The Great Debate UK

from Breakingviews:

Four reasons to hedge against Japanese equities

What was a contrarian view right after Japan's earthquake has become consensus: confidence in a V-shaped recovery has powered a 10 percent rally in Japanese stocks since March 15. That outlook still appears likely, but questions surround the speed and strength of the recovery. Investors should hedge against the risk that politics, power shortages, and nuclear troubles prompt investors to turn tail.

Amid a drumbeat of cautiously optimistic forecasts, foreign investors pumped almost $12 billion into Japanese stocks, a surge that helped stoke an unwanted spike in the yen. Even Warren Buffett joined the chorus of support for Japanese equities. The rally also turned up some reconstruction darlings such as generator-maker Denyo <6517.T>, which has climbed 44 percent since March 15; water purification company Nihon Trim <6788.T>, up 48 percent; and lighting company Iwasaki <6924.T>, up 58 percent. 

But bad news out of Fukushima, where radiation continues to seep from crippled nuclear reactors, is nibbling at confidence. Alongside fears of worsening fallout, investors face three other worries. First, that power shortages will create a lasting dent in Japanese output. The quake took out almost a quarter of Tokyo Electric Power's <9501.T> capacity, prompting it to ration power and force key suppliers to shut down, with reverberations down the entire supply chain. If industry cannot restore its power before surging summer demand, lost production could cost Japan global market share. 

The speed of reconstruction is another concern. Opposition politicians are quibbling over an emergency budget. Even when passed, destruction is so extensive that infrastructure may need not only rebuilding, but relocation. Last and perhaps most important is consumer confidence. Some fear that younger Japanese, already chastened by two decades of job insecurity, will pull their purse-strings even tighter.

from Breakingviews:

Egypt needs a reconstruction fund too

By Hugo Dixon
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

LONDON -- Egypt needs a reconstruction fund too. Japan will be spending tens of billions of dollars on rebuilding after its tsunami. Egypt can't afford to finance an equivalent fund after its political tsunami. But foreign powers could help by showing they are not just interested in bombing neighbouring Libya.

Tide turns against nuclear energy

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TAIWAN/

By Kathleen Brooks. The opinions expressed are her own.

As the nuclear threat in Japan steps up a gear, global politicians have pre-empted a wave of anti-atomic feeling from their public and spoken out against nuclear reactors, which threatens its future as a viable alternative to oil.

As Japan has found out with devastating consequences when things go wrong with atomic energy the effect is both devastating and immediate. Unlike carbon fuels, which have a lagged detrimental effect on the atmosphere, a nuclear accident doesn’t get worse in increments – once radioactive material is released into the atmosphere the damage to the surrounding areas is done.

from Breakingviews:

How Japan’s nuclear industry got here

By Martin Dusinberre
The author is a Reuters Breakingviews guest columnist. The opinions expressed are his own.

NEWCASTLE, England -- How did Japan's nuclear industry get here? As the world digests the appalling images from Fukushima of reactors crippled by last week's earthquake and tsunami, the question springs to mind how a country that experienced the horrors of nuclear weapons in 1945 came to embrace nuclear power so expansively in the post-war decades.

from Business Traveller:

Travel as an escape

As I write this, the first U.S. chartered flights are leaving Japan carrying those military families and private citizens who wish to leave. Unlike the destinations affected by the 2004 tsunami, business travellers know the futuristic conurbation of Tokyo well. Its generation-next skyscrapers and bullet trains make for one of the slickest corporate hubs on the planet.

We, and the rest of the connected world, watch agape as this most civilised country deals with the disaster, very much doubting that if such a cataclysm befell us, we would behave with such patience, decorum, dignity.

from The Great Debate:

The cantankerous effects from Japan’s radiation

JAPAN-QUAKE/

Devra Davis, PhD, MPH, president of Environmental Health Trust, is an award-winning scientist and writer on environmental health issues, author of "The Secret History of the War on Cancer," and "Disconnect" who served as the founding director of the Board on Environmental Studies and Toxicology at the U.S. National Academy of Sciences, 1983-93. The opinions expressed are her own.

The discovery of ionizing radiation at the turn of the nineteenth century revolutionized science and society. Within two weeks of their being created at the end of 1895, the stunning x-ray images of his wife's bejeweled hand that physics professor Wilhelm Conrad Röntgen had taken appeared in major newspapers around the world. From Paris, to London and Tokyo, scientists and celebrities engaged in a world-wide medical vogue with fashionable x-ray parties featuring popular demonstrations of moving skeletons.

from Breakingviews:

Japan reminds strapped officials they need buffer

By James Pethokoukis
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

WASHINGTON -- When your credit card is nearly maxed out, dealing with emergencies can be tricky. A massive rebuilding effort may stretch Japan to its financial limits. Politicians in Washington and other overspending capitals should take note of the warning.

from The Great Debate:

Japan shows another side of the press

JAPAN-QUAKE/LEAKAGE

By Anya Schiffrin
The opinions expressed are her own.

Sitting in Japan in the days after the Friday earthquake and watching the official broadcaster NHK cover the disaster has been an unusual experience. There has been the typical blanket television coverage of this tragedy but the flavor of the reporting is different than it would be in the U.S. “Restrained” is how one friend described it. Over and over we’ve seen the same awful footage of the enormous dirty wave sweeping up cars and houses as it inches slowly along the land.

There are the inevitable interviews with displaced people and experts in their offices. But there are very few graphics or charts, no catchy logos and certainly no dead or injured on the screen. Just as U.S. presidents take off their ties when they visit the troops, Japanese officials appearing on television wear the blue uniforms of someone doing physical labor but with their logo of their ministry or office sewn on their pocket. “It’s theatre” a Japanese friend said dismissively as we watched television last night. But the purposefulness and determination of the government officials were evident — and even my skeptical friend agreed that this commitment would be well-received by the electorate.

from Breakingviews:

Tragic quake may add to inflation pressures

The full economic impact of the sixth most powerful earthquake ever recorded is not yet known. Many hundreds of lives have been reported lost in Japan. Aftershocks are a danger and other nations fear a tsunami running across the Pacific will spread the damage more widely. Though uncertainty is rife, the earthquake is more likely to add to global growth and attendant inflationary pressures than subtract from them. It also raises concerns about Japan's long-running fiscal dangers.

The earthquake struck close to a relatively sparsely populated area of Japan. In contrast, the Kobe earthquake in January 1995 struck one of the most populated and industrialized regions, killing 6,434 people and causing damage estimated at around $100 billion. The current quake will leave a large reconstruction bill -- but, on current indications, a smaller one than for Kobe.

Monetary policy: QE2 or the Titanic?

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“Those whom the gods would destroy, they first drive mad.” – the words of a wise Roman thinker (or was it a Greek central banker?). At any rate, the gods certainly seem to have no benevolent intentions with regard to this country, judging by the statements coming from the Bank of England, in particular the calls for another round of quantitative easing from one member of the Monetary Policy Committee and the cry of “Spend, spend, spend” from another.

The view emerging from the Bank and the Monetary Policy Committee is that the country is in the grip of a slow-growth recession, facing the threat of Japanese-style deflation and a double-dip recession, and that this grim situation requires near-zero interest rates, supported by QE2 if necessary, in order to restore consumption and lending (including mortgages) to pre-crisis levels.

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