Quantitative Easing they've been practicing of late !!

  • Comment number 62.

    #48 >>What would have cheered me somewhat more would have been the major trading nations, G20 or G20+, deciding to suspend market activity for a period. Three days might have been the limit, and quite respectful too, but in the case of some things like Forex, it might be near impossible to do it for as long as that.

    For markets to suspend trading will mean widespread misery to almost ALL parts of the world. Think of the poor cocoa farmers in the Ivory Coast. Through no fault of theirs, the cocoa they produce are "sanctioned"(can't be sold) and they can't make a living. Is it necessary for millions to suffer to assurge someone's heart-felt sympathies ??

    The Law of Unintended Consequences strikes again !!

  • Comment number 63.

    #49 >>3. The critical issue here is energy. How, and at what cost, can Japan replace lost nuclear capacity? And what will this do to global energy prices?

    This presupposes that production, and its related energy needs, carry on at the same level. This may not necessarily be true. The Japanese can move much of the production overseas, to more energy-abundant countries.

    Finally, the Japanese are a most "structured" people and, in times of need, they hang together better than most others. I'm sure they work out everything soon.

  • Comment number 64.

    Japan's deflationary malaise and debt burden are the result of following the Washington Concensus of deregulated trade and allowing their banking industry to run wild with property speculation and debt.

    Sound familar?

    Now this huge natural disaster has happened, it is the role of the state in intervening to reconstruct and restore the destruction - and I think this might well provide the stimulus Japan needs to get out of their economic malaise.


  • Comment number 65.

    56. At 11:02pm on 14 Mar 2011, Fair Pay wrote:
    I suspect we're at a point where we need to rebuild our own domestic wealth and standard of living, before people start getting seriously pissed off.
    -------------------------
    Rumour has it that some already are p****d off. Students, unemployed and fixed income pensioners spring to mind.
    -------------------------

    56. At 11:02pm on 14 Mar 2011, Fair Pay wrote:
    I don't know much about economics, but I know that such a simple equation could never hope to come close to modeling the complexity of the system that has arisen from the simple principle of charging lending with interest.
    --------------------------

    A good recipe for economics is:
    200 grams of mathematics
    50ml of politics
    Add sugar to taste.

    ‘Economics’ is politically warped mathematics.

    Overall price level of all items = (Total amount of money) / (Supply of all available items to purchase)

    We have inflation because we have an increase in the amount of money, it's as simple as that.

  • Comment number 66.

    The Japanese Government could issue a reconstruction bond with a 5% coupon making it available to retail investors it would be widely taken up. But I suspect this will be a major money making opportunity for professional investors.

    There are many admirable things about the Japanese people their culture, technological and scientific achievements. They will come through this and I hope we are helping them as much as we can.

  • Comment number 67.

    Having worked and lived in Japan I feel for it's people, something that the BBCs prima-donna economist, alleged journalist, obviously does not even consider is the professional and decent position to take just four days after this vast human tragedy.

    For your failed behavior, please help restore your stained image by donating a day's pay to the appropriate UK Relief Fund for Japan.

  • Comment number 68.

    Not a big supporter from John From Hendon , he is often a opportunist, like Gordon was..

    However this disaster does show why governments should be ultra conservative when it comes to borrowing, because you never know when you need to borrow due to unforeseen circumstances.

    On this point JFH has a point , in that the UK like Japan is up to its neck in debt.

    We should be aiming for ZERO government debt.....


  • Comment number 69.

    38 "Government checks don't bounce".

    Believe me if that numpty GB and his cronies the 2 Ed's were still in power , cheque's would of bounced...

    These guys are unfit for any sort of government ...

  • Comment number 70.

    23**

    Take it from me this nuclear disaster will be up there with Chernobyl.

    The Full effect of the disaster will be released piece meal over a number of months if not years.

    Regards why are the using sea water , the answer is they have nothing else to use , the whole cooling system is knackered. The whole site will have to be flooded with concrete and mothballed for centuries to come.

    I am not against nuclear power , but the dangers are real and can't be contained to risk management files in the office , not dis-similar to the current financial crisis!!

  • Comment number 71.

    Somewhat depressing to see an attempt to explain the economic consequences of mass death and destruction.

    Holding my nose and sticking with the theme; Surely economics is all about numbers and to make any informed judgement you would really need to quantify the death and destruction. Ongoing incidents at a number of nuclear reactors would suggest it to be somewhat premature to attempt any such quantification.

    Anyone that knows anything about the industry already knows that the signs are not good, and no amount of ill informed talking heads on the BBC will change that.

    If anything good can come out of this then it maybe that the entire nuclear industry is itself safely contained and there will be no more of these plants built.

    Watch for the planted stories about how it's not as bad as all that, and about the end of civilization if we do not embrace nuclear. Try not to vomit the next time you hear someone piously explaining how climbing trees is dangerous and puts a strain on the health service. These clowns care nothing for your health and safety. The evidence is all around you.

  • Comment number 72.

    try working the true cost of nuclear power out eg;
    a) cost of building the plant.
    b) cost of monitoring employees for radiation and health issues.
    c) decommissioning costs o dismantle the nuclear plant when its done.
    d) cost of storing the nuclear waste in underground silio`s while it depletes.
    e) now the costs to the health service in treating people with cancer or leukemia when they get exposed to high levels of radiation.
    Add in the rather unnerving fact that once you start it up you can never actually shut it down completely.
    No wonder Germany and China are rethinking there strategy on nuclear reactors!

 

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