Saturday, 19 March 2011

Weekend Update March 19, 2010

Baltic Dry Index. 1533

LIR Gold Target by 2019: $30,000. Revised due to QE.

"The history of fiat money is little more than a register of monetary follies and inflations. Our present age merely affords another entry in this dismal register."

Hans F. Sennholz

This weekend, two controversial articles from the mainstream media. Do mega earthquakes come in clusters? If they do, our global insurance and reinsurance industry is on the wrong model. Did TEPCO create most of the problem at Fukushima by attempting to protect its financial interest in its nuclear assets? The WSJ thinks that they might have. If so, is private ownership the wrong model for such dangerous assets? We don’t allow the private ownership of nuclear bombs despite their being the ultimate form of self defence. Are nuclear plants too dangerous to leave to companies that risk bankruptcy in making the right decision when things go wrong? Thoughts to ponder this weekend as the west goes to the brink of war with Gaddafi’s Libya.

March 17, 2011, 6:37 p.m. EDT

Japan disaster raises fear of megaquake cluster

Some experts think big earthquakes can trigger other giant temblors

SAN FRANCISCO (MarketWatch) — Most experts believe giant earthquakes happen randomly. The 9.0-magnitude temblor that devastated Japan on March 11 may be changing that assumption.

The Japan disaster followed two damaging earthquakes in New Zealand in recent months and an 8.8-magnitude quake off the coast of Chile in late February 2010.

“Chile, New Zealand, and now we have seen this,” said Tom Larson, product architect and senior vice president at catastrophe-modeling firm Eqecat.

“The general consensus is that this is strictly a coincidence, but there are people who believe there are clusters of these events,” he added. “A lot of people are investigating these clusters. They have happened in the past.”

If big quakes happen in patterns, that would have big implications for insurers and reinsurers, which have always struggled to predict such expensive events. Read about the cost of Japan’s latest earthquake here.

Some seismologists argue that mega-earthquakes cluster in 50-year cycles, according to RMS, another catastrophe-modeling firm.

Under this theory, the last cycle is supposed to have happened in the 1960s, when the two largest megaquakes of the 20th century hit — a 9.5-magnitude Chilean temblor in 1960 and a 9.2-magnitude event in Alaska in 1964, according to RMS.

USGS records indicate that seven of the 16 largest earthquakes since 1900 hit between 1950 and 1965, RMS noted.

The recent spate of big quakes may be part of a new cluster. Five of the 16 largest temblors have happened since the end of 2004, according to RMS and USGS data, which include Friday’s quake in Japan.

Near the beginning of the 20th century, there were also a number of major earthquakes — in 1906 there were three big ones, including the temblor on the San Andreas fault that devastated San Francisco RMS said.

In November 2006, an 8.3-magnitude quake shook the Kuril Islands north of Japan as the Pacific plate pushed beneath them. Two months later, in January 2007, the islands felt the force of a second large quake, this time an 8.1-magnitude event.

When the Pacific plate lunged beneath the islands in the first of those quakes, it left the oceanic crust under tension. The January quake was the result of a new rupture that allowed the plate to stretch and thin to compensate, New Scientist said.

Still, other scientists question the historical data used to support the megaquake-cluster theory.

MARCH 19, 2011

Bid to 'Protect Assets' Slowed Reactor Fight

TOKYO—Crucial efforts to tame Japan's crippled nuclear plant were delayed by concerns over damaging valuable power assets and by initial passivity on the part of the government, people familiar with the situation said, offering new insight into the management of the crisis.

Meanwhile, a regulator who was inspecting the Fukushima Daiichi nuclear-power complex when the quake hit offered The Wall Street Journal one of the first eyewitness accounts of the havoc at the site, describing how the temblor took down all communications in the area, greatly complicating the response.

The plant's operator—Tokyo Electric Power Co., or Tepco—considered using seawater from the nearby coast to cool one of its six reactors at least as early as last Saturday morning, the day after the quake struck. But it didn't do so until that evening, after the prime minister ordered it following an explosion at the facility. Tepco didn't begin using seawater at other reactors until Sunday.

Tepco was reluctant to use seawater because it worried about hurting its long-term investment in the complex, say people involved with the efforts. Seawater, which can render a nuclear reactor permanently inoperable, now is at the center of efforts to keep the plant under control.

Tepco "hesitated because it tried to protect its assets," said Akira Omoto, a former Tepco executive and a member of the Japan Atomic Energy Commission, an official advisory body involved in the effort to tame the plant. Both Tepco and government officials had good reason not to use saltwater, Mr. Omoto added. Early on, nuclear fuel rods were still under cooling water and undamaged, he said, adding, "it's understandable because injecting seawater into the fuel vessel renders it unusable."

----"This disaster is 60% man-made," said one government official. "They failed in their initial response. It's like Tepco dropped and lost a 100 yen coin while trying to pick up a 10 yen coin."

Government efforts also were plagued with delays. Japan's military, the Self-Defense Forces, didn't participate in cool-down efforts in a big way until Wednesday, after four of the six reactors had suffered damage and the remaining two showed signs of heating as well. A military spokesman said forces didn't move in because they weren't requested by Tepco.


"In the long run, the gold price has to go up in relation to paper money. There is no other way. To what price, that depends on the scale of the inflation - and we know that inflation will continue."

Nicholas L. Deak


No comments:

Post a Comment