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Global market confidence despite civil strife and devastation in parts of Japan

Global market confidence despite civil strife and devastation in parts of Japan

Lee Jay Walker

Modern Tokyo Times

Global economy is rebounding despite the chaos
Global economy is rebounding despite the chaos

The Middle East and North Africa remains volatile and the 9.0-magnitude earthquake and violent tsunami in Japan caused enormous loss of life and the nuclear crisis at the stricken nuclear plant in Fukushima is still unresolved.  Added to this you have major tensions in the Ivory Coast, events in Southern Sudan do not bode well and piracy is still a major concern near Somalia.

Also, while recent news is focused on Egypt, Libya, and Tunisia in North Africa and on Bahrain and Yemen in the Middle East; it is clear that convulsions could erupt in other nations like Saudi Arabia and Iran remains divided because the opposition is clearly against the current government of Iran.  It is also possible that these political shockwaves could spread further and many nations remain jittery at the moment because political convulsions can either die quickly or open up a can of worms therefore 2011 is clearly chaotic.

Despite this, you have clear signs that the global economy is about to pick up and while recent events have been dramatic and led to countless carnage and political changes; some form of normality appears to be returning to the global market and confident is returning.

Goldman Sachs Group Inc. is forecasting global economic growth this year of 4.8% and JP Morgan is estimating growth to be 4.4%, therefore, both are optimistic of a stronger global economy this year.

China, Germany, the United States, and other major players, are showing signs that manufacturing is picking up and market confidence is growing on this news.

Therefore, despite all the political chaos, devastating earthquake in Japan, and increasing price of oil and high commodity prices; the manufacturing base of many leading nations is rebounding.

The Institute for Supply Management in America stated that the factory index in February showed strong growth because the index rose by 61.4% and this is the highest rating since May in 2004.  At the same time Europe is showing signs of a recovery because Europe’s service and manufacturing industries are expanding and this is being led by Germany. 

It also appears that the worst fears of the economic crisis in Greece did not cause the damage that many had feared.  Therefore, the banking system in Europe is looking much stronger in 2011 despite internal problems in some European Union member states.

Marc Gross who works at RS Investments in New York commented that “I am not sure if risk is all the way back on to where it was, but the market seems much happier and healthier after a short-term panic attack last week.”

The U.S. Treasury Department which began buying mortgage-backed-securities after intervening in Fannie Mae and Freddie Mac also announced that it will begin selling up to $10 billion a month in order to wind down the $142 billion which are currently held.  At the height of the 2008 economic crisis in America the government bailed out many financial institutions but now you have renewed confidence.

Jason Pride at Glenmede which is based in Philadelphia commented that “We have a growth economy that seems like it is moving faster than it was six months ago” and “Everything’s pointing in the direction of an economic expansion. There’s still a lot of work to be done, but it’s moving the right way.”

The Japanese stock market also rebounded on March 22 because after the initial shock of the earthquake, tsunami, and nuclear crisis; it appears that state intervention by Japan and global market confidence is helping this rebound despite major uncertainty in Japan.

Mark Skidmore, who is a professor at Michigan State University in America, comments that As incomes rise in a society, you can devote more resources to safety. So economies that have relatively high exposure to earthquakes or hurricanes start taking the precautions they need. Japan is among the best prepared in the world because they have high exposure and high income.”

The Kobe earthquake in 1995 created mass devastation and over 6,000 people died and unlike the regions of Iwate and Miyagi, the city of Kobe is more instrumental for trade and at the time the port was the sixth largest in the world.  However, Kobe rebounded quickly and was redeveloped rapidly and Japan showed reasonable economic growth despite the 1990s on the whole being negative.

Mark Skidmore also comments about this and he stated that “We don’t know yet how devastating this is going to be economically, or even in terms of human casualties, but Kobe was able to rebound very quickly and I think there is the same potential here.”

It must be stated that unlike Kobe which was devastated by an earthquake and where the area of land covered was much smaller; the same situation is very different because the March 11 earthquake which struck recently was multi-dimensional. This applies to this disaster being based on the initial earthquake, the resulting tsunami, and then the ongoing nuclear crisis in Fukushima.

Also, whole communities have been destroyed along the coast of northeastern Japan and Iwate, Miyagi and Fukushima have been severely damaged.  Another major difference is the significance of energy in this area and the fear of radiation is an unknown quantity.  Therefore, the fisheries sector and farming sector is going to suffer in this part of Japan and the radiation issue is going to remain for some time.

Despite this, it is apparent that global market confidence is growing and some benchmarks are positive.  Yet major convulsions may still put fresh breaks on the global economy but for now it appears that dramatic political changes and the devastation of the earthquake in Japan can not dampen enthusiasm.

http://www.moderntokyotimes.com  (please visit)

 

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Headway being made at Fukushima nuclear plant

Headway being made at Fukushima nuclear plant

Lee Jay Walker

Modern Tokyo Times

Damaged nuclear plant in Fukushima
Damaged nuclear plant in Fukushima

It appears that one of the reactors out of the six which has been leaving people on tenterhooks is gradually being reigned in.  This was achieved after fire trucks sprayed the stricken reactor No. 3 for several hours.  Therefore, you now have some signs that headway is being made but the situation remains delicate.

According to reports reactor No. 3 at the Fukushima Daiichi nuclear complex is stabilizing and this is welcome news for everybody.  This applies to the fact that reactor No. 3 is the most dangerous reactor because of the usage of highly toxic plutonium and if this reactor comes under control then this will be a welcome tonic for all the workers involved.

It now appears that a power cable was attached to the stricken nuclear plant and if the cable becomes fully effective then water pumps can prevent the fuel rods from overheating.  Therefore, Yukio Edano, the Chief Cabinet Secretary announced that “The situation there is stabilizing somewhat” and it is hoped that this will prevent a major radiation leak which would endanger life.

A significant breakthrough will hopefully materialize on March 20th and this applies to electricity flowing into four reactors and this in turn will boost the stabilization and rescue operation.

It was announced that a power cable is now connected to the No. 2 reactor and on March 20th a test will be held on reactors one to four at the Fukushima Daiichi nuclear complex.  Therefore, the next twenty four hours will be instrumental in making real headway and containing the nuclear crisis in Fukushima.

Roughly three hundred engineers worked on reactor No. 6 and once a second diesel generator was attached to this reactor then attention was put on to cooling pumps in reactor No. 5.

Tokyo Electric Power Co. (TEPCO) which is under enormous pressure and this applies to political pressure and from the general public; had some welcome news to give the general public.

TEPCO announced that “TEPCO has connected the external transmission line with the receiving point of the plant and confirmed that electricity can be supplied.”

TEPCO also confirmed that cable is being laid and that once everything is in place then engineers will try to regenerate coolers at reactor No.2.  If everything goes according to plan then numbers 1, 3, and 4, will become functional or partly functional on March 20th.

Hidehiko Nishiyama of the Nuclear and Industrial Safety Agency commented that “Our priority is to have the regular cooling system cool the reactor and storage pool, instead of pouring in seawater.”

Meanwhile TEPCO is coming under close scrutiny because it appears that the nuclear plant was ill-equipped and this applies to a possible tsunami.  Some critics are claiming that the stricken plant was designed to withstand a major earthquake but ill-prepared against a potent tsunami.

Hidehiko Nishiyama confirmed this because he stated that the tsunami was “beyond the prediction.”  He continued by stating that “One of the problems that caused (the crisis) was that the emergency power generators were not placed inside the building complex” and “I have heard that generators in some other nuclear power plants are placed inside.”

On a more optimistic note it is hoped that video feeds and other devices will enable TEPCO to view every detail of the current situation and then respond to these new findings.

March 20th will be an important milestone if everything goes according to plan.

http://moderntokyotimes.com  (Please visit)

http://www.tepco.co.jp/en/index-e.html   (TEPCO website)

 

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