Today is the one year anniversary of the BP Deepwater Horizon oil rig explosion that dumped 4.9 million barrels (206 million gallons) of oil into the Gulf of Mexico. A roundup of what has happened so far:
Late stage capitalist societies like Japan and the U.S. already have the capacity to produce more than enough of the basic goods needed for our biological survival – such as food and shelter. The production of basic goods has become so efficient that we need fewer and fewer people to work to provide them. But at the same time, the population has grown because of such efficient, mass production. Because job creation and wage growth didn’t keep up with rising living costs – leading to lifestyle changes such as the two-income family, post-baby boom families got smaller, closing off a demographic bubble that will soon become a national budgetary headache. In essence, Japan and the U.S. have become victims of their own success.
The EIA reported Japan had 281 gigawatts (GW) of installed electrical generation capacity as of 2008. A total 12 GW of that went offline due to automatic shutdowns (i.e. nuclear reactors shut off as a precaution whenever a major tremor is detected) or structural damage (i.e. damage to Fukushima Daiichi nuclear reactor plus a few thermal power plants), leaving 269 GW of generation capacity. Transmission losses are normally 5% of the total electricity generated, which effectively leaves 256 GW of electricity available to customers. Given that national electricity demand peaks at a pre-recession level of 175.2 GW as of FY2008 according to FEPCO , Japan has plenty of generation capacity to spare. Yet, rolling blackouts continue to roil Japan (except on weekends due to voluntary electricity conservation) because of inadequate capacity to transmit and transform electricity.
If we declare the exclusion zone around Fukushima 1 a nuclear wasteland, how much of the factors of production—land, labor and capital—does Japan stand to lose? Check out The Land of the Rising Radiation: What Could Fukushima Cost? available exclusively to RGE clients.
This year marks Chernobyl’s 25th anniversary and how ironic it is that the world has a new nuclear emergency on its hands: Japan’s Fukushima power plant, operated by TEPCO. The situation at Fukushima continues to worsen, with now 2 more reactors experiencing cooling problems and the radiation released so far surpassing that of Three Mile Island. General Electric designed the troubled, 40-year old reactors, which were due for decommissioning at the end of this month.
The Thai government’s PR department released a sanguine report on Thailand’s Q2 GDP data yesterday, glossing over the economic impact of the violent protests that flared up in April and May:
Thailand’s gross domestic product (GDP) in the second quarter of this year has expanded by 9.1%, setting the highest record of half-year figure in 13 years, according to the National Economic and Social Development Board (NESDB).
A look at the data reveals however that real GDP actually contracted in Q2 2010 by 5.6%, not seasonally adjusted. The 9.1% growth reported by the National News Bureau refers to year-over-year growth. By this metric, Thailand’s expansion is really nothing surprising considering GDP rose from a very low base formed after the deepest contraction since the 1997-98 financial crisis. When the bar is set low, it’s quite easy to jump the bar. What’s more striking is, Thailand failed to even meet that bar in some respects:
The widening discrepancy between the yen and economic fundamentals raises the risk of market intervention by the Bank of Japan. Officials have made verbal interventions yet the yen proceeds to strengthen versus the U.S. dollar, ignoring the sharp slowdown in Japan’s Q2 GDP growth and instead feeding off the Federal Reserve’s entry to quantitative easing. Export volumes have yet to fully reflect the impact of a strong yen, shrinking only slightly in June, but export values have already tapered off. Q3 exports may show a more pronounced effect as the yen sinks further below the 92 yen breakeven level for exporters, lowering export volumes and local currency revenues and delaying repatriation of Japanese assets overseas. A strong yen also lowers import prices, counteracting efforts to end deflation.
Japan’s unemployment rate has been rising since end-Q1 2010—in other words, since the end of the cyclical export rebound. As Japan is really still only an industrial economy, not an information economy like the U.S. or eurozone, the downturn in exports means a slowdown in industrial production and hence employment growth.
Thailand has continued its struggle to expand democracy since the absolute monarchy was ousted in a 1932 coup—when Siam became Thailand. Most coups and protests in Thailand have been relatively bloodless compared to the Philippines, where election violence is the norm. But once in a while, the death toll stacks up to heights that terrify Thais. As of May 18, 37 people had died in two months of protests, the bloodiest since the “Black May” protests in May 17-20, 1992, which killed at least 52 according to the official count.