Tainted Alpha

Japanese official reports are quite scarce, so this is my inferring  based on what is not said rather than on what is said.

Reuters Summary: Japan scrambles to pull nuclear plant back from brink

“We believe that around the reactor site there are high levels of radiation,” Gregory Jaczko, head of the Nuclear Regulatory Commission, told a House Energy and Commerce subcommittee hearing.

“It would be very difficult for emergency workers to get near the reactors. The doses they could experience would potentially be lethal doses in a very short period of time.”

…

Nuclear experts said the solutions being proposed to quell radiation leaks at the complex were last-ditch efforts to stem what could well be remembered as one of the world’s worst industrial disasters.

“This is a slow-moving nightmare,” said Dr Thomas Neff, a physicist and uranium-industry analyst at the Massachusetts Institute of Technology.

So, to sum up, the situation is getting worse, reactors are heating up and maybe even completely out of water. Desperate attempt to poor water (and/or boric acid) on reactors and used fuel rods warehouse/pool using helicopters has failed because the radiation was too high.

I hope I am wrong, but based on the tone of Japanese officials releases and statements it looks they don’t have much hope that this could be contained.

Market implications… Today’s Yen action is a kind of thing that brings havoc to the carry trade strategies. When this starts to happen the only wise thing is to close positions as fast as possible. The problem is that everybody is doing the same and no POMO’s, FED’s or BOJ’s can spare the markets from wild swings. My best guess is that we could see classical risk-off scenario.

If we move further down the time horizon my feeling that the negative effects on global growth are substantially underestimated. The psychological consequences on Japanese people will be severe and they will not go away fast. Putting aside all the quantitative models and research, this alone could have dire consequences on both Japanese and global growth.

So, good luck and keep your positions light.

Best wishes to Japanese people.

Japan

This entry was posted on Wednesday, March 16th, 2011 at 5:12 pm and is filed under Markets. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.