Posts Tagged ‘Japan earthquake’

Yen surge not as strange as it sounds

Tuesday, March 22nd, 2011

Last week, when all those foreigners bolted the country they got a nice little windfall from the ongoing crisis if they traded in all their hard-earned yen for whatever currency they’d need to get by back home. When markets opened after that nerve-wracking weekend the U.S. dollar, for instance, had lost up to ¥5 since the week before, from 82 to 77. A lot of people were dumbfounded, since such a reaction flies in the face of so-called textbook economics. Why would Japan’s currency get stronger as a result of such a disaster? Wouldn’t people be trying to unload their yen?

Whoops!

The easiest explanation for the surge was the idea of “repatriation.” Japanese companies with investments overseas in other currencies quickly exchanged much of their holdings into yen in order to pay for reconstruction or, in the case of insurance companies, to pay benefits to people and businesses with damage policies. However, as most Japanese economists have pointed out since then, that alone wouldn’t have explained such a pronounced increase in such a short time.

According to the Mainichi Shimbun, the Great Hanshin Earthquake of 1995 created a precedent for the yen surge. Three months after that earthquake destroyed much of Kobe, the yen was the highest against the dollar that it had ever been in history up to that point. At the time, Japan’s GDP was still the envy of the world, and investors with extra cash decided to buy yen, believing that it was sounder than a lot of other investments, especially since Kobe would require lots of money to rebuild. They were basically chasing the repatriated yen. As always, Japan’s exporters panicked. The Bank of Japan intervened to bring the yen down, but they were unsuccessful. It wasn’t until the summer, when the United States and Europe joined in the intervention, that the yen started to drop.

Continue reading about the post-quake yen. →

Power to the people: TEPCO at economic cross-purposes with blackout strategy

Friday, March 18th, 2011

An article in this week’s Sunday Mainichi implies that Tokyo Electric Power Company’s series of planned blackouts in the Kanto region to address power shortages as a result of the failure of the Fukushima nuclear reactors is a kind of demonstration, the point of which is to show customers that they really need those nuclear reactors, even if they are on the verge of rendering the Tohoku region radioactive. Though the article’s tone is cynical, anti-nuclear forces have been accusing Tepco of essentially the same PR strategy for years. Faced with another serious power shortage in 2003, Tepco threatened blackouts unless customers cut back after the company was forced to shut down reactors for emergency inspections in light of a safety scandal.

Tepco "eco-cute" ad for "economical" (not "ecological") all-electric house

Electricity users in the Kanto region are already dealing with periodic power outages to save energy, and because we’re doing as we’re told, some planned outages have been canceled. The problem with generating electricity over a conventional power grid is that once you generate it you can’t recover any that isn’t used. And unlike thermal generators that use fossil fuels, nuclear reactors cannot be turned up or down at will. Once they are operating it takes months to turn them off. Tepco’s output is basically a blend of constant nuclear power and fluctuating thermal and other forms of power generation. The 10 Fukushima reactors provided 14 percent of Tepco’s power, about 50 million kilowatts.

Average power consumption at any given moment during March in the Kanto region is estimated at 47 million kw. This is far less than the 65 million kw that are normally consumed during the peak days of summer, when air conditioners are on, but last Monday, when Tepco launched the planned blackouts, the maximum output available was 31 million kw, so Tepco had to convince homes and businesses to use less than that. If they didn’t, they would have to cut power to the designated “groups.”

Continue reading about the energy crisis →

RSS

Recent posts