Japan Bear Warns on Unfolding Debt Crisis – Caused by Fukushima nuclear accident?

Mr. Bass said that the Japanese government was “insolvent” and described recent accounting moves that included issuing a new form of debt called Japanese compensation bonds as “adding a Ponzi scheme to a Ponzi scheme”

He said that believing it was possible to understand these risks with concepts such as “value at risk”, a popular analytical framework used by banks [And insurance – Arclight2011] to assess trading risk, was “naive”.

Published: Wednesday, 8 May 2013 | 9:41 PM ET

By: Dan McCrum and Arash Massoudi

http://www.cnbc.com/id/100722143

Image source ; Japan’s nuclear reactor overreaction Phil Plait | March 14, 2011 🙂 [oops! he got that wrong then?but the picture in this context seemed appropriate! Arclight 2011]

Japan will be consumed by a debt crisis surpassing the U.S. subprime crash, a leading U.S.-based hedge fund manager has warned, telling investors that “the beginning of the end has begun” for Japan’s finances.

Over-indebted governments, and especially the precarious state of Japan’s finances, set the tone for the high-profile Ira Sohn investment conference in New York on Wednesday.

Kyle Bass of Hayman Capital, a $1.8 billion Texas-based hedge fund and a noted Japan bear, said signs of the crisis had started to emerge, as banks and dealers become less willing to take the other side of negative bets from funds such as his.

(Read More: Don’t Stand in the Way of the Nikkei Train)

Mr. Bass said that the Japanese government was “insolvent” and described recent accounting moves that included issuing a new form of debt called Japanese compensation bonds as “adding a Ponzi scheme to a Ponzi scheme”.

Mr. Bass, who was one of the hedge fund managers to famously bet against the value of subprime mortgage-backed securities in 2007, said that the quantitative argument was now complete, and that it was simply a qualitative argument about when crisis hit Japan. He predicted that inflation in Japan would hit 2 percent and that the yen would fall below ¥125 to the dollar.

Mr. Bass was not entirely bearish, however, as he extolled the prospects for Dex Media, whose stock promptly surged 22 percent to $16.72 in trading.

(Read More: Bonderman Is Skeptic on Japan)

Paul Singer of Elliott Management opened the conference with a bleak outlook for the global financial system. He said that “there are no safe havens” in today’s markets, providing an overview of the world economy.

[This seems like a natural connection to me Arclight2011]

The Naked Truth About Nuclear Accident Insurance

By Miles Benson

MAY 8, 2013, 12:00 PM

But one not so small thing remained unchanged, post-Fukushima: the tightly capped insurance system. Of course, raising the amount of insurance required to operate nuclear plants would be expensive. The nuclear industry, which provides 20 percent of all of the country’s electrical power, is not eager to incur additional expenses like higher insurance premiums for more coverage. Oh, but the nuclear power industry doesn’t actually pay premiums on most of the insurance coverage that supposedly is available…

https://nuclear-news.net/2013/05/09/the-naked-truth-about-nuclear-accident-insurance/

Chernobyl Nuclear Power Plant Disaster Economy Effects

Updated March 23, 2012

The 1986 Chernobyl nuclear power plant disaster affected, not only Russia, Ukraine and Belarus, but the entire global economy. What were the consequences of the Chernobyl nuclear power plant disaster for the U.S. economy?On 26 April 1986, the most serious accident in the history of the nuclear industry occurred at Unit 4 of the Chernobyl nuclear power plant in the Ukraine. The explosions that ruptured the Chernobyl reactor vessel released a cloud with high levels of radioactive material that spread over much of Europe. Radioactive caesium-137, which has a long half-life, is still measurable in soils and some foods in many parts of Europe

In some way or another, the Chernobyl accident affected 7 million people in Russia, Ukraine and Belarus. The disaster immediately exposed 1,000 people to high levels of radiation, while 4,000 children later came down with thyroid cancer from drinking contaminated milk. More than 600,000 emergency workers were also exposed to radiation. Five million people currently live in radiated areas, although the levels of radiation are lower than those received by people who live in some areas of high natural background radiation in India,Iran, Brazil and China.

Twenty years after the accident, the cost had grown to hundreds of billions of dollars. Why? A wide range of costs were incurred, including:

Direct damage caused by the accident.
Sealing off the reactor creating an exclusion zone.
Resettling 330,000 people.
Health care.
Research to find out how to produce uncontaminated food.
Radiation monitoring of the environment.
Toxic waster clean-up and disposal of radioactive waste.
The opportunity cost of removing farm land and forests from use.
Loss of power from the Chernobyl nuclear plant and the cancellation of Belarus’s nuclear power program.

(Source: Chernobyl’s Legacy: Health, Environmental and Socio-Economic Impacts, The Chernobyl Forum: 2003-2005)

The cost of a modern-day nuclear accident in a populated, industrial area could be much higher. That’s because the Chernobyl disaster took place in a rural area, where agricultural was the primary industry. More than 5,700 square miles of farmland and forests were contaminated — an area about the size of Connecticut.The economic cost of Hurricane Katrina was estimated at between $125 billion to $250 billion. It knocked GDP growth to 1.3% in the 4th quarter 2005. It affected 19% of U.S. oil production and briefly spiked gas prices to $5 a gallon.

A nuclear accident on the scale of Chernobyl would have a similar impact, but would last at least 20 years due to radiation contamination.

http://useconomy.about.com/od/worldeconomy/a/Chernobyl-Nuclear-Power-Plant-Disaster.htm