Friday, March 18, 2011

FRIDAY MORNING RAMBLE: The Debt Tsunami Edition [updated]

  • Japan is still crying. Meanwhile, the rest of the world is in hysterics. I don’t know about you, but I’m still keeping up to date with the situation in Fukushima via the knowledgeable types at the Nuclear Physics blog of Mass. Institute of Technology.
    They’re whip smart, know what’s going on, and have no axes to grind. Much more rational than getting your news hysterics from John Campbell.
    M.I.T. Nuclear Information Hub - Nuclear Science Engineering Blog
  • Japan endures 10 per cent of world's seismic activity; it is also home to a disproportionate stock of the world's fortitude.
    Why quakes leave the Japanese unshakeable – Ben McIntyre, T H E   A U S T R A L I A N
  • 700 billion dollars. “That's the total amount of money rumoured to be injected by the BOJ in order to keep the Nikkei going for a whopping 4 days, and to send its currency into free fall. [Hat tip Keith W.]
    ¥55,600,000,000,000 – Z E R O   H E D G E
    USDJPY Flash Crashes As All Support Taken Out - Record Collapse – Z E R O  H E D G E
  • In the age of central banking, when confronted with disasters first instinct is to print money. Even when that instinct is idiotic.
    Why Japan Feels the Need to Print Money  – D A I L Y   R E C K O N I N G
    Broken Windows – Peter Schiff et al,  N O T  P C
    Japan: The Tipping Point – D A I L Y   B E L L
  • At The Daily Reckoning they predicted a meltdown in Japan – but not this kind of a meltdown!
    Who Will Buy the Bonds Japan Needs to Sell? -  D A I L Y   R E C K O N I N G
  • Look, it’s a whole meltdown of fearmongers!
    A Meltdown Of Fearmongers  - I N V E S T O R ‘ S   B U S I N E S S   D A I L Y
    • Taken from the iowahawkblog:
      “Japan tsunami damage estimate: $310 B, enough to run the US govt for March. Also less damage than US govt caused in March.”
  • That ‘Great Wave’ above by Hokusai really is the art for the moment. Here’s a beautiful animated adaptation of Hokusai’s work sent in by a reader.
  • Bill English is a man with a Plan B. When things were good, he planned to borrow.  When things turned to pooh, he planned to borrow. In order to get elected, he planned to borrow. To make his pseudo-tax cuts, he planned to borrow.  And now things are turning to disaster, Bill English still plans to borrow. A lot.  An awful lot.
    Bill English has plenty of Plan B. I just wish to Christ he’d find a Plan C.
    Govt will borrow to cover quake bill -
    NZ could face borrowing difficulties after Japan disaster – R A D I O    N Z
  • The toll from the Christchurch earthquake is enormous. And that’s not even including the incompetence of the world’s least lateral Finance Minister.
     Cut spending, don't tax more, to balance books after earthquake – N Z I E R
  • “The last time Sir Geoffrey Palmer went through the US his laptop was confiscated.” (John Burrows, Law Commission, speaking at ‘Smart Govt’ Conference). So maybe there’s an argument for the T.S.A. after all?
  • There are two types of people in Christchurch.
    Those who agree with Vicki Anderson that the last thing we need so soon after the earthquake-enforced closure of schools, shops, and businesses is a provincial holiday forcing already struggling local businesses to close or pay punitive holiday rates.
    And those who want everybody to go and hug each other while listening to Dave Dobbyn in Hagley Park.
    Manichean ponderings 
    – Eric Crampton, O F F S E T T I N G  B E H A V I O U R
  • Don’t worry, Eric. No new buildings in central Christchurch for six months, by order of the PM. No new buildings in central Christchurch for six months – N Z  H E R A L D
  • SCCZEN_170311NZHSRIPROTEST05_460x230Christchurch business owners remind Dictator-Pro-Tem Gerry Brownlee that the city does not belong to him.
    “Where are our property rights"?” they ask.
    Brownlee turns away and eats another pie.
     Perhaps you have to be Prince William? 
    – N O T  P C
    Christchurch earthquake: Business owners seek right to salvage – N Z   H E R A L D

    UPDATE
    : The protest yesterday by Kurt Langer and fellow Christchurch businessmen and women, pictured here, has won a victory of sorts. No demolitions for the next three days while “a new plan” is being considered. “The wrecking ball will rest while a new plan to allow business owners into central Christchurch is considered, Civil Defence says.”
    Civil Defence calls rethink as Christchurch building owners protest - S T U F F
protest_460x230
  • Geez, these ACT guys sure know how to deregulate...
    Raft of changes to consumer law introduced – N Z   H E R A L D
  • Message to the dumbarse from Epsom: “An Increase is Not a Saving”
     An Increase is Not a Saving – S I R   A R T H U R   S T R E E B – G R E E B L I N G
  • Day One:  Be pointed and controversial. Day Two: Backtrack and crawl. ACT’s Hilary Calvert lacks even the courage over of her unprincipled-ness. (A metaphor for her party, really.)
     Race row over Act comments on Foreshore – N B R
  • But is she right? Isn’t it true that “tikanga” won’t be legally defined until Chris Finlayson’s law is passed. If then.
     Tikanga in Wonderland  -  Mike Butler,  B R E A K I N G  V I E W S
  • Tariana says Hilary Calvert is “racist.” Other folk say the Tea Party is racist. Frankly, when is it appropriate to label someone or some group as racist?
    What is racism and Why the Tea Party is NotJ O H N  D R A K E
  • Q: What’s even worse than being “racist”?
    A: Not knowing your Lewis Carroll.
    There's glory for you! – Andrew Geddis,  P U N D I T
  • What if the U.S. Government issued a public service film on what it means to be a good citizen…


  • As Australia contemplates being hit with a carbon tax on all industry to make politicians feel good about themselves, NZ-Australian Professor Bob Carter offers 10 little facts to contemplate.
     Global warming down under: 10 little facts – W A T T S   U P   W I T H   T H A T
  • Earth Hour: a Dissent. "Earth Hour celebrates ignorance, poverty and backwardness."
    Earth Hour: A Dissent [pdf] - R O S S   M c K I T R I C K
  • Global Temperature Trend Update, February 2011
    Global Temperature Trend Update, February 2011 – R E A S O N   M A G A Z I N E
UAH_LT_1979_thru_Feb_2011
  • ”Mr. President, don’t send guns to the Libyans. Send them a piece of paper.”
    How to Get Gaddafi - Niall Ferguson, N E W S W E E K
  • I don’t know about you, but what with everything else going on (and being about a million miles away) I’ve had trouble getting my head around the Union Vs Governor dispute going on in Wisconsin. This post  helps: It’s about rights… "collective bargaining rights" … and the question whether or not they’re legitimate. Are they?
      Wisconsin Labor - Right Or Wrong?  - Jeff Montgomery, F U N   W I T H   G R A V I T Y
  • Here’s the beginning of the end: World’s biggest bond-holder drops U.S. Treasury Bonds from its portfolio
    Divesting in America: PIMCO Dumps U.S. Treasury Bonds from Portfolio 
    – Front Page, P J T V
  • Happy 260th birthday, James Madison---try not to be too upset.
    Celebrating James Madison – C A T O   I N S T I T U T E
  • Um, something seems to have gone missing. Perhaps it’s over there, under the latest disaster?
    Where Have the World’s Savings Gone? – Greg Canavan,  D A I L Y   R E C K O N I N G
  • - "I see tremendous confusion concerning inflation and the money supply.” Me too. This might help.
     Making Claims About the Money Supply -  K R A Z Y   E C O N O M Y
  • In Jones on Property I’ll always remember that the common economics of building yields will hold as long as some new revolutionary technology isn’t introduced.  I’d love to see what the technology of structural insulated panels could do for building economics in NZ if were legally allowed to exploit it. Sourced from China they can be as cheap as $60/sqm. And just look how simple they are to erect.
  • The head of the Ayn Rand Institute has had a chance to see the film adaptation of Part I of Ayn Rand’s book Atlas Shrugged. What does he make of it?
  • School vouchers vs. tax credits. Which is the REAL free market in education? Toward a Free Market in Education: School Vouchers or Tax Credits? 
    – Michael LeFerrara, O B J E C T I V E  S T A N D A R D
  • “What is the proper role of government?” Moderated by WNYC's Brian Lehrer, Ayn Rand Institute head Yaron Brook debates Demos President Miles Rapoport in an argument that goes right down to first principles.
     Government: What Is Its Proper Role? [Audio, 109 min.] – F I R S T   P R I N C I P L E S
  • Some thoughts on the above debate.
    A Debate on Government (and the Nature of Man -  G I D E O N   R E I C H
  • Could it be that there’s something to be said for choosing investment banking as a productive career?
    Traders, not Traitors – Jonathan Akin,  U N D E R C U R R E N T  B L O G
  • Martin Jacques is right. We really don’t understand China. And we’ll need to.
    Martin Jacques: Understanding China -  Martin Jacques, T.E.D.
  • “Only a moron would try to wash her daughter in awashing machine; or shake hands with the business end of a chainsaw; or light a match to check the contents of a gas tank. And yet manufacturers continue to go to laughable lengths to protect their customers, bombarding them with ridiculous warning labels or stunningly obvious explanations of how their products work. Here are 15 of the best--er, worst--we found over the last four years"
    15 Stunningly Dumb Warning Labels – F O R B E S
  • There’s only one time in your life your brain is being wired: the first six years. If an adult could absorb at eth same rate your child does, you’d be better than Einstein.
    The Untapped Potential of the Absorbent Mind 
    – Judi Orion, M O N T E S S O R I   A U S T R A L I A
  • You know how it is. One day you relax the food limits on your children, the next thing they’re raiding the freezer for those frozen peas.
    Experimenting. Parenting. Part Three.  -  R A C H E L   M I N E R
  • Tried not yelling at your kids recently? Sounds like a good idea. Shame it seems so difficult.
    Kate Yoak shares some tools that have worked.
    Stop yelling at kids – P A R E N T I N G   I S . . .
  • The root of all philosophy worth the name is the simple observation that Existence Exists.  But that’s not quite as simple as it sounds…
     Existence exists  -  J O H N   J .   M c V E Y
  • Oy, you. Yes, you! Why businessmen need philosophy (NB: low volume, turn your volume up):
  • Berlin Philharmoniker conductor Simon Rattle explains why you should listen to Bruckner.

Picture sources NZ Herald, Reason magazine.

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Thursday, March 17, 2011

Broken windows

A big hello to Leighton Smith’s listeners,

The post Leighton recommended is here:

Another I can recommend is this one, posted after the first quake:

Right here you can find all the posts on the Broken Window Fallacy .

Here, Peter Schiff explains why it's idiotic to think Japan's earthquake will "stimulate" the economy.

Yaron Brook and Terry Jones talk about the same idiocy. (Eight-minute video.)

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Perhaps you have to be Prince William? [update 3]

Today in Christchurch a magazine pinup from England will be given a guided tour around Christchurch’s destroyed Central Business District—yet the people who own, lease and work in the buildings that make up that district are still being stopped from going anywhere near it, and their buildings and livelihoods are still being destroyed without even the courtesy of a phone call.

No wonder they’re fuming.

Antony Gough, Central City Business Association chairman and owner of 12 buildings in the CBD has organised many “raids” on his own buildings and businesses to rescue computers and servers, dismantling them to take the equipment out in people’s pockets.

_Quote “It is shameful that we have to go to these sorts of extremes to get life back into these businesses," he said.

And yesterday he had to learn through the media that his Hereford St building housing the Vivace Espresso Bar and Fortuna Books was destroyed without even letting in the business owners to remove books or expensive imported coffee machines--destroyed because it was the same colour as its badly damaged neighbouring building.

_Quote"They were different buildings but, unfortunately, I painted them the same colour, and it was a cream day that day. Every building that was cream in Hereford St was demolished…
    "It is anarchy from the top down," he said. "They have taken lethal blows to the business community, and we are rising to fight back.”

Gough is not alone.

_QuoteMary Fraser, who owns Care Consultants in the Link Centre in Hereford St, said she was "absolutely devastated" by the lack of information from the officials. "We are not being told anything," she said. "I am worried sick.
    Kurt Langer, who owns a photography studio in the City Mall, said he felt "robbed and ruined" by authorities denying him access to his building.   It holds more than $800,000 worth of property, including his wedding albums.   He said he had begged at the earthquake headquarters for access every day since the February 22 quake.
    "I feel like Christchurch is in a police state and I believe we are living under a communist rule.  I know it sounds extreme, but they are demolishing businesses without giving information. They are ruining lives, and in a democracy this should not be allowed," he said.

City Centre Business Association manager Paul Lonsdale said he has had “email after email from owners asking when they will get access to their buildings and when more information will come through, but there is no co-ordinated information coming through.” No effort at all being made by officials to get crucial information to business owners. And no effort at all to understand a point made by Kurt Langer:

People choose risk all the time—choosing themselves to play rugby, climb mountains, take gliders up to 5,000 feet above the ground.
But they're not allowed to choose their own risk (with the guidance of their own professionals) to enter their own buildings and remove their own property--even when their livelihood depends on it.

The grey ones wouldn’t begin to understand that. Instead they are still preening themselves in their own new-found importance, and today will be ferrying around a man whose face could launch a thousand magazines, but do nothing at all for the recovery of Christchurch business owners.

The business of Christchurch was business. Not any more. The business of Christchurch, if you listen to “the authorities,” is killing the very businesses that need to recover if Christchurch ever will.

There is not even a hint of Christchurch’s grey ones understanding that.

UPDATE 1Today is a day for protest in Christchurch. Photographer Kurt Langer, mentioned above, will be marching to the Art Gallery and Civil Defence Headquarters at lunchtime today and he wants your support.  Get along there and help him help other Christchurch business owners. Says Kurt:

Tell as many people as possible to come and join us at 12:30pm 4:30pm outside the Bridge of Remembrance. They can park anywhere around the Bridge of Remembrance. (But they have to drive along Montreal street from at least Tuam street coming from the hospital to get there.)From there we plan to walk to the art gallery at 1 pm 5pm, the headquarters of the new regime.
Come join us!

UPDATE 2: Contact protest organiser Kurt Langer on either 021 407 506 or mail@kurtlanger.com .

UPDATE 3: Eric Crampton has a whole slew of similar disgusting stories, including a restaurant owner, prohibited from recovering items from his restaurant “for his own good” finds out the soldiers guarding the cordon had been inside to grab a few chairs to sit on. The restaurant was then demolished without his being notified after assurances it wouldn't be… [hat tip Tribeless]

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DOWN TO THE DOCTOR’S: Injustices and iniquities

_McGRathLibertarianz leader Dr Richard McGrath invites you down to his clinic for an inoculation against this week’s stories and headlines on issues affecting our freedom.

This week: Jail, and some people who should be there.

  • DOMPOST: “Disgraced ACC manager must repay $160k – Corrupt ACC bureaucrat Malcolm Mason has been given 11 months gardening leave and asked to pay back the $160k he took in bribes, as he might repay an interest-free loan…

THE DOCTOR SAYS: What is it with judges these days?
     Last week we had the appalling spectacle of “Justice” Joseph Williams reassuring Rikki Perigo-Check—a grown man who kicked a two year old toddler in the abdomen until his pancreas split, thus ensuring the little boy would suffer indescribable pain before dying. How comforting to see Justice Williams—or, as I would have him called if I had my way, Inmate Williams—reassuring this  monster that he was not one; to see man from the bench offering words of comfort to a sub-human animal in the dock for slaughtering a defenceless child.
    This week it’s Judge Denys Barry, who awarded Malcolm Mason, former employee of a rotten and corrupt state monopoly, a year on the couch watching the Rugby World Cup. God, poor Malcolm must be shaking in his boots at the prospect. He has already expressed remorse, no doubt at being caught. Better not make things too tough on him by charging interest on the bribe that he has been asked to hand back.
    Meanwhile, taxpayers who miss a tax payment are landed with usurious penalties; students are charged interest on their loans…we might well ask “What is so special about Mr Mason above such things as imprisonment and fines?”
    What is so special about Mr Mason is that he is of the bureaucrat class. The senior bureaucrat class. Imprisonment, fines and penalty payments are for lesser people, for the people who pay the bills, not for senior bureaucrats.
    Justices Williams and Barry are in my opinion a disgrace to the judiciary.
    Would they were required to serve themselves the sentences they should have handed down.

THE DOCTOR SAYS: Hmm, that sounds like a good business move. Which rocket scientist came up with that idea? Obviously, someone unconcerned with such trivial and irrelevant things as profit and viability. This story actually gets more bizarre, as one learns that those who purchase multi-trip tickets will be stung an extra 5 per cent, as opposed to the average ticket price rise of 4 per cent.
    As one commuter quite rightly said: “Why are we paying more and more for something that’s getting worse and worse?”
    Let’s face facts: there is no free market in rail services in this country. The involvement of the state ensures that rail services, as with Amtrak in the United States, will be inefficient, unreliable and a financial black hole for taxpayer and ratepayer dollars.
    Vote with your feet, Wellington commuters - boycott the bloody useless rail service and car pool instead. Do it now, while we’re still allowed that little bit of freedom. Before the green-washed city councillors in Wellington ban the internal combustion engine altogether.

  • DOMPOST: “Tax cheat gets home detention A Lower Hutt businessman manages to hang onto almost $1.5M of his own money for several years until IRD goombahs catch up with him…

It won’t come as any surprise that a Libertarianz Party MP would support any reduction—and eventual elimination—of income tax. Not only is its collection an act of extortion, but it offers completely the wrong incentive: it punishes people for the crime of employing others and being self-sustaining and entrepreneurial.
    But I had to put this item in, as it contains a quote from an IRD goon that shows just how distorted a person’s mind can become after years spent working for an organisation whose talents lie in seizing the products of other people's time and energy by using threats of violence, while producing nothing of their own.
    “Taxpayers expect their taxes to go to pay for public services,” said Department of Legalised Theft bureau-rat Patrick Goggin, “not to tax cheats like [insert name of hapless business owner]."
    Not only is that statement questionable in a grammatical sense, it is nonsensical. The extorted funds of other people are not used to “pay for” tax “cheats.” Malcolm Mason was an actual tax cheat: paid with other people’s money. This businessman on the other hand is not. He simply refused to allow his own money to be stolen, regardless of the good intentions of the people trying to steal it from him.
    Only in the twisted mind of an IRD employee, or a district court judge, could a person who refused to allow himself be robbed suddenly become the criminal.
    In contrast to the bureaucratic bribe-taking couch potato from the Accident Compensation Corrupt Corporation (a monopoly whose services we are forced to purchase), the private businessman who withheld his property from the clutches of the IRD has been sentenced to perform 350 hours of community service.
    Go figure.

That’s all for now.
See you next week!
Doc McGrath

Resistance to sudden violence, for the preservation not only of my person,
my limbs and life, but of my property, is an indisputable right of nature which
I have never surrendered to the public by the compact of society, and which
perhaps, I could not  surrender if I would. Nor is there anything in
the common law of England ... inconsistent with that right.
- John Adams, second President of the United States

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Wednesday, March 16, 2011

GUEST POST: The Japanese Crisis

Guest post by Vedran Vuk, Bud Conrad and the Casey Research Energy Team

With the Japanese crisis unfolding, I’m thinking about the policy consequences ahead for the U.S and the rest of the world. I’m positive that Japan will rebuild itself. As Kevin Brekke pointed out yesterday, the market was back within a year after the Kobe earthquake. Of course, a nuclear meltdown would surely push this time line further out, but eventually the nation would recover. However, bad political decisions may stick around for as long as radiation. This is the perfect time for politicians to enact poor policies that could last for decades.
    So, let’s think through some of these possibilities. The Bank of Japan is already pumping billions into the system, and the yen is dropping. After the monetary stimulus, a fiscal one is sure to follow. Unfortunately, Japan is in no shape to add on to its already gargantuan debt level at 225% of GDP.
    The stimulus might not simply go toward infrastructure repair and construction. Consider that the already weak Japanese banks just took a huge hit. Loan defaults will doubtlessly skyrocket from the crisis. On top of that, depositors will soon be pulling cash out of their savings accounts, draining the banks from a second angle…
    If the Japanese government bails out the banks and insurers on top of enacting a fiscal stimulus, where will the debt level stand as a percentage of GDP? While the earthquake is a very literal crisis at the moment, the seeds of a financial crisis are being planted next. Well, to be fair these aren’t seeds at all, but rather emerging seedlings already apparent prior to the earthquake. These sprouting problems are about to receive an extra dose of fertilizer.
    So, are there any good policies that could result from the earthquake? Yes, one being improved immigration laws. With Japan’s unemployment rate at only 4.9%, they’re necessarily going to require outside workers to get the job done, and cheap. Afterwards, they may decide to let many of them stay. Japan has a serious demographic problem of the older generation soon to outnumber the young. An influx of immigrants could be positive for Japan’s fiscal situation.
    First, Bud Conrad will update us on the economic situation across the board from Japan to the U.S., to commodities. Then the Casey Energy Team will give us a briefing on the Japanese reactors: what’s the status quo and what’s the worst-case scenario, plus what should uranium investors do about it?

Japan’s Stock Market Crash
By Bud Conrad, The Casey Report

The Japanese quakes are the worst in decades and serious. The Nikkei 225 dropped from 10,500 to a low of 8,200 Tuesday, or by 22% in two days. It crashed over 1,000 points after a recovery from a low point of 1,400 points down. As the world’s third biggest economy with close ties to China and our own economy, we will all suffer the consequences.

    Certainly, Japan will need to find other sources of energy than nuclear. In my opinion, that will mean bigger imports of oil. Their refineries are damaged; as a result, their purchases will focus on gasoline and jet fuel rather than crude. And that will increase shipping rates. Natural gas could be an alternative fuel for electricity and might rise if it could be shipped to Japan as Liquefied Natural Gas (LNG).
    Across Japan, there are already shortages of gasoline, and store shelves are bare – only partly from panic and hoarding. The shortage of electricity means trains aren't running and many manufacturing plants can't operate. The loss of more power plants besides the Fukushima reactors has required rolling 3-hour power outages across Tokyo.
    The Bank of Japan (BoJ) has floated $180 B of new liquidity in two days to stem the panic, but panic has already stricken this low-priced stock market. Japanese government bond 10-year rates are down on BoJ buying and Japanese investors’ flight to safety out of equities. The U.S. stock market is down, and Treasury rates are also lower in sympathy. Japan will not be buying U.S. Treasuries and could become a seller to finance reconstruction.
    It is likely that the reactor and unit of Fukushima 1 that experienced a second explosion in the suppression pool below the reactor came from a breach of the containment vessel. The radiation rose to 400 millisieverts per hour, which is a level that is dangerous to health (compared to normal background levels of only 3 millisieverts). The situation is still getting worse, and it will affect attitudes toward nuclear energy for years. [Keep up to date on this news at the M.I.T. Nuclear Science blog]
    A scan of world stock markets this morning (March 15) shows Europe, Asia and the Americas reeling from the impact. While Japan recovered to only 10% down, Europe is 2% to 3% lower, and the U.S. Dow lost 200 points. Virtually all commodities took a hit, but not at panic levels. However, many commodities have been up as much as 100% since last year; so they could have further to go if world economies implode. The impact on worldwide confidence cannot be underestimated.
    Every major commodity has retreated, with gold losing $33 to $1,395 and silver losses approaching $2 to $34. Even oil eased to $97 for West Texas Intermediate, despite the potential demand for replacing the loss of nuclear energy with oil. Natural gas hasn’t participated in last year’s commodity boom and as a result is suffering the least. The simple explanation is that markets tend to move together, but the bigger implication is that world economies may be forced to slow down, decreasing demand for all commodities.
    Panic seems justified until the situation stops getting worse. This seems as serious as other events that triggered worldwide economic catastrophes in the past.
    Add to this the North Africa/Middle East protests and regime changes, and the situation gets worse. With Saudis moving into Bahrain, Syria sending arms to Qaddafi and the rebels losing to him, the traditional energy source of oil from the Middle East is hanging in the balance. (See more in my article in the latest Casey Report on this topic.) Our political response to the fast-changing events is only being taken one day at time.
    And then there is the continuing financial storm: the Fed is signaling that it will stop buying all the government debt by ending QE2. Since QE2 buoyed the market since last summer, its absence could send panic throughout the market. The Fed could have been pre-announcing the end of QE2 to defend the dollar against the yen ($1.22/100 yen) and euro ($1.40/E). Who knows how this will be played out? The Fed may continue QE2 to avoid internal panic. It is remarkable that Fed policy is only third on the list of current disasters.
    My conclusion is that we will see more financial aftershocks just as Japan is experiencing geological aftershocks (6.2 this morning, 75 miles east of Tokyo) for months to come. The long-term destruction of paper currencies is likely to be accelerated from government thrashing to fix all the problems. In the short-term, we should ride out these storms more comfortably in physical resource investments than in bank deposits.
The governments will try to paper over problems with more printing as the BoJ did with $180 B in two day $320b in three days, but the real-world limitations on energy supplies compared to population growth mean that long-term energy demand will still be with us and energy and precious metals will be important areas for investment in the long term.

Uranium and Japan
By the Casey Energy Team

Fukushima-1 nuclear power plant The potential for a core meltdown at three of Japan’s nuclear reactors after a 9.0-magnitude earthquake and ensuing tsunami slammed the island nation is causing another onslaught, this one against every uranium-related stock in the world.
    Stocks of uranium explorers, producers and nuclear-reactor builders, and the spot price of uranium all fell dramatically on March 14 and 15, the first days of trading following Japan’s disaster. As the country worked to keep three reactors at risk for meltdowns contained, the world’s largest pure uranium producer Cameco (T.CCO, N.CCJ) watched as its share price fell as much as 22.7% in Monday’s intra-day trading. By the end of the day the loss had softened to 12.7%, leaving the company at C$31.70. By mid-day Tuesday, Cameco shares had lost another C$2.29 to trade at C$29.41.
    Uranium One (T.UUU), another major global uranium producer, fell harder, losing 27.7% on Monday. By midday on Tuesday, it had lost another 16.9% to sit near C$3.60. The world’s largest provider of nuclear equipment and services, France’s Areva (P.CEI), lost 9.6% on Monday and continued to fall Tuesday, sitting 9.2% down by the middle of the trading day.
    The impact reverberated all the way down to uranium explorers: Athabasca Basin junior Hathor Exploration (V.HAT) dropped 28.3% on Monday and continued the drop Tuesday, 15.6% down at midday, while producer-explorer Denison Mines (T.DML) lost 22.3% on Monday and had lost another 11.3% by the middle of Tuesday.
    The spot price of uranium, which is not traded on the open market but is represented by the average price of individual transactions, dropped 11% on Monday to close at US$60.75 per pound. By midday on Tuesday, it had plunged another 10.3% from there to sit at US$54.40 per pound.
    Germany suspended an agreement to extend the life of its nuclear power stations, Switzerland put some nuclear power plant approvals on hold, Taiwan announced plans to study reductions in nuclear power output, and Senator Joe Lieberman said the U.S. should put the brakes on new nuclear power plants until the Japanese situation plays out. Other nations voiced continued support for nuclear power, including France, China, and India, all nations wherein nuclear power is important and new reactors are being built.
    What does this all mean for uranium and nuclear power? To be blunt, there are two sides to this story: the objective, supply-and-demand side and the emotional, fear-of-nuclear-radiation side. Both are absolutely legitimate, because fear is a major factor in the uranium arena.
    That fear is certainly being stoked by news stories describing the situation as “the worst nuclear disaster since Chernobyl” and maps showing how winds could potentially carry radiation across the Pacific to North America. So before we get into uranium forecasts, let’s talk about what is actually happening within Japan’s damaged reactors.
    There are serious cooling problems and the likelihood of partial core meltdowns at three reactors within the Fukushima Daiichi plant, which is 270 km north of Tokyo. On Saturday, a buildup of hydrogen gas caused a major explosion at the No. 1 reactor; the walls and roof of the building blew off, but the containment vessel around the reactor itself remained intact.
    On Monday morning, the same thing happened at the No. 3 reactor. By Tuesday morning, the building housing reactor No. 2 exploded violently; this time the explosion seems to have inflicted some damage to the reactor’s suppression pool, which is a donut-shaped reservoir at the base of the containment vessel. Radiation levels spiked, then settled back to the low levels that have been the norm since the disaster started. On Tuesday night, a fire in the spent fuel pools near reactor No. 4 added to problems, but it was extinguished within a few hours.
    Now efforts are focused on keeping the reactors cores submerged in water, to keep them cool. The main challenges are that coolant and pumping systems have been damaged, personnel are short, and power supplies are inconsistent, especially after the three explosions damaged the plants’ power systems. Cooling efforts have yielded rewards at reactors 1 and 3, where temperatures are now dropping. Reactor No. 2 is still very unstable, and temperatures are starting to rise in No. 4.
    Despite everything, Japanese officials continued to express confidence that containment vessels will hold, keeping the high-level radiation that results from partial core meltdowns locked away. Operators have been venting steam that contains only low-level radiation. The reported levels have remained well below the maximum exposure limits set by the International Atomic Energy Agency.
    The take-home message is this: if the 8-inch-thick steel walls of the containment vessels remain primarily intact, things should be fine, and that is what we expect based on the events to date. The vessels are designed to stay intact even if the cores explode. However, if we are unlucky and one or more of the vessels burst (beyond the small breach inflicted by the explosion at No. 2), highly radioactive gases would spread for hundreds of kilometers, with the worst contamination hitting in a 50-mile radius.
    Really, no one should be mentioning Chernobyl because even the worst-case scenario at Fukushima would be nothing compared to Chernobyl. In the Ukrainian disaster, a nuclear reactor exploded while still in full operation, and its sub-standard containment unit was destroyed in the explosion, which meant radioactive gases and molten plutonium and uranium spilled into the surrounding countryside. Some 4,000 people would eventually die.
    In Japan, the reactors are shut down and the containment vessels have already held for four days. Experts say that longevity bodes well. Provided the vessels do hold, the situation will be much more like the Three Mile Island incident. That is also a difficult comparison, however, because many people misunderstand that situation. At Three Mile Island, a stuck-open valve led to major coolant losses, which led to a partial meltdown in one reactor. High-level radiation was confined to the containment vessel, and little radioactive material actually escaped. (The real problem at Three Mile Island was lack of training and protocol to deal with the situation.)
    Chernobyl instilled fear of nuclear reactors into the general population, and rightfully so. Three Mile Island was scary, and today’s precarious situation in Japan is also scary. But nuclear power is a mainstay of many countries’ green power plans and, provided this disaster does not escalate, that will remain the case.
    For one thing, there are 65 nuclear power plants currently under construction, and the builders cannot back out of the long-term contracts they signed to supply those plants with uranium. And as we’ve written before, global uranium supplies are not projected to meet growing demand, so if economics prevail, the price will rebound and uranium equities with it.
    If Japan’s nuclear troubles worsen significantly, however, fear may take over from economics. Governments wanting to reassure scared citizens will suspend nuclear power plans (as some have already) and institute heavy-handed permitting hurdles for new mines and reactors. In this scenario, uranium could drop back down into disfavor...

Vedran Vuk
Casey's Daily Dispatch  Editor

Image sources Casey Research, Objective Standard

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Tuesday, March 15, 2011

GUEST POST: Dismal Economists & Spruikers [updated]

_Kris_Sayce Guest post by Kris Sayce from ‘Money Morning Australia’

“One final point, the reconstruction of Japan will economically help
the country and provide more demand for resources. You can see
why economics is described as the dismal science.”
– Peter Switzer, switzer.com.au

We’re not quite sure what point Mr. Switzer is making.

Is he saying the tsunami and earthquake in Japan are good for the economy?

Or is he saying it’s crazy to think the tsunami and earthquake are good for the Japanese economy?

We don’t know for sure.  And we don’t want to put words into someone’s mouth.  So, we can only guess.

We think he’s saying that it’s economically good for Japan because money will be spent on construction and buying new things.  And that economics is sometimes a bit topsy-turvy.  But all up, bad things end up being good… economically.

As you know, the argument is nonsense.  And to simply blame it on economics is just as bad.

Let’s get one thing straight: economics isn’t a “dismal science”.  It’s not economics claiming that destruction leads to a booming economy.  It’s the economists who make that claim.

So rather than economics being a dismal science, it’s the 95% of economists who believe that sort of rubbish who are dismal.

In other words, don’t blame the science, blame the scientists.

If you study real economics, not the mumbo-jumbo variety, then everything makes perfect sense.  In reality economics is nothing more than sound common sense.

It’s about understanding an economy is made up of individuals who interact with each other.

Economics isn’t about placing bets on whether the unemployment rate will be 5.1% or 5.2%.  Economics isn’t about stiff-necked central bankers raising or dropping interest rates, or deciding how much new money to print.

And it isn’t about spreadsheets and ratios.

Once you figure that out, you’ll realise economics isn’t as hard as most will have you believe… then you’ll agree with me that economics isn’t a dismal science at all.

It you want proof, I suggest you check out the videos and information at the Mises Institute.  You’ll be enlightened by economics from the Austrian School. [Just don’t bother with their non-economics. – Ed.]

If you’re not familiar with the Austrian School that’s not surprising.  It’s a school of economics that believes in free markets.  It believes in the evil of central bankers.  And it believes that governments can only ever hinder and distort an economy.

That’s why you may not have heard of it.  Because it opposes everything the mainstream believes in – government intervention and central bank omnipotence.

But check it out for yourself and make up your own mind.

Now, we won’t cover old ground again by explaining how the destruction of property and lives isn’t good for an economy.  I’d wager you’ve gotten the message on that by now.  So for today, we’ll look back at comments from our old pal, Reserve Bank of Australia (RBA) governor, Glenn Stevens…

He’s a bit of a wag you know is Glenn Stevens.

Answering questions from analysts in London, the RBA guv’nor said:

“I don’t think we have huge [house price] rises going on.  We don’t have a gearing up going on now.  We’ve got quite modest growth in housing credit now for the past year or more.  That all seems to me to be consistent with a household sector that’s being more careful.”

Your honour, could the witness please refer to chart ‘b02’ from the RBA.  The chart details total residential household loans made by Australians from 2000 until January 2011:

Source: Reserve Bank of Australia

You’ll note your honour, Australians have a cause for celebration.

During the month of January, in the year of our Lord 2011, the great people of Australia (otherwise known as the Children of the Lucky Country) amassed for the first time in history a total of $1,004,896,371,000 in residential housing debt with Australian banks.

Or to put it another way M’Lud, ONE TRILLION DOLLARS!

Not only that, but during the time of the supposed Great Deleveraging, household residential debt increased from $750 billion in September 2008 to over $1 trillion today.

That’s right it increased.  It went up.

Plus, during the time Mr. Stevens claims there has only been a modest growth in housing credit, the rate of increase quickened.

To the extent that housing credit has climbed 33%… in just two-and-a-half years!

And if we take all household debt – including unincorporated businesses such as sole traders, and personal loans – the total amount of household debt is nearly $1.5 trillion:

Source: Reserve Bank of Australia

Pardon us for mentioning it, but we fail to see any “modest” growth.  Over the period from late 2008 to September 2010, total household debt increased nearly 15%.  That’s 7.5% per year.

Including a 33% increase in housing debt.

Obviously your editor and Mr. Stevens have different ideas about what modest means.

So in the face of what the numbers show, Mr. Stevens insists there’s no housing bubble, and no credit-driven bubble.  Everything is fine with Australian house prices… there’s no need to panic.

Well, he may care to take a look at an article that appeared in The Australian over the weekend.  It’s titled “No Shore Thing”.

There’s only one word to describe the article – Amazing!

It’s the biggest, most bearish and most honest article on Australian housing we’ve ever seen in the Australian mainstream press.

In fact it’s so good I could easily quote the whole thing here.  But I won’t.  Instead I suggest you read it in full for yourself.

It’ll give you an idea of what can happen when property goes bad.  The great thing about it is that it’s describing people and properties in Australia.  Not in Detroit or Bristol or Phoenix or Liverpool… these are examples of prime Australian properties being sold at 30%, 50% and even 70% discounts!

Let me give you one cracking quote from the article:

“‘A couple of magnificent estates that would have fetched $8m to $10m during the good days were recently sold for $4.7m.’  He says apartments in the Peninsula Apartment complex near the Abel Point Marina, which originally cost more than $2m, including fittings, have been recently sold for less than $900,000.”

Wow!

Now, I know what the property bulls will say.  They’ll say these are holiday homes.  And holiday homes are different to city homes.

Our reply is this – and how do you think those holiday homes were financed?  That’s right, withdrawing so-called equity from the city home to buy the weekender.

Owners who are forced to sell these overpriced trinkets by the sea will now find themselves having to withdraw even more equity from their city home to pay off the negative equity on the weekender.

And they’ll be in competition to sell with those who just want to get out while they can.

That’s not all.  It’s a mistake to believe holiday homes are isolated from city homes.  That negative price action won’t impact the prices in metropolitan areas.

The fact is it will have a flow-on effect.

Already we can see the spruikers squirming.  Now they’ve got to change their argument.  The walls are closing in on them.

No longer can they say Australian house prices don’t fall, because here’s the proof.  The house price Armageddon from the US and Europe has finally touched Australian shores.

But onward they’ll go.  They’ll now claim that city house prices can’t and won’t fall – even though we know that’s happening already.  But when prices start falling in the suburbs, the next claim will be that they can’t and won’t fall in the inner-city areas…

So they’ll change their argument again.

It’ll be CBD properties that can’t and won’t fall… eventually they’ll have nowhere to go.  Except to admit they got it wrong – real wrong.

It’s quite sad really.  Why can’t they just admit prices can and will fall?  You know the answer to that, we explained it last week – Aussie housing is built on leverage and the belief prices always rise.

Take away that belief and you get the other side of leverage’s double edged sword… and that’s the bad side.  The side that’ll cut the market in half and make the debt position of over-leveraged Australians even worse.

Until then, keep saving.  Cheap, discounted property is coming to a suburb near you soon.

It seems it’s not just 95% of economists who are dismal, but 95% of property spruikers too.

Regards,
Kris Sayce
For
Money Morning Australia

UPDATE:

Peter Schiff explains why it's idiotic to think Japan's earthquake will "stimulate" the economy. (Ten minute video.) http://bit.ly/hOmQ4e

Yaron Brook and Terry Jones talk about the same idiocy. (Eight-minute video.)
Earthquake, Tsunami, Destruction: Can Japan's Economy Withstand the Strain?
http://www.pjtv.com/?cmd=mpg&mpid=113&load=5079

People might reflect that no matter where the insurers are who are paying for rebuilding (leading to inevitable rises in premiums for everyone) the resources used in the rebuild will now be bid away from other folk who otherwise would have been using them for productive purposes.
Building materials, for instance, that could have been used to build new affordable homes, will instead be bid up to be used to rebuild that which already existed.
New computers and servers, that could have been used to expand or start up new businesses, will instead be re-installed in businesses that (before the earthquakes) already existed.
All that labour, which could have been used to build new houses and new business opportunities, will instead be used simply to get things back where they were before--and with a lengthy delay.
So instead of new houses and new businesses, after many years we will simply have at best only what he had before.
If that's what alleged economists call economic progress, then they should be drummed out of their alleged profession.

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Headlines we won’t be seeing [update 2]

Reports of those who died in the Japanese earthquake and tsunami continue to rise. As blogger John Cook says, it’s only natural to only see the people who died and not the people who did not. [Hat tip Gus Van Horn.] But let’s look at the other side of that coin and consider a headline we won’t be seeing but should:

Engineers save millions of lives in Japan

Sure, we’ve seen headlines around the traps that Building Codes Saved Lives. But the techniques embodied in those building codes don’t just spring out of the ground fully grown, to be plucked when desired by well-meaning bureaucrats. They’re ingenious techniques invented by heroic men and women who saved millions of lives in Japan, and thousands of lives in Christchurch. (Techniques which in a more rational society would, and should have been progressively required by insurance companies keen to minimise the risk for what they insure.)

So let’s pause for a moment to thank those heroic but unsung men and women: the seismic engineers whose ingenuity saves lives.

Here’s another headline we won’t be seeing:

Thousands of people did not die mining coal to generate electricity that powers Japan. [Hat tip John Cook]

And another we fortunately won’t see:

Earthquake destroys hydro dam killing thousands downstream.

And another:

Tsunami hits solar farm sweeping tonnes of lead and cadmium telluride across cities and into the sea. [Hat tip Berend]

And another, which few newscasters would ever run:

Irrational scaremongering about nuclear fallout scaring already tragically hard-hit people.

As Josef Oehmen comments, “Nuclear safety and journalistic meltdown - I wish we could build containments for both.”

Fortunately, we at least have nuclear containment vessels, something of which few journalists seem aware. Containment vessels which Chernobyl did NOT have (where up to 50 died), but which Three Mile Island DID have (where nobody died).

So while Japan has been hit with the deadliest natural event to ever hit a modern industrialised country, the modern media is instead obsessed with a fantasy.

For more sense on the problems facing the damaged nuclear reactors, for which you will need only some very basic physics, try these:

  • “If a meltdown does occur in Japan, it will be a disaster for the Tokyo Electric Power Company but not for the general public. Whatever steam releases occur will have a negligible impact. Researchers have spent 30 years trying to find health effects from the steam releases at Three Mile Island and have come up with nothing. With all the death, devastation and disease now threatening tens of thousands in Japan, it is trivializing and almost obscene to spend so much time worrying about damage to a nuclear reactor.
    ”What the Japanese earthquake has proved is that even the oldest containment structures can withstand the impact of one of the largest earthquakes in recorded history.”
    Japan Does Not Face Another Chernobyl – W A L L  S T R E E T  J O U R N A L
  • “There was and will *not* be any significant release of radioactivity.
    ”By ‘significant’ I mean a level of radiation of more than what you would receive on – say – a long distance flight, or drinking a glass of beer that comes from certain areas with high levels of natural background radiation.”
    Fukushima Nuclear Accident – a simple and accurate explanation 
    – Dr Josef Oehmen, T H E   E N E R G Y   C O L L E C T I V E

Send a copy to every journalist you know.

UPDATE: In response to Dr Josef Oehmen’s original post, his employers at the Mass. Institute of Technology have begun setting up an information hub on the nuclear situation in Japan.This you really must  send to your journalist friends: http://mitnse.com/

UPDATE 2: Another very good piece at Bad Astronomy [thanks to a reader for the link]:

Japan’s nuclear reactor overreaction – B A D  A S T R O N O M Y
The Fukushima Daiichi nuclear plant … is facing a crisis with its reactors. While this situation is serious, let me be very clear: we are notfacing a nuclear explosion, nor are we facing the release of a huge, deadly radioactive cloud (more on both of these below). The fear-mongering and misinformation on the web and in the news is rampant, and the last thing we need is people panicking because of it! The news is bad enough without exaggeration of it…
    Here’s what happened…

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GUEST POST: The Myth that Patents are a Monopoly [updated]

Guest post by patent specialist Dale Halling 

A patent gives the holder the right to exclude others from making, using or selling the invention.  It does not give the holder the right to make, use or sell their invention.  A monopoly is an exclusive right to a market, such as an electric utility company.  An electric utility company has the exclusive right to sell electricity in a certain territory.  Since a patent does not even give the holder the right to sell their invention, let alone an exclusive right to a market, it is clearly not a monopoly.

When a person describes a patent as a monopoly to be consistent they should also state that they have a monopoly over their car or over their house.  In fact, they have more rights in their car and house than a patent gives the inventor over their invention, since you have a right to use and sell your car or house.  A patent does not give these rights to an inventor over his invention.  All invention are built upon existing elements (conservation of matter) and if the elements that the invention uses are patented, then the inventor will not have the right to sell their invention without a license.

Some economists argue that a patent is designed to give the holder monopoly power.  Those economists who are consistent also state that all property rights give some monopoly power.  The property rights are monopolies thesis shows how confused economic thought is on this subject.  The only logically consistent definition of a monopoly is an exclusive right to a market.

According to Wikipedia “In economics, a government-granted monopoly (also called a “de jure monopoly”) is a form of coercive monopoly by which a government grants exclusive privilege to a private individual or firm to be the sole provider of a good or service; potential competitors are excluded from the market by law, regulation, or other mechanisms of government enforcement.”  Since patents are clearly “government granted”, then this is the appropriate definition.  Since a patent does not even provide the holder the right to sell their invention, it clearly does not grant an exclusive privilege to a firm to be the sole provider of a good or service.

There is a lot of nonsense in the economic profession about monopolies.  Even the definition above can lead to nonsense.  For instance, according to Locke’s Natural Rights theory you own yourself so you own the product of your labor, both mental and physical.  This means anything you produce you have the exclusive right to make and sell, does this make you a monopolist?

The historical basis for monopolies is the Statute of Monopolies of 1623 in England.  The Statute of Monopolies prohibited the Crown from issuing monopolies for items that were already known or being produced.  The idea was to protect the Natural Rights of Englishmen to practice their craft, in today’s language the government in issuing a monopoly was interfering with private citizens rights to their property.  However, the Statute did not prevent an exclusive grant for inventions.  The reason for this in the words of the day was an invention did not interfere or take away anything from private citizens.  The invention did not exist before it was invented, so it does not take away anything from private citizens to provide a limited term property right to the inventor.

Modern antitrust law has turned the concept of monopolies on their head.  Instead of being a limitation on government power, like the Statute of Monopolies, it is a limitation on private action.  Instead of protecting people’s rights to their property, like the Statute of Monopolies, it limits or takes away private property.  The only logically consistent definition of a monopoly is an exclusive right to a market.  No property right, gives you an exclusive right to a market.  Market success is not an exclusive right to a market.  Only the government can create a monopoly.

People who suggest a patent is a monopoly are not being intellectually honest and perpetuating a myth to advance a political agenda.

Dale Halling is an American patent attorney and entrepreneur, and the author of the book The Decline and Fall of the American Entrepreneur: How Little Known Laws are Killing Innovation.
Read his regular thoughts at his
State of Innovation blog.

UPDATE:  Local Intellectual Property lawyer Imperator Fish busts a few more myths about patents and other intellectual property.

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Monday, March 14, 2011

ECONOMICS FOR REAL PEOPLE: Division of Labour

The Auckland University Economics Group exists for real people to discuss real-life economics. Here’s what our friends at the Group have for you this week.

Economic Harmonies 1: Division of Labour

Without division of labour there would be no need to study economics.   And likely nobody around to study it either.

            “Whoever prefers wealth to poverty and life and heath to sickness and death, is
        logically obliged to value the existence of a division-of-labour society and all that
        it depends on… Take away a division-of-labour society, and production shrivels to
        the level of medieval feudalism…”

               - Ludwig Von Mises

            “The purpose of division of labour is to make a smaller quantity of labour produce
        a greater quantity of work.”

                - Adam Smith

Division of Labour is the very soul of economics. It is inescapable.

            “Even the inhabitant of [Marx &] Engels’s future fairyland will have to decide sooner
        or later whether he wishes to be Archbishop of Canterbury or First Sea Lord, whether
        he should seek to excel as a violinist or as a pugilist, whether he should elect to know
        all about Chinese literature or about the hidden pages in the life of the mackerel.”
               
- Alexander Gray

Come along and learn what makes the soul of the dismal science tick, and learn:

  • Why was Henry Ford able to produce more cars in a day than any other manufacturer?
  • Why is economics founded on 'division of labour'?
  • What barriers are there to division of labour? And what are implications of these barriers?

UoA Econ Group 15 March-1

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Way to trivialise tragedy, people

When catastrophes occur, we turn to the media to learn more.

How sad that the media aren’t up to it.

Instead of a dispassionate recitation of facts, commentators feel they have to emote uncontrollably.

Rather than describing the context of their carefully-chosen pictures, TV stations instead scroll the same out-of-context images of destruction so frequently as to make them into wallpaper.  Wallpaper in which, by the frequency and context in with the scenes are shown the viewer might almost forget that thousands of people are dying.

Using pictures of tidal waves sweeping away cities as advertising for upcoming coverage—or of planes full of passengers flying into buildings as a backdrop for economic commentary—these are the work of people without a soul.

Instead of rational analysis, we get disaster porn.

There are many things that piss me off about disaster commentary as it’s presently done. Showing people dying as if it’s unimportant pisses me off the most.

But there are more things than that about disaster commentary that piss me off. Here’s a few of them:

These are the sort of people who like to interpose fantasy in front of reality. Who never really know what’s going on. Who at times of tragedy like to push their limp little barrows, or simply open their mouths and let the wind blow their tongue around.

When catastrophes keep occurring, when sharp thinking and rational analysis is more important than ever, I have no time for any of them.

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Japan is crying

800px-The_Great_Wave_Hokusai

It was not Japan's darkest day.  But it was without question Japan's darkest day since the war.

Japan is used to the destruction of earthquakes. The 1923 Kanto earthquake killed nearly 100,000 in Tokyo and Yokohama—many killed by heavy falling roof tiles, which were then traditional; many more dying in the fire that swept Tokyo in the wake of the earth's shaking, and left more than 1,500,000 homeless. (Amid the rubble, the Imperial Hotel reached skyward, undamaged, as a symbol of hope. The earthquake-proof design of Frank Lloyd Wright had been just that.)

Japan is used to earthquakes. The lessons learned in that earthquake and many others have meant its late-twentieth century buildings are among the world’s best at resisting the earth’s regular tremors, and keeping people safe.

What that earthquake engineering couldn’t do was to save people from the tsunami that came after the Pacific plate dropped catastrophically, pulling the Pacific Ocean off the coast of Japan then delivering it by deluge across the shallow plains of Honshu.

We should never forget that the planet is an inhospitable place. The violence of nature can be resisted only by the ingenious exploitation of nature’s own resources to human ends.

Hokusai’s ‘Great Wave’ (above) could not be more topical, nor the consolations of great art be more welcome.

_Quote Hokusai loved to depict water in motion: the foam of the wave is breaking into claws which grasp for the fishermen. The large wave forms a massive yin to the yang of empty space under it. The impending crash of water brings tension into the painting. In the foreground, a small peaked wave forms a miniature Mt. Fuji, which is reflected hundreds of miles away in the enormous Mt. Fuji, which shrinks through perspective; the wavelet is larger than the mountain. Instead of shoguns and nobility, we see tiny fishermen huddled into their sleek crafts; they slide down a seamount and dive straight into the wave to make it to the other side. The yin violence of Nature is dismissed by the yang relaxed confidence of expert fishermen.

Because of man’s ingenuity and vigilance, destruction is not the normal human experience—that relaxed confidence portrayed so subtly by Hokusai is.

But we should never forget the power of the earth to destroy.

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