Saturday, 26 March 2011

Weekend Update March 26, 2010

Baltic Dry Index. 1533 (Thursday)

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

We open this weekend with yet more doubt on what exactly is going on at Fukushima. The radioactive power complex is now polluting both the land and sea for miles around the complex, and ruining one of Japan’s prime agricultural areas in the process. With four out of six power plants still out of control two weeks after the tsunami hit, and another with a semi drained spent fuel rod pool, the Fukushima incident seems likely to continue for months. What possible gain to mankind warrants this sort of open ended risk for so many ordinary Japanese? Below that, Japan’s earthquake is about to hit the global economy.

MARCH 26, 2011

Setback for Japan at Rogue Reactors

TOKYO—In a further sign of distress at the troubled Fukushima Daiichi nuclear complex, the plant's regulator announced Saturday a sharp elevation in radioactive contamination detected in nearby seawater.

A spokesman said the spike in radioactive iodine—to 1,250 times the legal limit—didn't pose an immediate threat to human health or the area environment, since the material quickly dissipates in the tides and would become diluted before reaching fish and seaweed. "Because nobody is engaged in fishery in the evacuation area within a radius of 20 kilometers [from the plant], there will be no immediate impact on people in the area," added Hidehiko Nishiyama, spokesman for Japan's Nuclear and Industrial Safety Agency told reporters at a news conference Saturday morning.

But the news underscores that fact that, for all the progress claimed by officials over the past week, they have a long way to go in bringing Tokyo Electric Power Co.'s reactors under control, or to understanding exactly what's happening inside the compound.

Mr. Nishiyama said officials weren't sure what caused the latest surge in nuclear pollution. "Radioactive substances may have been transmitted through the air, or contaminated water could have drained from the plant somehow," he said. "I don't have further ideas."

The precise cause of the radioactive leak—by air or by water—could yield clues about whether there is new, unanticipated damage in the complex.

The reading announced Saturday compared with an earlier report that showed iodine at 126 times the legal limit. A person drinking half a liter of water with the latest level of contamination would be consuming 1 millisievert, the equivalent of a full year's acceptable consumption.

Saturday's report came after officials Friday has suggested that a breach involving one reactor at the damaged Fukushima Daiichi nuclear power complex was responsible for a dangerous radiation leak, further complicating the protracted and perilous efforts to bring the plant under control.


Automakers May Lose 600,000 Vehicles as Japan's Quake Halts Assembly Lines

By David Welch - Mar 26, 2011 4:44 AM GMT

Global automakers may lose production of 600,000 vehicles by the end of the month as the earthquake in Japan halts assembly lines and work at suppliers including the maker of a paint pigment.

About 320,000 vehicles may have been lost worldwide as of March 24, and manufacturing at plants in North America may be affected when parts supplies start running out as soon as early April, said Michael Robinet, vice president of Lexington, Massachusetts-based IHS Automotive.

“The next surge of shutdowns comes when the pipeline of parts that were already built dries up,” Robinet said yesterday in a telephone interview. “The rate of lost production will accelerate once North American plants join in.”

Toyota Motor Corp., the world’s largest automaker, said it has lost output of 140,000 vehicles, and Honda Motor Co. has lost 46,600 cars and trucks and 5,000 motorcycles. Mitsubishi Motors Corp.’s was lowered by 15,000. Ford Motor Co. hasn’t lost any output, said Todd Nissen, a spokesman.

Honda, Japan’s third-largest automaker, said its production in North America may be disrupted after April 1 because quake damage is restricting parts supplies, Natsuno Asanuma, a spokeswoman for the company, said today by phone. Plants in Ohio, Alabama, Indiana, Canada and Mexico may be affected, she said.


Meanwhile, in the world’s biggest economy, despite QE2 and trillion and a half dollar deficits forever, the US real estate sector is joining Fukushima in meltdown. As goes US real estate so goes the US economy, which is why old failed fraudster Greenspan set off the USA real estate bubble in the first place after his dot con and stock market bubbles had burst. With the world’s number one and three national economies deep in trouble and the EU economy, the world’s largest trade grouping economy, reeling from the collapse and soon default of the Union’s PIIGS, our global economy looks likely to revisit 2008.

March 24, 2011

'Worst Report' on Housing Renews Fears of Recession

By Patrice Hill, The Washington Times

March 24--Within the space of a week, the nation has witnessed worst performances on record of new home sales, home prices and building -- evidence that the housing market has sunk into a double-dip recession that poses a significant drag on the overall economy.

Never before has the U.S. economy staged a recovery while the housing market was in such a deep slump, although analysts are expecting it to defy the historical odds and maintain growth this year. But the news on housing in recent days is giving even the biggest optimists some pause.

The Commerce Department reported Wednesday that sales of new homes plummeted a breathtaking 16.9 percent last month to a record low annual rate of 250,000. On Monday, the National Association of Realtors found that prices of existing homes plunged again in every region of the country and are down by more than a third on average since the recession began.

Perhaps in the most dismal housing news to date, new starts and permits for residential housing construction nose-dived to the lowest levels in more than half a century of record-keeping, Commerce reported last week, in what one economist described as the "worst report" he has ever seen on housing.

"The new and existing housing markets are in a very precarious situation," said Chris G. Christopher, an economist at IHS Global Insight. "The bottom line is extremely simple to interpret. The housing market is still very depressed and a major drag on the economy."

----The housing slump poses a major obstacle for consumers and homeowners because the biggest home-price drops since the Great Depression have cut into their main source of wealth and made it difficult or impossible to refinance, sell homes or even move from one place to another.

Huge price drops ranging up to 60 percent in some distressed areas of the country also increase the likelihood that more people will end up defaulting on mortgages that are worth far more than the homes they finance and that homeowners can no longer afford to pay, economists say.


Pressure grows on Portugal to seek eurozone bailout

Portugal took a step closer to what markets see as its inevitable bailout, as the country's borrowing costs hit a new record in the wake of its government's collapse.

By Emma Rowley, and Harry Wilson 7:39PM GMT 25 Mar 2011

Investors dumping Portuguese bonds pushed the yield on the country’s 10-year debt above 8pc, the highest in the euro’s lifetime. Having to borrow at this rate would effectively block Portugal out of the markets when it next needs to raise money, said analysts.

Meanwhile ratings agency Standard & Poor’s joined rival Fitch in downgrading Portugal’s debt by two notches, closer to junk status. Portuguese prime minister José Socrates was forced out on Wednesday evening, after failing to win parliamentary support for his austerity package intended to shrink the country’s debt burden and reassure markets in the hope of averting a bail-out.

Portugal’s government has been resisting following Greece and Ireland in accepting international aid, as a rescue package would come with strings attached.

Ireland, which wants better terms on its €85bn (£74bn) bail-out loans from the EU and International Monetary Fund, on Friday also sought to persuade the European Central Bank to scrap plans to withdraw the assistance is has given to the country’s troubled banking sector.

At a meeting of EU leaders in Brussels, Enda Kenny, Ireland’s prime minister, said that he reminded ECB President Jean-Claude Trichet of the need to provide long-term support to its banks. The pressure on the country’s banks is mounting ahead of next week’s release of the latest round of EU stress tests.

----However, S&P warned it could soon downgrade Portugal’s rating again, depending on the shape of the eurozone bail-out system. EU leaders failed to deliver the promised comprehensive package to resolve Europe’s debt crisis at their two-day Brussels summit.


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