With what few vacuum tube-based trading algos are left and reacting with rabid kneejerkiness to every flashing red headline, one would get the impression that what matters to the Fed’s decision on how to adjust its balance sheet flow depends on the US economy. But if Deutsche Bank is correct, the next source of global economic contraction, which it will be up to the Fed to offset (just like China was the marginal growth dynamo in the months after Lehman filed), and result in an increase in QE nevermind taper, is not in the US at all, but in China where things are about to go bump in the night. Which means that just like that we have moved into the “New Normal paradigm” where the worse the news out of China, the better for stocks.
From Deutsche’s Jim Reid:
Over the weekend, China’s inflation, industrial production and retail sales numbers for the month of October will be released. China’s much awaited Third Plenum meeting gets underway tomorrow where DB’s Jun Ma expects a wide ranging package of reforms will follow, in terms of industry deregulation, financial liberalisation, reforms to land titles, state-owned enterprises and social security. Our take on this is that there will be lots for the market to get excited about in the reforms but that it will not necessarily be easy to implement them successfully. Our GEM equity strategist JP Smith yesterday reiterated his bearish view on China and most of the EM complex. If he’s correct Yellen and Draghi are going to have interesting 2014s with the provocative thought being that Yellen may actually have to increase QE. Food for thought.
And just for thought, because very soon the bulk of the world’s population won’t be able to afford any other kind. Especially once the Fed is forced to start monetizing Big Macs.
via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/Hgx-zLdk0Uw/story01.htm Tyler Durden
With what few vacuum tube-based trading algos are left and reacting with rabid kneejerkiness to every flashing red headline, one would get the impression that what matters to the Fed’s decision on how to adjust its balance sheet flow depends on the US economy. But if Deutsche Bank is correct, the next source of global economic contraction, which it will be up to the Fed to offset (just like China was the marginal growth dynamo in the months after Lehman filed), and result in an increase in QE nevermind taper, is not in the US at all, but in China where things are about to go bump in the night. Which means that just like that we have moved into the “New Normal paradigm” where the worse the news out of China, the better for stocks.
From Deutsche’s Jim Reid:
Over the weekend, China’s inflation, industrial production and retail sales numbers for the month of October will be released. China’s much awaited Third Plenum meeting gets underway tomorrow where DB’s Jun Ma expects a wide ranging package of reforms will follow, in terms of industry deregulation, financial liberalisation, reforms to land titles, state-owned enterprises and social security. Our take on this is that there will be lots for the market to get excited about in the reforms but that it will not necessarily be easy to implement them successfully. Our GEM equity strategist JP Smith yesterday reiterated his bearish view on China and most of the EM complex. If he’s correct Yellen and Draghi are going to have interesting 2014s with the provocative thought being that Yellen may actually have to increase QE. Food for thought.
And just for thought, because very soon the bulk of the world’s population won’t be able to afford any other kind. Especially once the Fed is forced to start monetizing Big Macs.
via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/Hgx-zLdk0Uw/story01.htm Tyler Durden
TIME Executive Editor Michael Duffy
has defended the magazine’s recent cover, which includes a
silhouetted photo of Christie (who was re-elected as New Jersey’s
governor on Tuesday) and the caption “Elephant in the Room.”
Time Magazine Executive Editor Michael Duffy took to the
airwaves last night to defend his magazine’s most recent cover,
which has sparked outrage this week for its thinly veiled shot at
Gov. Chris Christie’s weight.
The cover features a silhouetted photo of the governor
beside the caption “Elephant in the Room.” After the cover was
revealed yesterday, the Twittersphere erupted with condemnation for
the magazine.
“Whether or not one likes Christie, these cheap shots–like
Time’s new cover–about his weight are decidedly uncool,” tweeted
New York Times reporter Steven Greenhouse.
Spice up your blog or Website with Reason 24/7 news and
Reason articles. You can get thewidgets
here. If you have a story that would be of
interest to Reason’s readers please let us know by emailing the
24/7 crew at 24_7@reason.com, or tweet us stories
at @reason247.
from Hit & Run http://reason.com/blog/2013/11/08/time-defends-christie-cove
via IFTTT
Stanford economist Edward Lazear, who chaired
George W. Bush’s Council of Economic Advisers from 2006 to 2009,
explains why one man’s “substandard” health plan is another’s
optimal coverage:
Plans that exclude the president’s “core” benefits may be
exactly what is desired for those in good health with the means to
cover their limited every-day and predictable medical
expenses….
Just as it would be a bad idea to require that all cars come
with power windows, power locks, and automatic transmissions, it is
also unwise to order citizens to buy health care that includes
maternity benefits or other care.
Some may have no intention of having children.
Others may not want to devote the time required to take
advantage of the preventive care that is covered.
Still others may be skeptical of the effectiveness of mental
health care….
The fact that a health care plan does not include all the
benefits of other plans does not imply that it is “substandard.”
Instead, the [Affordable Care Act] replaces plans that cater to
needs of a particular consumer with those cluttered with bells and
whistles that may be of little value.
Lazear also notes that generous coverage contributes to health
care inflation by encouraging overconsumption: When someone else is
picking up the tab, consumers do not worry much about the price. In
fact, because the health care market is dominated by third-party
payments, patients typically do not even know the price before they
decide whether to “purchase” a particular medical service. The
other day The New York Times published an op-ed piece
in which Peter Ubel, a professor of medicine at Duke University,
proposed a radical idea: What if doctors deigned to tell
patients, before asking them to approve a procedure or course of
treatment, how much it will cost them? Ubel argues that doctors
should “discuss out-of-pocket costs with patients just as they
discuss any side effects.”
That is eminently sensible, except that doctors may have no idea
how much the services they offer will cost the patient or his
insurer, because the answer depends on carrier-specific
negotiations, the details of the patient’s policy, and his prior
covered expenses. Patients may not find out how much a treatment
costs until months after they buy it, when they get an “explanation
of benefits” in the mail. Even then the answser may not be final,
because there is room for dispute about exactly what is covered.
Furthermore, out-of-pocket costs may be negotiable, since hospitals
are accustomed to receiving only partial payment of the bills they
issue (and presumably inflate them with that in mind). The upshot
is price signals that are late and faint, if not utterly obscured.
The major exceptions are medical services, such as dental care,
vision correction, and plastic surgery, that consumers typically
buy with their own money. You can easily get a price quote for a
tooth implant, Lasik surgery, or a nose job. It is almost
impossible to get a clear idea of how much an MRI or a
tonsillectomy will cost. In my experience, such questions usually
elicit blank stares, as if they’ve never been asked before. Imagine
how well the car repair market would function if customers had no
way of knowing how much a new transmission would cost until months
after agreeing to buy one.
Obamacare, Lazear notes, compounds this problem by requiring
people to buy more coverage than they would otherwise choose:
Health economists, notably Daniel Kessler at Stanford, have
demonstrated that the failure by the consumer to pay for health
care on the margin induces high and in many cases over
usage.
Plans that have low co-pays, first-dollar coverage, and insure
routine predictable health care events induce high and excessive
use of care.
By contrast, those like catastrophic care plans that do not
insure the routine and cover only unpredictable high cost events
induce consumers to behave more efficiently.
Banning such “substandard” plans makes no sense from a
cost-control perspective. Last month I
compared Obamacare’s minimum coverage requirements to the
federal ban on incandescent light bulbs, which likewise overrides
consumers’ assessments of their own interests. But while the light
bulb requirement was defended in the name of efficiency, Obamacare
mandates inefficiency.
from Hit & Run http://reason.com/blog/2013/11/08/the-advantages-of-substandard-health-pla
via IFTTT
Stanford economist Edward Lazear, who chaired
George W. Bush’s Council of Economic Advisers from 2006 to 2009,
explains why one man’s “substandard” health plan is another’s
optimal coverage:
Plans that exclude the president’s “core” benefits may be
exactly what is desired for those in good health with the means to
cover their limited every-day and predictable medical
expenses….
Just as it would be a bad idea to require that all cars come
with power windows, power locks, and automatic transmissions, it is
also unwise to order citizens to buy health care that includes
maternity benefits or other care.
Some may have no intention of having children.
Others may not want to devote the time required to take
advantage of the preventive care that is covered.
Still others may be skeptical of the effectiveness of mental
health care….
The fact that a health care plan does not include all the
benefits of other plans does not imply that it is “substandard.”
Instead, the [Affordable Care Act] replaces plans that cater to
needs of a particular consumer with those cluttered with bells and
whistles that may be of little value.
Lazear also notes that generous coverage contributes to health
care inflation by encouraging overconsumption: When someone else is
picking up the tab, consumers do not worry much about the price. In
fact, because the health care market is dominated by third-party
payments, patients typically do not even know the price before they
decide whether to “purchase” a particular medical service. The
other day The New York Times published an op-ed piece
in which Peter Ubel, a professor of medicine at Duke University,
proposed a radical idea: What if doctors deigned to tell
patients, before asking them to approve a procedure or course of
treatment, how much it will cost them? Ubel argues that doctors
should “discuss out-of-pocket costs with patients just as they
discuss any side effects.”
That is eminently sensible, except that doctors may have no idea
how much the services they offer will cost the patient or his
insurer, because the answer depends on carrier-specific
negotiations, the details of the patient’s policy, and his prior
covered expenses. Patients may not find out how much a treatment
costs until months after they buy it, when they get an “explanation
of benefits” in the mail. Even then the answser may not be final,
because there is room for dispute about exactly what is covered.
Furthermore, out-of-pocket costs may be negotiable, since hospitals
are accustomed to receiving only partial payment of the bills they
issue (and presumably inflate them with that in mind). The upshot
is price signals that are late and faint, if not utterly obscured.
The major exceptions are medical services, such as dental care,
vision correction, and plastic surgery, that consumers typically
buy with their own money. You can easily get a price quote for a
tooth implant, Lasik surgery, or a nose job. It is almost
impossible to get a clear idea of how much an MRI or a
tonsillectomy will cost. In my experience, such questions usually
elicit blank stares, as if they’ve never been asked before. Imagine
how well the car repair market would function if customers had no
way of knowing how much a new transmission would cost until months
after agreeing to buy one.
Obamacare, Lazear notes, compounds this problem by requiring
people to buy more coverage than they would otherwise choose:
Health economists, notably Daniel Kessler at Stanford, have
demonstrated that the failure by the consumer to pay for health
care on the margin induces high and in many cases over
usage.
Plans that have low co-pays, first-dollar coverage, and insure
routine predictable health care events induce high and excessive
use of care.
By contrast, those like catastrophic care plans that do not
insure the routine and cover only unpredictable high cost events
induce consumers to behave more efficiently.
Banning such “substandard” plans makes no sense from a
cost-control perspective. Last month I
compared Obamacare’s minimum coverage requirements to the
federal ban on incandescent light bulbs, which likewise overrides
consumers’ assessments of their own interests. But while the light
bulb requirement was defended in the name of efficiency, Obamacare
mandates inefficiency.
from Hit & Run http://reason.com/blog/2013/11/08/the-advantages-of-substandard-health-pla
via IFTTT
Last week the German magazine Der
Spiegel published “A Manifesto for the Truth,” Edward
Snowden’s explanation of why he revealed the National Security
Agency’s surveillance programs. In his manifesto Snowden says such
programs are “not only a threat to privacy” but “threaten freedom
of speech and open societies.” He further argues, “Society can only
understand and control these problems through an open, respectful
and informed debate.” Reason Science Correspondent Ronald
Bailey argues that Snowden is right and that President Obama should
pardon him immediately and then quickly repeal the laws under which
the government presumed to prosecute him.
The Japanese nuclear agency recently green-lighted the removal of the spent fuel rods from Fukushima reactor 4′s spent fuel pool. The operation is scheduled to begin thismonth.
The success of the cleanup also has global significance. So we all have a direct interest in seeing that the next steps are taken well, efficiently and safely.
If one of the pools collapsed or caught fire, it could have severe adverse impacts not only on Japan … but the rest of the world, including the United States. Indeed, a Senator called it a national security concern for the U.S.:
The radiation caused by the failure of the spent fuel pools in the event of another earthquake could reach the West Coast within days. That absolutely makes the safe containment and protection of this spent fuel a security issue for the United States.
Hiroaki Koide – a nuclear scientist working at the University of Kyoto – says:
I’m worried about whether Tepco can treat all the 1,331 [spent-fuel] assemblies without any problem and how long it will take.
Award-winning scientist David Suzuki says that Fukushima is terrifying, Tepco and the Japanese government are lying through their teeth, and Fukushima is “the most terrifying situation I can imagine”.
Suzuki notes that reactor 4 is so badly damaged that – if there’s another earthquake of 7 or above – the building could come down. And the probability of another earthquake of 7 or above in the next 3 years is over 95%.
Suzuki says that he’s seen a paper that says that if – in fact – the 4th reactor comes down, “it’s bye bye Japan, and everyone on the West Coast of North America should evacuate. Now if that’s not terrifying, I don’t know what is.”
The operator of Japan’s crippled Fukushima nuclear power plant … will begin a dry run of the procedure at the No. 4 reactor, which experts have warned carries grave risks.
***
“Did you ever play pick up sticks?” asked a foreign nuclear expert who has been monitoring Tepco’s efforts to regain control of the plant. “You had 50 sticks, you heaved them into the air and than had to take one off the pile at a time.
“If the pile collapsed when you were picking up a stick, you lost,” he said. “There are 1,534 pick-up sticks in a jumble in top of an unsteady reactor 4. What do you think can happen?
“I do not know anyone who is confident that this can be done since it has never been tried.”
Conditions in the unit 4 pool, 100 feet from the ground, are perilous, and if any two of the rods touch it could cause a nuclear reaction that would be uncontrollable. The radiation emitted from all these rods, if they are not continually cool and kept separate, would require the evacuation of surrounding areas including Tokyo. Because of the radiation at the site the 6,375 rods in the common storage pool could not be continuously cooled; they would fission and all of humanity will be threatened, for thousands of years.
Former Japanese ambassador Akio Matsumura warns that – if the operation isn’t done right – this could one day be considered the start of “the ultimate catastrophe of the world and planet”:
(He also argues that removing the fuel rods will take “decades rather than months.)
Nuclear expert Arnie Gundersen and physician Helen Caldicott have both said that people should evacuate the Northern Hemisphere if one of the Fukushima fuel pools collapses. Gundersen said:
Move south of the equator if that ever happened, I think that’s probably the lesson there.
We are now within two months of what may be humankind’s most dangerous moment since the Cuban Missile Crisis.
***
Should the attempt fail, the rods could be exposed to air and catch fire, releasing horrific quantities of radiation into the atmosphere. The pool could come crashing to the ground, dumping the rods together into a pile that could fission and possibly explode. The resulting radioactive cloud would threaten the health and safety of all us.
Former Ambassador Mitsuhei Murata says full-scale releases from Fukushima “would destroy the world environment and our civilization. This is not rocket science, nor does it connect to the pugilistic debate over nuclear power plants. This is an issue of human survival.”
Even Japan’s Top Nuclear Regulator Says that The Operation Carries a “Very Large Risk Potential”
Even the head of Japan’s nuclear agency is worried. USA Today notes:
Nuclear regulatory chairman Shunichi Tanaka, however, warned that removing the fuel rods from Unit 4 would be difficult because of the risk posed by debris that fell into the pool during the explosions.
“It’s a totally different operation than removing normal fuel rods from a spent fuel pool,” Tanaka said at a regular news conference. “They need to be handled extremely carefully and closely monitored. You should never rush or force them out, or they may break.”
He said it would be a disaster if fuel rods are pulled forcibly and are damaged or break open when dropped from the pool, located about 30 meters (100 feet) above ground, releasing highly radioactive material. “I’m much more worried about this than contaminated water,” Tanaka said
Nothing remotely similar has been attempted before and … it is feared that any error of judgment could lead to a massive release of radiation into the atmosphere.
***
A spokesman for Tepco … admitted, however, that it was not clear whether any of the rods were damaged or if debris in the pool would complicate the recovery effort.
Among the risks [Hiromitsu Ino, professor emeritus of nuclear engineering at the University of Tokyo] and other experts cite is the possibility that a container being used to move the units falls and breaks apart, exposing the fuel to the air.
Similarly, Edwin Lyman – a nuclear expert and the chief scientist for the Union of Concerned Scientists notes:
The biggest risk with Unit 4 pool unloading is that a spent fuel cask might drop and damage the pool, causing a leak that could expose some fuel and cause overheating.
Professor Richard Broinowski – former Australian Ambassador to Vietnam, Republic of Korea, Mexico, the Central American Republics and Cuba – and author of numerous books on nuclear policy and Fukushima, says some of the fuel rods are probably fused.
Murray E. Jennex, Ph.D., P.E. (Professional Engineer), Professor of MIS, San Diego State University, notes:
The rods in the spent fuel pool may havemelted …. I consider it more likely that these rods were breached during the explosions associated with the event and their contents may be in contact with the ground water, probably due to all the seawater that was sprayed on the plant.
Fuel rod expert Arnie Gundersen – a nuclear engineer and former senior manager of a nuclear power company which manuf
actured nuclear fuel rods – recently explained the biggest problem with the fuel rods (at 15:45):
I think they’re belittling the complexity of the task. If you think of a nuclear fuel rack as a pack of cigarettes, if you pull a cigarette straight up it will come out — but these racks have been distorted. Now when they go to pull the cigarette straight out, it’s going to likely break and release radioactive cesium and other gases, xenon and krypton, into the air. I suspect come November, December, January we’re going to hear that the building’s been evacuated, they’ve broke a fuel rod, the fuel rod is off-gassing.
***
I suspect we’ll have more airborne releases as they try to pull the fuel out. If they pull too hard, they’ll snap the fuel. I think the racks have been distorted, the fuel has overheated — the pool boiled – and the net effect is that it’s likely some of the fuel will be stuck in there for a long, long time.
The racks are distorted from the earthquake — oh, by the way, the roof has fallen in, which further distorted the racks.
The net effect is they’ve got the bundles of fuel, the cigarettes in these racks, and as they pull them out, they’re likely to snap a few. When you snap a nuclear fuel rod, that releases radioactivity again, so my guess is, it’s things like krypton-85, which is a gas, cesium will also be released, strontium will be released. They’ll probably have to evacuate the building for a couple of days. They’ll take that radioactive gas and they’ll send it up the stack, up into the air, because xenon can’t be scrubbed, it can’t be cleaned, so they’ll send that radioactive xenon up into the air and purge the building of all the radioactive gases and then go back in and try again.
It’s likely that that problem will exist on more than one bundle. So over the next year or two, it wouldn’t surprise me that either they don’t remove all the fuel because they don’t want to pull too hard, or if they do pull to hard, they’re likely to damage the fuel and cause a radiation leak inside the building. So that’s problem #2 in this process, getting the fuel out of Unit 4 is a top priority I have, but it’s not going to be easy. Tokyo Electric is portraying this as easy. In a normal nuclear reactor, all of this is done with computers. Everything gets pulled perfectly vertically. Well nothing is vertical anymore, the fuel racks are distorted, it’s all going to have to be done manually. The net effect is it’s a really difficult job. It wouldn’t surprise me if they snapped some of the fuel and they can’t remove it.
The consequences could be far more severe than any nuclear accident the world has ever seen. If a fuel rod is dropped, breaks or becomesentangled while being removed, possible worst case scenarios include a big explosion, a meltdown in the pool, or a large fire. Any of these situations could lead to massive releases of deadly radionuclides into the atmosphere, putting much of Japan — including Tokyo and Yokohama — and even neighboring countries at serious risk.
Experts question whether it will be able to pull off the removal of all the assemblies successfully.
***
No one knows how bad it can get, but independent consultants Mycle Schneider and Antony Froggatt said recently in their World Nuclear Industry Status Report 2013: “Full release from the Unit-4 spent fuel pool, without any containment or control, could cause by far the most serious radiological disaster to date.”
***
Nonetheless, Tepco inspires little confidence. Sharply criticized for failing to protect the Fukushima plant against natural disasters, its handling of the crisis since then has also been lambasted.
***
“There is a risk of an inadvertent criticality if the bundles are distorted and get too close to each other,” Gundersen said.
***
The rods are also vulnerable to fire should they be exposed to air, Gundersen said. [The pools have already boiled due to exposure to air.]
Tepco confirmed the Reactor No. 4 fuel pool contains debris during an investigation into the chamber earlier this month.
Removing the rods from the pool is a delicate task normally assisted by computers, according to Toshio Kimura, a former Tepco technician, who worked at Fukushima Daiichi for 11 years.
“Previously it was a computer-controlled process that memorized the exact locations of the rods down to the millimeter and now they don’t have that. It has to be done manually so there is a high risk that they will drop and break one of the fuel rods,” Kimura said.
***
Corrosion from the salt water will have also weakened the building and equipment, he said.
ABC Radio Australia quotes an expert on the situation (at 1:30):
Richard Tanter, expert on nuclear power issues and professor of international relations at the University of Melbourne:
***
Reactor Unit 4, the one which has a very large
amount of stored fuel in its fuel storage pool, that is sinking. According to former prime Minister Kan Naoto, that has sunk some 31 inches in places and it’s not uneven.
And Chris Harris – a, former licensed Senior Reactor Operator and engineer – notes that it doesn’t help that a lot of the rods are in very fragile condition:
Although there are a lot of spent fuel assemblies in there which could achieve criticality — there are also 200 new fuel assemblies which have equivalent to a full tank of gas, let’s call it that. Those are the ones most likely to go critical first.
***
Some pictures that were released recently show that a lot of fuel is damaged, so when they go ahead and put the grapple on it, and they pull it up, it’s going to fall apart. The boreflex has been eaten away; it doesn’t take saltwater very good.
Nuclear engineers say that the fuel pool is “distorted”, material was blown up into air and came down inside, damaging the fuel, the roof fell in, distorting things inside.
Indeed, Fukushima documents discuss “fuel that is severely damaged” inside cooling pool, and show illustrations of “deformed or leaking fuels”.
The Urgent Need: Replace Tepco
Tepco is severely downplaying the risks involved in removing fuel rods. For example, Tepco’s head of the Fukushima plant, Akira Ono, says:
We have removed spent fuels many times. Therefore, we don’t think we are going to be doing anything that is very dangerous.
That is idiotic given that (as shown above) this is anything but a normal fuel removal operation.
Tepco is incompetent and corrupt, and has been in cover-up mode since day one. As such, it is the last company which should be in charge of the clean-up.
Prime Minister Shinzo Abe is being told by his own party that Japan’s response is failing. Plant operator [Tepco] alone isn’t up to the task of managing the cleanup and decommissioning of the atomic station in Fukushima. That’s the view of Tadamori Oshima, head of a task force in charge of Fukushima’s recovery and former vice president of Abe’s Liberal Democratic Party.
***
[There's] a growing recognition that the government needs to take charge at the Fukushima station…. “If we allow the situation to continue, it’ll never be resolved” [said Sumio Mabuchi, a government point man on crisis in 2011].
via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/hgPBz6ize8g/story01.htm George Washington
Attention this week was focused on Europe’s overall (disappointing) 0.7% inflation print – which sent Draghi back to drawing board – despite the world of sell-side strategists exclaiming that Europe has turned the corner and now is the time to load the boat. However, quietly out of sight for the mainstream, Greece just printed its worst deflation data on record. Consumer prices fell 2.0% on an annual basis as a combination of deep recession, wage cuts, and substantial spare capacity squeeze prices lower. Additionally, we already showed the dismal demise of the macro picture across the European union – heading in a very different direction that the stock markets.. but now, bottom-up, earnings are collapsing too… so remind us again why Europe is a “strong buy?”
So EU inflation is slumping despite years of easy policy…
And peripheral deflation is the worst on record…
Top-down, Europe is ugly…
and no bottom-up earnings are collapsing too…
Buy, Strong Buy, Or Buy It All?
Charts: Bloomberg and @Not_Jim_Cramer
via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/njPH_Os1g64/story01.htm Tyler Durden
Stanford economist Edward Lazear, who chaired
Last week the German magazine Der
