Nicole Foss

May 112011
 
 May 11, 2011  Posted by at 1:59 am Earth, Primers Comments Off on Welcome to The Atomic Village

alt


Ansel Adams Nurse Hamaguchi 1943 “Nurse Aiko Hamaguchi at the Manzanar Relocation Center, California”

Stoneleigh:


Welcome to The Atomic Village

alt

Denko-chan (でんこちゃん), whose name comes from the “den” of electric power (電力, denryoku), the “ko” (子, child) in which female names so often end, trapping their bearers in a state of eternal childhood, and the generally female diminutive suffix “chan”, can be found everywhere in TEPCO propaganda. Here she is, with finger characteristically a-wagging, admonishing us to “Take care of electricity!””

 

Stoneleigh: These days, Denko-chan is perhaps more representative of the situation that the country and TEPCO find themselves in when rendered like this, in fan art:

 

alt

As an energy resource poor island, Japan has embraced nuclear power over the last several decades as a means to ensure security of energy supply. Growth in electricity supply was a key enabler of the Japanese post-war boom and commitment to high-tech industrial growth, but dependence on external sources would have entailed a major vulnerability. The oil shocks of the 1970s strongly underlined the danger of dependency on potentially unstable or capricious foreign suppliers, creating further impetus for nuclear development. The relative independence and self-sufficiency conferred by nuclear development also fitted with a characteristic Japanese cultural insularity. Prior to the earthquake and tsunami, nuclear provided over 30% of Japan’s electric power from 54 reactors.

Since the disaster of March 11th, the world has been watching Japan struggle to deal with an unanticipated eventuality that greatly exceeded the design-basis accident for the 40-year old Fukushima plant and overwhelmed its inadequate defences. Japan is in uncharted waters, attempting to control several badly damaged reactors and several spent fuel pools simultaneously, under circumstances for which there is no rule book to follow. Criticism is mounting as to the way the catastrophe is being handled, and the Japanese nuclear governance record is coming under sharp scrutiny.

In order to fathom the Japanese approach to these events, it is necessary to understand aspects of Japanese culture, especially as it manifests in terms of corporate culture.

People’s sense of identity and worth is tightly bound with membership of strong, cohesive groups. Japan is an insular and collectivist society which prizes conformity, loyalty, harmony, obedience, consensus, teamwork, stability and homogeneity, and strongly discourages deviation from the norm or standing out from the crowd. Originality, initiative, freedom of expression and openness to outside influences are therefore not generally rewarded. There is an old Japanese proverb encapsulating this attitude:

 

出る杭は打たれる。(“Deru kui wa utareru“), or in English, “The stake that sticks up gets hammered down.

 

Sociologist Geert Hofstede:

Individualism on the one side versus its opposite, collectivism, that is the degree to which individuals are integrated into groups. On the individualist side we find societies in which the ties between individuals are loose: everyone is expected to look after him/herself and his/her immediate family.

On the collectivist side, we find societies in which people from birth onwards are integrated into strong, cohesive in-groups, often extended families which continue protecting them in exchange for unquestioning loyalty. The word ‘collectivism’ in this sense has no political meaning: it refers to the group, not to the state.

 

Stoneleigh: In the corporate world, loyalty to one’s firm, and to the team effort, is expected to be demonstrated by sacrifices such as working long hours and not taking one’s allotted vacation. This has traditionally been rewarded with job security, wages which increase substantially with seniority, insurance, bonuses, pensions, access to company recreational facilities and low-cost loans. Group activities are encouraged, both on the job and after hours. The life of a salaryman is expected to revolve around the office. He is expected to share a strong emotional bond with his co-workers, and to share the attitudes and values of the group. Salarymen are sometimes unflatteringly referred to as 社畜 (shachiku), meaning ‘corporate livestock’.

Responsibility is collective, and the leadership role of top management is defined by the ability to maintain harmony and create consensus, rather than the making of bold decisions. Policy is shaped at the level of middle management. Actions leading to potential conflict are discouraged, because of the importance placed avoiding embarrassment or shame. Failing to fulfill one’s obligations to the group also results in loss of face in a culture where relationships, and the good opinion of others, are of the utmost importance.

This corporate culture applies particularly to large, first-tier, Japanese firms, such as TEPCO, where job security has been much stronger through Japan’s two decades of economic stagnation. Employment at such a firm is typically only open to graduates of Japan’s top thirty colleges and universities, hence much effort from a young age is invested in gaining entrance to one of these institutions. Doing so confers high status, which is extremely important (it influences everything from the depth of a bow on greeting, to the language style used, the gifts given, and the relationships formed). Hofstede:

Companies provide their own training and show a strong preference for young men who can be trained in the company way. Interest in a person whose attitudes and work habits are shaped outside the company is low.

Permanent employees are hired as generalists, not as specialists for specific positions. A new worker is not hired because of any special skill or experience; rather, the individual’s intelligence, educational background, and personal attitudes and attributes are closely examined. On entering a Japanese corporation, the new employee will train from six to twelve months in each of the firm’s major offices or divisions. Thus, within a few years a young employee will know every facet of company operations.

Seniority is determined by the year an employee’s class enters the company. Career progression is highly predictable, regulated, and automatic. Members of the same graduating class usually start with similar salaries, and salary increases and promotions each year are generally uniform. The purpose is to maintain harmony and avoid stress and jealousy within the group.

Stoneleigh: This kind of culture is weaker in second-tier firms, which cannot provide the same benefits as a reward for loyalty. It weakens further as one descends strong social hierarchy, which exists as a relic of the old feudal caste system. Business elites expect to have a job and support structure for life, but at the other end of the social spectrum exists considerable, and sometimes hereditary, disadvantage. For instance, Burakumin (village people) are descendants of outcast communities from the feudal era, considered to have been tainted by their ancestral professions (executioners, undertakers, workers in slaughterhouses, butchers or tanners). Wikipedia:

They were legally liberated in 1871 with the abolition of the feudal caste system. However, this did not put a stop to social discrimination and their lower living standards, because Japanese family registration (Koseki) was fixed to ancestral home address until recently, which allowed people to deduce their Burakumin membership. The Burakumin were one of the several groups discriminated against within Japanese society.

Stoneleigh: Other disadvantaged groups include residents of yoseba, or downwardly-mobile communities for day labourers, who are generally single, aging and low-skilled. “As they are increasingly transient, without a fixed address, they are denied access to communal and welfare services which in the past helped them to survive.”

In the context of tackling the Fukushima disaster, this hierarchy appears to play a significant role:

Dying for TEPCO

Job offers come not from TEPCO but from Mizukami Kogyo, a company whose business is construction and cleaning maintenance. The description indicates only that the work is at a nuclear plant in Fukushima Prefecture. The job is specified as 3 hours per day at an hourly wage of 10,000 yen. There is no information about danger. Those who answer these offers may have little awareness of the dangers and they are likely to have few other job opportunities. $122 an hour is hardly a king’s ransom given the risk of cancer from high radiation levels.

Rumor has it that many of the cleanup workers are burakumin. This cannot be verified, but it would be congruent with the logic of the nuclear industry and the difficult job situation of day laborers. Because of ostracism, some burakumin are also involved with yakuza [members of organized crime syndicates].

Therefore, it would not be surprising that yakuza-burakumin recruit other burakumin to go to Fukushima. Yakuza are active in recruiting day laborers of the yoseba. People who live in precarious conditions are then exposed to high levels of radiation, doing the most dirty and dangerous jobs in the nuclear plants, then are sent back to the yoseba. Those who fall ill will not even appear in the statistics.

Stoneleigh: Prior to the devastation caused by the earthquake and tsunami, there was already a well established hierarchical subcontracting system in place:

These contract employees or temporary workers were provided by subcontracting companies: they range from rank and file workers who carry out the dirtiest and most dangerous tasks—the nuclear gypsies described in Horie Kunio’s 1979 book and Higuchi Kenji’s photographic reports—to highly qualified technicians who supervise maintenance operations. So even within this category, there is much discrepancy in working conditions, wages and welfare depending on position in the hierarchy of subcontracted tasks.

What is clear is that the contract laborers are routinely exposed to the highest level of radiation: in 2009 according to NISA, of those who received a dose between 5 and 10 millisieverts (mSv), there were 671 contract laborers against 36 regular employees. Those who received between 10 and 15 mSv were comprised of 220 contract laborers and 2 regular workers, while 35 contract workers and no regular workers were exposed to a dose between 15 and 20 mSv.

Since contract laborers move from one nuclear plant to another, depending on the maintenance schedule of the various reactors, they lack access to their individual cumulative dose for one year or for many years. NISA compiles only the cumulative dose for each nuclear plant. The result is that the whole system is opaque, thus complicating the procedure for workers who need to apply for occupational hazards compensation.

Stoneleigh: This 1995 documentary provides some interesting background on the topic:

Nuclear Ginza: Japan’s secret at-risk labor force and the Fukushima disaster

Back in 1995, the UK’s Channel 4 produced a 30-minute documentary on Japan’s nuclear industry and how they use disadvantaged people, including burakumin and other day laborers, to do manual labor inside their power plants. And by inside, I mean inside. Some were forced to work right next to the room where the core was kept, in the dark and drenched in sweat; one man tells how he was forced to mop up radioactive water with towels.


Watch additional video segments here

Stoneleigh: It may be very difficult to undertake any future epidemiological study of the health effects of Fukushima liquidators, as it was at Chernobyl where little data was ever collected. In the case of Chernobyl this willful blindness has allowed the official numbers for mortality and morbidity to be grossly underestimated. At Chernobyl there were hundreds of thousands of liquidators in the years following the accident, while at Fukushima the numbers are so far orders of magnitude lower.

Apparently, TEPCO is considering improving working conditions at the plant, but so far only in terms of food, showers and accommodation. There has been no mention of better radiation protection, even though workers have begun entering the reactor buildings:

Tokyo Electric Power Co (TEPCO) said it started work to install a ventilation system to clean the air inside the building at the Fukushima Daiichi plant.

Once the air inside is cleaned, TEPCO plans to send crews in to conduct complex work as part of attempts to bring the entire plant to a cold shutdown. It will be the first time workers have gone inside the building since the March 11 disaster.

The utility said it began installing tent-like equipment to keep radioactive materials inside the reactor one building when workers open its doors. The air inside the structure is highly contaminated with radioactive materials.

Stoneleigh: Discrimination against disadvantaged segments of society goes beyond feudal history and the workplace. In fact Fukushima is generating a new group to be marked as outsiders and treated accordingly in some quarters.

Don’t stigmatise nuclear evacuees, says Japan government

The Japanese government on Tuesday urged “heartless” people, local authorities and businesses not to discriminate against evacuees from the area around the crippled Fukushima nuclear plant.

The call came after some evacuation centres demanded radiation-free certificates from people who lived near the plant, and following reports that hotels have turned them away and their children have been bullied.

Since the March 11 earthquake and tsunami triggered the world’s worst nuclear crisis since Chernobyl, nearly 86,000 people have had to evacuate, with about 30,000 of them relocated outside Fukushima prefecture.

Stoneleigh: TEPCO’s management of the Fukushima crisis is being increasingly criticized, both externally and within Japan itself. For instance, the Soviet Army officer in change of the Chernobyl accident, Col-Gen Nikolai Antoshkin, has expressed shock at what he calls the “slow-motion” reaction at Fukushima. A few days after March 11th, TEPCO was evacuating 740 “non-essential” staff from the complex – leaving only 50 technicians to fight the worst civil nuclear crisis in Japan’s history. In contrast, a small army descended on Chernobyl in the days following the 1986 accident.

Several other foreign commentators, including Arnie Gundersen and Chris Busby, have also pointed out that Chernobyl was no longer emitting radiation into the environment after 6-7 weeks, while the Fukushima reactors are still doing so, and remain critically unstable. The continuing release of radiation will make the task of cleaning up ever more dangerous for the liquidators.

 

Michio Ishikawa, a veteran member of the Japan Nuclear Technology Institute who believes that all the reactors have melted down, has made a public stand on the issue of response adequacy as well. He describes the on-going disaster as a “war” and the efforts so far to cool the reactors as “peripheral tricks”. His assessment is stark indeed:

The water [inside the pressure vessel] is highly contaminated with uranium, plutonium, cesium, cobalt, in the concentration we’ve never seen before.

My old colleague contacted me and shared his calculations with me. At the decay heat of 2000 kilowatt… There’s a substance called cobalt 60. Highly radioactive, needs 1 to 1.5 meter thick shields. It kills people at 1000 curies. He calculated that there are 10 million curies of cobalt-60 in the reactor core. If 10% of cobalt-60 in the core dissolve into water, it’s 1 million curies [37,000 terabecquerels].

Stoneleigh: As Mr Ishikawa has indicated, TEPCO has consistently been reluctant to share information in its possession regarding the seriousness of the radiation release in the early days of the accident, ostensibly understating the seriousness in order to prevent panic.

It seems likely, given the defensive responses of an embattled company, that the lack of openness is at least partly due to corporate interests over-riding the broader public interest. When asked about the discrepancies between his view and the official story of limited core damage, Mr Ishikawa labelled the official line a lie. Perhaps because he is 77 years old, he no longer needs to be mindful of the effect that breaking ranks with the collective could have for him personally.

Japan Denies Withholding Evidence of Massive Radiation Release

Japan on Tuesday [a month after the accident] upgraded the plant’s incident level from 5 to 7, a classification reserved for the most severe nuclear crises. The government took the action in large part in response to calculations showing that extreme quantities of radioactive iodine and cesium had escaped from the six-reactor facility in the first week after it was crippled by the 9.0-magnitude earthquake and devastating tsunami that hit Japan on March 11.

Uncertainty over the calculations’ accuracy held up their release, Japanese Nuclear Safety Commission official Seiji Shiroya said. In addition, the official suggested the government was concerned the measurements could exacerbate public fear over the atomic crisis.

“Some foreigners fled the country even when there appeared to be little risk,” Shiroya said. “If we immediately decided to label the situation as level 7, we could have triggered a panicked reaction.”

Stoneleigh: In addition to the delay in releasing vital information, some of the delay in making meaningful attempts to cool the damaged reactors is also attributable to corporate priorities over-riding the public interest:

Bid to ‘Protect Assets’ Slowed Reactor Fight

Crucial efforts to tame Japan’s crippled nuclear plant were delayed by concerns over damaging valuable power assets and by initial passivity on the part of the government, people familiar with the situation said, offering new insight into the management of the crisis [..]

The plant’s operator—Tokyo Electric Power Co., or TEPCO—considered using seawater from the nearby coast to cool one of its six reactors at least as early as last Saturday morning, the day after the quake struck. But it didn’t do so until that evening, after the prime minister ordered it following an explosion at the facility.

TEPCO didn’t begin using seawater at other reactors until Sunday. TEPCO was reluctant to use seawater because it worried about hurting its long-term investment in the complex, say people involved with the efforts. Seawater, which can render a nuclear reactor permanently inoperable, now is at the center of efforts to keep the plant under control.

Stoneleigh: It is not clear who is in charge, which is not surprising given Japan’s consensus-building culture. Yuki Tatsumi for BBC:

As the head of the disaster response headquarters, the prime minister has the authority to direct relevant government agencies as well as private companies that are involved in responding to the disaster.

He has two entities from which to draw expert opinions to assist him in decision-making: the Nuclear and Industrial Safety Agency (Nisa, an agency within the Ministry of Economy, Industry and Trade (Meti) and the Nuclear Safety Commission, an advisory panel made up of non-government experts. So, legally speaking, the prime minister of Japan is in charge. Or he is supposed to be.

So what of Mr Kan’s leadership to date? On the one hand, it has been clear that he wants to appear in charge: he wanted to “speak directly to the Japanese people” in the immediate aftermath of the earthquake. Four days after the quake, amid confusion over the situation at the plant, he was overheard by journalists asking TEPCO executives: “What the hell is going on?” [He could not understand why he had not been told for a whole hour about the first explosion at the plant.]

Demonstrating his distrust in TEPCO and Meti, he has appointed a number of non-government experts in addition to those who are already in advisory roles. As of 29 March, 5 out of 15 advisers were appointed specifically to advise on the situation at the plant.

Stoneleigh: One of these advisors has already submitted a tearful high-profile resignation:

During a press conference held at the Diet building later that day, [Tokyo University Professor Toshiso] Kosako, who was named a special advisor to Prime Minister Naoto Kan on March 16, criticized the government’s handling of the crisis at the Fukushima No. 1 Nuclear Power Plant as shortsighted.

In particular, Kosako protested against the government’s decision to revise the maximum permissible level of radiation exposure among children up to 20 millisieverts per year, saying, “Should I approve that decision, I would no longer be a researcher. I would not want my children to be exposed to that amount of radiation.”

Kosako revealed the Cabinet did not accept his advice that outdoor school activities for elementary and junior high school students near the crippled power station be restricted to prevent them from being exposed to over 1 millisievert of radiation per year.

“It is quite rare for nuclear power plant workers dealing with radioactive materials to be exposed to 20 millisieverts of radiation per year. I cannot allow infants and children to be exposed to such high levels of radiation from an academic as well as humanitarian point of view.”

He also pointed out that the government was slow in applying the System for Prediction of Environmental Emergency Dose Information (SPEEDI) and disclosing its data, even though nuclear safety guidelines stipulate the system be implemented immediately in an emergency. “The government has ignored the law and taken stopgap measures, failing to bring the crisis under control promptly,” he said.

 

Stoneleigh: For Professor Kosako to resign a very prestigious advisory position and to be so overtly critical of authority is highly unusual in a Japanese cultural context, and quite likely to have significant consequences for him personally. As the proverb says, the stake that sticks up gets hammered down. The professor had intended to conduct a press conference to explain his position in detail, but was prevented from doing so by the Prime Minister’s office.

Kan Administration Silences Prof. Toshiso Kosako with “Kindly” Advice on Confidentiality

Professor Toshiso Kosako of Tokyo University, who resigned on April 30 in protest over the 20 milli-sieverts per year allowable radiation exposure to children, was threatened with a “kindly advice” from the Prime Minister’s Office not to hold a press conference on May 2 to explain his opposition.

The “kindly advice” told Professor Kosako that he still has a confidentiality obligation not to disclose any information that he was privy to during his days as a special advisor to the Prime Minister.

Stoneleigh: Haruki Madarame, head of the Nuclear Safety Agency, recently expressed puzzlement at Professor Kosako’s concern:

I only know what’s reported in the newspapers, but honestly, I haven’t a clue as to why Professor Kosako is so upset.

Stoneleigh: International research supports Professor Kosako’s position:

Save the Children: Radiation Exposure of Fukushima Students

For infants (under 1 year of age) the radiation-related cancer risk is 3 to 4 times higher than for adults; and female infants are twice as susceptible as male infants. Females’ overall risk of cancer related to radiation exposure is 40 percent greater than for males. Fetuses in the womb are the most radiation-sensitive of all.

The pioneering Oxford Survey of Childhood Cancer found that X-rays of mothers, involving doses to the fetus of 10-20 mSv, resulted in a 40 percent increase in the cancer rate among children up to age 15. In Germany, a recent study of 25 years of the national childhood cancer register showed that even the normal operation of nuclear power plants is associated with a more than doubling of the risk of leukemia for children under 5 years old living within 5 kilometers of a nuclear plant.

Increased risk was seen to more than 50 km away. This was much higher than expected, and highlights the particular vulnerability to radiation of children in and outside the womb. In addition to exposure measured by typical external radiation counters, the children of Fukushima will also receive internal radiation from particles inhaled and lodged in their lungs, and taken in through contaminated food and water.

Stoneleigh: At least Japan has, a month after the disaster, implemented a mandatory exclusion zone. Five additional communities will be added to the zone within the next month. In some of these communities, radiation levels are already nearly double the threshold for mandatory evacuation in the Ukraine following Chernobyl. Discussions round the issue of compensation for the victims of Fukushima are already being held, although with the crisis still unfolding, it cannot be clear what compensation will be required:

The Japanese government has estimated that compensation for damages resulting from the country’s nuclear crisis could reach four trillion yen ($49 billion), a report said Tuesday.

Half the money will come from Tokyo Electric Power Co (TEPCO), the operator of the crippled Fukushima Daiichi power plant, with the rest coming from other electricity companies, the Asahi Shimbun said, without citing sources [..]

TEPCO — which supplies about one third of Japan’s total power demand and services the Kanto region, including Tokyo — would increase its power tariffs by 16 percent, the Asahi said.

In addition, the government believes it will cost 1.5 trillion yen to decommission the six reactors at the Fukushima Daiichi plant and 1.0 trillion yen to fuel thermal power plants to meet electricity demand, the Asahi said.

Stoneleigh: TEPCO is already making plans to cut costs in order to meet this open-ended liability:

The operator of the Fukushima Daiichi nuclear plant will implement deep salary cuts for management to help fund its compensation payments for the nuclear accident.

Tokyo Electric Power Company said on Monday that it would halve the salaries of all its board members, including the chairman and the president, starting this month. Annual pay for other executive directors will be slashed by 40 percent. The company will cut the salaries of about 3,000 employees in managerial positions by 25 percent.

TEPCO has already asked its labor union to accept a 20 percent reduction in annual pay for 32,000 rank-and-file employees. Both sides reached an agreement on the matter on Monday. The utility expects the measures to save some 660 million dollars in salary costs.

TEPCO will also give up its recruitment of about 1,100 new graduates for fiscal 2012 and sell off part of its stock holdings and real estate to raise money.

The company plans to make initial payments worth more than 600 million dollars to 50,000 households that have been forced to leave their towns to avoid high radioactivity caused by the nuclear accident. But the total compensation amount is expected to balloon, as damage is spreading to the farming, fisheries and manufacturing industries.

Stoneleigh: In addition, abject public apologies have been made to evacuees:

 

alt

Tokyo Electric Power Co. (TEPCO) President Masataka Shimizu was on his knees here on May 4, apologizing to residents of towns forced to evacuate by the Fukushima nuclear crisis [..]

Shimizu also visited the Adatara Gymnasium here, where about 100 nuclear crisis refugees from Namie are now living. There, he was showered with criticism and demands once more, including, “Get us back to our normal lives quickly,” and “You told us nuclear power was safe. Was that a lie?”

Shimizu responded by saying, “From my heart I apologize to you for betraying your trust.”

 

Stoneleigh: Unfortunately, betraying the trust of one’s company, in the culture of the loyal company man, or even one’s wider industry, has traditionally been considered a greater sin than betraying the trust of the public. The nuclear industry as a whole, including the regulator, has been particularly insular, defensive, and self-protective, leading to being labelled as ‘The Atomic Village’. The impenetrable Atomic Village has been a law unto itself for decades, with the result that the history of Japanese nuclear power is one of accidents, cover ups and complicity in the betrayal of the public trust. A harsh light is now being focused on a shameful history that hides behind cheerful cartoon mascots.

After the earthquake: In the nuclear village (genshiryoku mura, 原子力村, )(Please read the whole article.)

Initially baffled and obliged to translate it, I asked the author, an expert in the electric power industry, what it meant. It refers, he explained, to the insularity and secretiveness of the nuclear-industrial complex, the close-knit web of ties that bind the supervisory ministry, the Ministry of Economy, Trade, and Industry, the lapdog watchdog under the ministry, the Nuclear and Industrial Safety Agency, the power companies, and the suppliers of the nuclear kit, prominent among them Hitachi, Toshiba, and Mitsubishi Heavy Industries.

This village mentality (mura ishiki, 村意識) is a microcosm of the national insularity encapsulated in a more familiar phrase, “island nation spirit” (shimaguni konjo, 島国根性), and it demands unwavering loyalty to the—in this case nuclear—cause, on pain of being subject to ostracism (mura hachibu, literally “village eight parts”, 村八分), in which in its original sense, those who infringed the codes and order of the village were excluded from eight of the ten social activities deemed essential to the life of the village, the only exceptions being firefighting—to prevent a fire spreading from the home of the ostracized—and funerals—those of the ostracized themselves.

Culture of Complicity Tied to Stricken Nuclear Plant

In 2000, Kei Sugaoka, a Japanese-American nuclear inspector who had done work for General Electric at Daiichi, told Japan’s main nuclear regulator about a cracked steam dryer that he believed was being concealed. If exposed, the revelations could have forced the operator, Tokyo Electric Power, to do what utilities least want to do: undertake costly repairs.

What happened next was an example, critics have since said, of the collusive ties that bind the nation’s nuclear power companies, regulators and politicians.

Despite a new law shielding whistle-blowers, the regulator, the Nuclear and Industrial Safety Agency, divulged Mr. Sugaoka’s identity to Tokyo Electric, effectively blackballing him from the industry. Instead of immediately deploying its own investigators to Daiichi, the agency instructed the company to inspect its own reactors. Regulators allowed the company to keep operating its reactors for the next two years even though, an investigation ultimately revealed, its executives had actually hidden other, far more serious problems, including cracks in the shrouds that cover reactor cores.”

“In Japan, the web of connections between the nuclear industry and government officials is now popularly referred to as the “nuclear power village.” The expression connotes the nontransparent, collusive interests that underlie the establishment’s push to increase nuclear power despite the discovery of active fault lines under plants, new projections about the size of tsunamis and a long history of cover-ups of safety problems.

Just as in any Japanese village, the like-minded — nuclear industry officials, bureaucrats, politicians and scientists — have prospered by rewarding one another with construction projects, lucrative positions, and political, financial and regulatory support. The few openly skeptical of nuclear power’s safety become village outcasts, losing out on promotions and backing.

Until recently, it had been considered political suicide to even discuss the need to reform an industry that appeared less concerned with safety than maximizing profits, said Kusuo Oshima, one of the few governing Democratic Party lawmakers who have long been critical of the nuclear industry.”

“At Fukushima Daiichi and elsewhere, critics say that safety problems have stemmed from a common source: a watchdog that is a member of the nuclear power village.

Though it is charged with oversight, the Nuclear and Industrial Safety Agency is part of the Ministry of Trade, Economy and Industry, the bureaucracy charged with promoting the use of nuclear power. Over a long career, officials are often transferred repeatedly between oversight and promotion divisions, blurring the lines between supporting and policing the industry.

Influential bureaucrats tend to side with the nuclear industry — and the promotion of it — because of a practice known as amakudari, or descent from heaven. Widely practiced in Japan’s main industries, amakudari allows senior bureaucrats, usually in their 50s, to land cushy jobs at the companies they once oversaw.

According to data compiled by the Communist Party, one of the fiercest critics of the nuclear industry, generations of high-ranking officials from the ministry have landed senior positions at the country’s 10 utilities since Japan’s first nuclear plants were designed in the 1960s. In a pattern reflective of the clear hierarchy in Japan’s ministries and utilities, the ministry’s most senior officials went to work at TEPCO, while those of lower ranks ended up at smaller utilities.”

“Collusion flows the other way, too, in a lesser-known practice known as amaagari, or ascent to heaven. Because the regulatory panels meant to backstop the Nuclear and Industrial Safety Agency lack full-time technical experts, they depend largely on retired or active engineers from nuclear-industry-related companies. They are unlikely to criticize the companies that employ them.

Even academics who challenge the industry may find themselves shunned. As Japan has begun looking into the problems surrounding collusion since March 11, the Japanese news media has highlighted the discrimination faced by academics who raised questions about the safety of nuclear power.

TEPCO Worker on Control Failures and the Culture of Silence

If my colleagues knew I was speaking with the press, they would despise me for it. My boss would certainly dismiss me. Therefore, I must remain anonymous. I have worked for TEPCO for a long time, and always considered it to be a good company. But now when I go to work, I see everywhere — on trains, on the streets — the headlines on the illuminated adverts for magazines: “TEPCO is bad, bad, bad.” That rankles because I know how much criticism it really deserves [..]

I know that new geo-scientific knowledge on earthquakes and tsunamis was ignored. In 2009, a research institute warned of the consequences of a disaster of equal magnitude to what has happened now. But the officials of the nuclear supervisory authority, NISA, didn’t take it seriously.

Controls in Japan don’t work. NISA falls under the control of the Ministry of Economy, Trade and Industry, which also seeks to promote nuclear power. Isn’t it strange that the same authority both supervises and promotes nuclear plants?

Moreover, the nuclear scientists from industry and NISA know each other all too well. The circle of nuclear scientists is very small, and many have studied together. I have witnessed this in the workplace myself.

The nuclear department at TEPCO is already a very special group, forming a closed world. Some call it the “atomic village” — a separate company within a company. On the practical level, there is almost no exchange between the “atomic village” and other TEPCO departments.

This closed village has until now been allowed to hide data and test reports from nuclear power plants; to falsify and invent. For that reason, the president and the vice director resigned in 2002. The new head of TEPCO tried to open up the “atomic village” through transfers and restructuring, but everything is basically just the same.

Stoneleigh: Given the insular nature of the industry, it is hardly surprising that Greenpeace has been refused permission to take radiation measurements of water, sediment and marine life inside the 12 mile limit of Japan’s territorial waters. In a situation where lack of information, especially timely information, has been typical, the results of independent monitoring could help to protect the health of a population which typically consumes a large amount of seafood. However, it could also potentially embarrass TEPCO or provide a justification for future expensive compensation claims.

Marine radiation monitoring blocked by Japanese government

The sparse data published by the government and TEPCO is not enough to understand the real risks of the continuous leakage of radioactive water in the sea.

The Japanese people are in great need of independent information on the radioactive contamination of their seafood supply. Therefore, we are planning to do research on the radioactive contamination of seaweed, fish and shellfish.

Despite this great need for information, the Japanese government today refused a permit to do research within the territorial waters of Japan. We are allowed to conduct research outside this 12 mile zone, but this is not the area where the Japanese catch their fish and collect their seaweed.

This is a critical situation, so we are not giving up. We will continue heading for Fukushima to begin our research at a distance while we pursue further permission to carry out the sampling within the 12 mile limit.

The Japanese government should welcome such independent monitoring, the fact is they can never have enough information about the extent of the contamination, and the public are entitled to the benefit from the scrutiny and pressure that independent monitoring brings.

Stoneleigh: The Japanese nuclear industry has an uninspiring safety record, both in terms of accidents and the means in which accidents have been addressed. Thus far The Atomic Village has demonstrated much more commitment to protecting itself from scrutiny and potential criticism by outsiders than to learning from its collective mistakes. There is a long history of failing to undertake inspections, failing to provide adequate training, falsifying safety records, tampering with evidence, jury-rigging repairs that would have been expensive to carry out properly, operating with potentially unsafe equipment and failing to design for withstanding obvious risks. There is no evidence of an effective safety culture, nor of any attempt to be proactive with regard to risk minimization. It is useful to review some of the accidents in order to see how this has played out in practice. In addition, examining the history of the Fukushima plant itself is instructive.

Monju(December 8th, 1995, after only 4 months of operation)

Intense vibration caused a thermowell inside a pipe carrying sodium coolant to break, possibly at a defective weld point, allowing several hundred kilograms of sodium to leak out onto the floor below the pipe. Upon coming into contact with the air, the liquid sodium reacted with oxygen and moisture in the air, filling the room with caustic fumes and producing temperatures of several hundred degrees Celsius.

The heat was so intense that it melted several steel structures in the room. An alarm sounded around 7:30 p.m., switching the system over to manual operations, but a full operational shutdown was not ordered until around 9:00 p.m., after the fumes were spotted. When investigators located the source of the spill they found as much as three tons of solidified sodium. Fortunately, the leak occurred in the plant’s secondary cooling system, so the sodium was not radioactive.

See also:

The operator of a Japanese prototype fast-breeder reactor which was hit by a sodium leak had breached regulations by not immediately closing air ducts after smoke alarms went off, the Kyodo news agency said on Monday. Power Reactor and Nuclear Fuel Development Corp (PNC) which runs the reactor, Monju, said it did not close air ducts until 3 1/2 hours after alarms went off. Regulations in the construction permit for Monju, submitted to the government, stipulate air ducts to be immediately closed when smoke alarms go off, the Kyodo news agency said.

For anyone wondering why shutting down the air conditioning is so significant in an accident like that, some more background. Burning Sodium can not be extinguished using water as it violently reacts with water, producing explosive hydrogen gas in the process. Halon and carbon dioxide (dry ice) based fire extinguishers can’t be used for a similar reason. The only way of putting out a sodium fire therefore is to starve it of all oxygen by cutting off the air supply and waiting for the fire to use up all oxygen.

Because of the danger of sodium fires, the primary coolant cycle where the sodium is highly radioactive is surrounded by inert nitrogen gas to reduce the chance of fires. Not so the secondary coolant cycle where the sodium fire occurred. By leaving the air conditioning on the operators of Monju kept pumping fresh oxygen into the room, fanning the flames of the burning sodium.

Panicked workers afraid to act without permission had worsened the initial leak by waiting 90 minutes to shut down the overheated system, officials admitted.

The PNC (called Donen in Japanese) which is controlled by the Japanese Science and Technology Agency had initially shown a 1 minute video of the accident site, later followed by another 4 minute clip and claimed that was all the footage that was available. None of this showed the actual coolant pipe that had leaked, only the floor of the site where the leak had occured. Later it was revealed that a total of 15 minutes of video had been taken, including footage of the affected pipe.

The one minute and four minute clips were only an edited version of the original clip. The existence of the unedited tape was kept secret for several days. It appears that the original tape had been deliberately edited to remove the footage of the leaking pipe. Asked for an explanation at a press conference of why the PNC had withheld information, Takao Takahashi, a board member of the PNC could only say: “There is none.” It also turned out that the PNC had inspected the site of the accident before the time given to the press.

Isao Sato, the deputy chief of the Monju office of the PNC admitted to giving orders to hide the master tapes of the video and to issuing gag orders to employees about the existence of the unedited originals. He was quoted as saying: “I was determined to cover up the case.”

Tokaimura Reprocessing Plant(March 11th, 1997):

A fire and explosion at the plant released a cloud of smoke possibly containing uranium and plutonium. Investigations disclosed that no fulltime plant employees were on duty at the time of the fire and seven maintenance workers were off-site playing golf. Smoke detectors had been turned off and the sprinkler system was not automatic — it had to be operated by hand.

Plant operators failed to warn nearby residents and even failed to evacuate 64 visitors who were on a tour of the plant when the fire broke out. When Prime Minister Hashimoto learned that the plant operators had lied to the government, he ordered a police raid on the company’s headquarters. Five officials eventually were demoted for falsifying reports.

Tsuruga(July 12th, 1999)

The coolant water leakage accident on July 12, at the second unit of the Tsuruga nuclear power plant (Japan) was not only one of the worst in terms of amount of primary coolant water that leaked (50 tons), but it is a significant accident because the crack that caused the leakage is different in nature from other power plant pipe cracks of the past.

The coolant leak at the Tsuruga reactor caused radiation levels inside the reactor building to shoot up 11,500 times the legal safety limit. This finding was announced by Japan Atomic Power Co. which operates the plant. At first, they said the highest level was about 250 times the limit (4 Bequerel per square centimeter set by Nuclear Reactors Control Law), but later they had to correct that figure. The highest level (46,000 Bequerel) was detected in a room on the second level basement, which is nine meters below the cracked pipe. The pipe in which the 4.4-cm long crack was found on July 12 was removed and closely examined. A second crack, 8 cm long, was found on the opposite side of the first crack. Later more cracks were found.

Tokaimura(September 30th, 1999)

On the day of the criticality accident, workers were running fuel through the last steps of the fuel purification process…. The JCO plant only needed to mix some high-purity enriched uranium oxide (U3O8) with nitric acid to form uranyl nitrate for shipping. During this operation, the workers deviated from the licensed procedure in three basic ways.

First, to speed up the process, they mixed the oxide and nitric acid in 10-liter buckets rather than in the dissolving tank (in doing so, they followed the practice that JCO had written into its manual—without Science and Technology Agency approval).

Second, for convenience, they added the bucket contents to the precipitation tank rather than to the buffer tank. That was a key misstep, because the tall, narrow geometry of the buffer tank precludes criticality.

Third, in filling the precipitation tank, the crew added seven buckets, or roughly seven times more uranium than permitted by the STA license. It was the seventh bucket that caused the mixture to go critical [..]

According to STA, the three workers in the room at the time the precipitation tank went critical received doses of 17, 10, and 3 sieverts. The entire JCO plant, not just the purification operation, was shut down, and STA revoked JCO’s operating license for the plant.

Stoneleigh: Two of the exposed workers died from lethal doses of radiation. Over forty others were treated for high level exposure, and hundreds of people living near the plant had to be temporarily evacuated from their homes

Mihama (August 9th, 2004)

A fatal accident happened at the Mihama No. 3 nuclear power station in Fukui prefecture, Japan. The plant is owned and run by Kansai Electric Power corporation (KEPCO), the major power utility in Western Japan. Four workers were scalded to death by superheated steam, seven other workers were injured.

The accident happened when the reactor was about to undergo routine maintenance. The accident was caused by a bursting steam pipe in the non-radioactive part of the reactor. In 27 years of operation that 56 cm diameter pipe had not once been checked for corrosion, let alone replaced. By the time it burst, its walls had worn down from an initial 10 mm of carbon steel to a mere 1.4 mm. Regulations required the pipes to be replaced when the walls were eroded to a thickness of 4.7 mm. Nine months before the accident a subcontractor company had alerted the operators to the need for inspections, but the warning was ignored.

Kashiwazaki-Kariwa(July 16th, 2007) World’s largest nuclear installation, with 7 reactors

A 6.8 earthquake [significantly larger than the design-basis accident for the plant], 10 kilometres offshore from the Honshu west coast plant, caused subsidence of the main structure, ruptured water pipes, started a fire that took five hours to extinguish, and triggered radioactive discharges into the atmosphere and sea. The company initially said there was no release of radiation, but admitted later that the quake had released radiation and had spilled radioactive water into the Sea of Japan. Seismologist Katsuhiko Ishibashi warned that had the epicentre been 10 kilometres to the southwest and at magnitude 7, Kashiwazaki City would have experienced a major emergency.

Monju (August 26th, 2010, only 4 months after restart following a 14 year hiatus of operations)

The accident involved a 3-tonne “fuel-replacement device” falling into the reactor vessel when being removed after a scheduled fuel replacement operation. According to Japanese Atomic Energy Agency (JAEA), the accident may result in a delay in bringing the reactor back into operation, since the device may have damaged the reactor vessel wall.”

Stoneleigh: The incident that most vividly illustrates the difficulty in establishing any kind of transparency or accountability in light of the tight-knit culture of the Atomic Village is the 1996 suicide of Shigeo Nishimura, deputy general manager of the general affairs department of the Power Reactor and Nuclear Fuel Development Corp. (PNC), who had been charged with investigating the cover up of the first Monju accident. His actions represent a willingness to pay the highest price in order to remain loyal to his chosen collective.

The Monju accident fall-out

He was tormented both by failure to get to the bottom of the cover-up and by the harm his inquiries would do to colleagues and the government corporation for which he worked for 26 years.

“They (PNC staff) were confident in their technical ability. But they may have found it difficult to explain their panic and confusion from the accident. It is most difficult for people to judge others and discover the truth,” Nishimura said in one of three suicide notes. He was investigating why plant officials took one hour to notify authorities about the leak and why video film of the incident was both edited and concealed from the press and government agency charged with determining what caused the leak.

Stoneleigh: The cover up culture does not apply only to the aftermath of accidents, but has also been demonstrated repeatedly in the conduct of day to day operations. What has emerged into the public domain is surely the tip of the iceberg, but it represents damning evidence of disregard for safety and the public interest on behalf of utility companies, regulators and the government.

Whistleblowers have been scapegoated, punishing the few who are prepared to risk disloyalty to their companies. Companies order staff to violate safety procedures or falsify data. Regulators turn a blind eye to violations, incompetence and failure to address obvious risks. Governments blindly push ahead with a one-dimensional agenda. Nuclear is meant to represent a shining new future, in contrast to remaining mired in a decaying past, but the foundations of that future have been built in a seismic zone, both literally and metaphorically.

May 032011
 
 May 3, 2011  Posted by at 1:00 am Primers Comments Off on Fukushima: Fallacies, Fallout, Fundamentals and Fear

alt

Detroit Publishing Co. Maxim Vixen 1900 “U.S.S. Vixen, Maxim machine gun and gunner Smith, who fired 400 consecutive shots at Battle of Santiago de Cuba, July 3, 1898”

Stoneleigh: It will be a long time before we have a complete picture of the unfolding nuclear catastrophe at Fukushima, and much longer before the scale of the impacts can truly be understood. Misinformation and disinformation abound in an emotive and exceptionally polarized debate over the nuclear power industry. Teasing apart fact from fiction will be a major task. First we need to look at the latest information on the state of affairs at Fukushima, and then turn to the debate over the health impacts of radiation and comparisons with Chernobyl.

The best interpretation of data and events at Fukushima is being provided by Arnie Gundersen at Fairewind Associates, a nuclear engineer of long experience. His most recent contribution puts the events of the last six seeks in stark perspective. He compares the explosive events at units 1 and 3, providing a very convincing case for the unit 3 detonation having resulted from a prompt criticality in the spent fuel pool. Pieces of fuel rods have been discovered as much as two miles away, plutonium dust has been detected on site and uranium and americium powder has been detected as far away as the US, indicating the volatilization of nuclear fuel.

Much of the building is missing, enough for it to be impossible for the spent fuel pool to have survived. TEPCO data appears to suggest the reactor itself is intact, but the scale of the destruction must lead to some considerable doubt.

 

alt

 

 

 

Stoneleigh: The spent fuel at the plant is a major concern, with at least two spent fuel pool (at units 3 and 4) either damaged or destroyed. The pool at unit 3 contained almost an entire reactor core of spent fuel, and at unit 4 the total was even much higher – between two and three reactor cores.

alt

Stoneleigh: In addition to the individual spent fuel pools, there is a common pool, which has also had cooling difficulties.

In addition to these individual pools, there is a larger common spent fuel pool that is used to store spent fuel from all 6 reactors once it has been out of the reactor for 19 months and has cooled down. It has a volume of 3,828 cubic meters (29m x 12m x11m deep) and currently has 6,375 spent fuel assemblies in it. It is located 50 meters west of Unit 4. Reports also say that this pool continues to have water supplies but its cooling system is not functional.

Stoneleigh: The quantity of radioactive material at the site is simply staggering, and its condition precarious. We could yet see more uncontrolled releases of contamination from this material, in addition to the on-going releases due to containment breaches, radioactive steam emissions and water flooding:

April 27th: Radiation Readings in Fukushima Reactor Rise to Highest Since Crisis Began

Radiation readings at Japan’s Fukushima Dai-Ichi station rose to the highest since an earthquake and tsunami knocked out cooling systems, impeding efforts to contain the worst nuclear crisis since Chernobyl. Two robots sent into the reactor No. 1 building at the plant yesterday took readings as high as 1,120 millisierverts of radiation per hour, Junichi Matsumoto, a general manager at Tokyo Electric Power Co., said today. That’s more than four times the annual dose permitted to nuclear workers at the stricken plant.

April 27th: Reactor Flooding Effort Proceeds at Japan Reactor

Turbine areas at reactors No. 1, No. 2 and No. 3 contain nearly 70,000 metric tons of significantly contaminated water, the International Atomic Energy Agency said. Transfers of fresh water continued into reactors No. 1, No. 2 and No. 3, and a vehicle over the weekend fired 305 metric tons of fresh water on the No. 4 reactor’s spent fuel cooling pond. The liquid is intended to prevent additional releases of radiation from the cooling ponds.

April 28th: TEPCO Data Shows Ongoing Criticalities Inside Leaking Fukushima Daiichi Unit 2

Data released on April 28, 2011 by TEPCO is now unequivocal in showing ongoing criticalities at Unit 2, with a peak on April 13. TEPCO graphs of radioactivity-versus-time in water under each of the six reactors show an ongoing nuclear chain reaction creating high levels of “fresh” I-131 in Unit 2, the same reactor pressure vessel (RPV) with a leak path to reactor floor, aux building, and outdoor trenches, that is uncontrollably leaking high levels of I-131, Cs-134, Cs-137 into the Pacific Ocean.

Because I-131 has no long-lived “parent” to “feed it” by parent decay, the levels of I-131 in scrammed reactors with intact geometry will decrease exponentially with an 8-day halflife, meaning that after 5 halflives (40 days) the I-131 levels are only 3% of what they were at scram. But instead of seeing that expected decrease in I-131 levels relative to Cs-134 and Cs-137 in the regular TEPCO press releases, I-131 was seen to be increasing, instead of decreasing as the physics said it should.

“Outlier” Unit 2 has I-131 levels roughly 20 times its levels of Cs-134/137. The only possible source of I-131 would be “pockets” of molten core in the Unit 2 RPV settled in such a way that the boron in the injected water is insufficient to stop the localized criticalities.

 

Stoneleigh: The scope of the accident and its likely impact on the surrounding heavily populated area continues to be considerably underestimated, and evacuation efforts remain grossly inadequate.

IAEA Confirms Very High Levels of Contamination Far From Reactors

Today the IAEA has finally confirmed what some analysts have suspected for days: that the concentration per area of long-lived cesium-137 (Cs-137) is extremely high as far as tens of kilometers from the release site at Fukushima Dai-Ichi, and in fact would trigger compulsory evacuation under IAEA guidelines.

The IAEA is reporting that measured soil concentrations of Cs-137 as far away as Iitate Village, 40 kilometers northwest of Fukushima-Dai-Ichi, correspond to deposition levels of up to 3.7 megabecquerels per square meter (MBq/sq.m). This is far higher than previous IAEA reports of values of Cs-137 deposition, and comparable to the total beta-gamma measurements reported previously by IAEA.

This should be compared with the deposition level that triggered compulsory relocation in the aftermath of the Chernobyl accident: the level set in 1990 by the Soviet Union was 1.48 MBq/sq.m. Thus, it is now abundantly clear that Japanese authorities were negligent in restricting the emergency evacuation zone to only 20 kilometers from the release site.

 

Stoneleigh: Arnie Gundersen calls the exposure limits being applied for children in the area of the stricken plant “a gross miscarriage of radiation science”. Children are particularly vulnerable to radiation, as their cells are dividing very rapidly. The impact of a given dose is therefore 10-100 times greater, yet the dose limit for children in the area of Fukushima is set at a level most countries would use for adults working at a nuclear plant.

 

 

 

Stoneleigh: Toshio Kosako, a government advisor on radiation safety, recently resigned in protest over the handling of the accident by the Japanese government.

In one of his most damaging charges, the adviser, Toshiso Kosako, drew attention to a recent government decision to allow children living near the crippled Fukushima Daiichi nuclear plant to receive doses of radiation equal to the international standard for nuclear power plant workers. That level is far higher than international standards set for the public. “I cannot allow this as a scholar,” said Mr. Kosako, an expert on radiation safety at the University of Tokyo.

He also blasted the government for what he said was a lack of transparency in releasing radiation levels around the Fukushima Daiichi plant, and for setting an overly high limit on radiation exposure for workers who have spent weeks struggling to keep the plant under control.

Government advisory positions are considered prestigious, and it is highly unusual for an academic to quit one in protest.

 

Stoneleigh: Another senior advisor, Michio Ishikawa, the former head of the Japan Nuclear Technology Institute and an ardent supporter of the nuclear industry, also made dramatic claims contradicting the official version of the extent of the damage at Fukushima.

I believe the fuel rods are completely melted. They may already have escaped the pressure vessel. Yes, they say 55% or 30%, but I believe they are all melted down. When the fuel rods melt, they melt from the middle part on down.

I think the temperature inside the melted core is 2000 degrees to 2000 and several hundred degrees Celsius. A crust has formed on the surface where the water hits. Decay heat is 2000 to 3000 kilowatts, and through the cracks on the crust the radioactive materials (mostly noble gas and iodine) are escaping into the air.

Volatile gas has almost all escaped from the reactor by now. The water [inside the pressure vessel] is highly contaminated with uranium, plutonium, cesium, cobalt, in the concentration we’ve never seen before.

My old colleague contacted me and shared his calculation with me. At the decay heat of 2000 kilowatt… There’s a substance called cobalt 60. Highly radioactive, needs 1 to 1.5 meter thick shields. It kills people at 1000 curies. He calculated that there are 10 million curies of cobalt-60 in the reactor core. If 10% of cobalt-60 in the core dissolve into water, it’s 1 million curies.

They (TEPCO) want to circulate this highly contaminated water to cool the reactor core. Even if they are able to set up the circulation system, it will be a very difficult task to shield the radiation. It will be a very difficult work to build the system, but it has to be done.

It is imperative to know the current condition of the reactor cores. It is my assumption [that the cores have melted], but wait one day, and we have water more contaminated with radioactive materials. This is a war, and we need to build a “bridgehead” at the reactor itself instead of fooling around with the turbine buildings or transporting contaminated water.

Stoneleigh: While acknowledging high radiation levels, he nevertheless declared those levels to be safe and said that people in the evacuation zone should be allowed to return to their homes.

The Fukushima disaster inevitably leads to comparisons with Chernobyl, particularly with regard to the expected health impacts. Twenty-five years after Chernobyl, estimates of morbidity and mortality are almost inconceivably variable. The official story is that fewer than 50 people died as a direct result of the accident, and that the only other identifiable impact has been a few thousand cases of thyroid cancer in children exposed to radioactive iodine in milk.

This impact is said to have been preventable with appropriate restrictions on consumption of contaminated food, and its seriousness is minimized in the official discourse as thyroid cancer is described as readily curable. This official position incenses those who lived through the Chernobyl catastrophe and have been involved in dealing with its aftermath.

The debate hinges on the nature of the data and evidence, with huge disagreement as to what should be taken into consideration. The outcome is far from purely academic, as it will determine the future of the nuclear power industry.

Most recently the two sides have been personified by George Monbiot, an environmental journalist and recent convert to nuclear power, and Helen Caldicott, a doctor and long term opponent of the nuclear industry. Monbiot began the exchange immediately following the events at Fukushima:

Why Fukushima made me stop worrying and love nuclear power

You will not be surprised to hear that the events in Japan have changed my view of nuclear power. You will be surprised to hear how they have changed it. As a result of the disaster at Fukushima, I am no longer nuclear-neutral. I now support the technology.

A crappy old plant with inadequate safety features was hit by a monster earthquake and a vast tsunami. The electricity supply failed, knocking out the cooling system. The reactors began to explode and melt down. The disaster exposed a familiar legacy of poor design and corner-cutting. Yet, as far as we know, no one has yet received a lethal dose of radiation. [..] Yes, I still loathe the liars who run the nuclear industry.

Yes, I would prefer to see the entire sector shut down, if there were harmless alternatives. But there are no ideal solutions. Every energy technology carries a cost; so does the absence of energy technologies. Atomic energy has just been subjected to one of the harshest of possible tests, and the impact on people and the planet has been small.

Stoneleigh: Monbiot accepts the official position on the impact of Chernobyl, on the grounds that it represents the scientific consensus, and has become increasingly vociferous in his condemnation of the evidence for greater health consequences:

Evidence Meltdown

Over the past fortnight I’ve made a deeply troubling discovery. The anti-nuclear movement to which I once belonged has misled the world about the impacts of radiation on human health. The claims we have made are ungrounded in science, unsupportable when challenged and wildly wrong. We have done other people, and ourselves, a terrible disservice. [..]

For the past 25 years, anti-nuclear campaigners have been racking up the figures for deaths and diseases caused by the Chernobyl disaster, and parading deformed babies like a mediaevel circus. They now claim that 985,000 people have been killed by Chernobyl, and that it will continue to slaughter people for generations to come. These claims are false [..]

Professor Gerry Thomas, who worked on the health effects of Chernobyl for Unscear (UN Scientific Committee on the Effects of Atomic Radiation), tells me that there is “absolutely no evidence” for an increase in birth defects.

The double standards of green anti-nuclear opponents

In the normal course of operations, at least six people are killed in Chinese coal mines every day. Even if you accept the official figure, Chinese coal mining alone kills as many people every week as the worst nuclear power accident in history – the Chernobyl explosion – has done in 25 years.

Stoneleigh: Monbiot accuses those who oppose nuclear power on health grounds of “failing to provide sources, refuting data with anecdote, cherry-picking studies, scorning the scientific consensus, invoking a cover-up to explain it”.

The double standards of green anti-nuclear opponents

We emphasise, when debating climate change, the importance of the scientific consensus, and reliance on solid, peer-reviewed studies. But as soon as we start discussing the dangers of low-level radiation, we abandon that and endorse the pseudo-scientific gibberish of a motley collection of cranks and quacks, who appear to have begun with the assumption that it must be killing thousands of people every year, and retrofitted the evidence to match it.

Stoneleigh: Monbiot places a great deal of faith in scientific consensus, but this presents considerable pitfalls in its own right. Truth and consensus are not necessarily identical, nor even comparable. There are many academic fields, including economics and finance which we focus on here at The Automatic Earth, where an established consensus acts as a substantial impediment to discovering the truth about events and to making sense of them.

It can be virtually impossible to fund or publish studies conflicting with received wisdom which has hardened into dogma. Since only data from peer reviewed publications is considered evidence, it is possible to ignore huge amounts of relevant information and reinforce the fallacious consensus even further. All conflicting information is then dismissed as anecdotal. This is exactly what appears to have occurred in relation to Chernobyl.

In a review of the book Chernobyl: Consequences of the Catastrophe for People and the Environment, which Monbiot has read and dismissed as unscientific, Dr. Rosalie Bertell writes:

Until now we have read about the published reports of limited spotty investigations by western scientists who undertook projects in the affected territories. Even the prestigious IAEA, WHO and UNSCEAR reports have been based on about 300 such western research papers, leaving out the findings of some 30,000 scientific papers prepared by scientists working and living in the stricken territories and suffering the everyday problems of residential contamination with nuclear debris and a contaminated food supply[..]

The government of the former Soviet Union previously classified many documents now accessible to the authors. For example, we now know that the number of people hospitalized for acute radiation sickness was more than a hundred times larger than the number recently quoted by the IAEA, WHO and UNSCEAR.

Unmentioned by the technocrats were the problems of “hot particles” of burning uranium that caused nasopharyngeal problems, and the radioactive fallout that resulted in general deterioration of the health of children, wide spread blood and lymph system diseases, reproductive loss, premature and small infant births, chromosomal mutations, congenital and developmental abnormalities, multiple endocrine diseases, mental disorders and cancer.

The authors systematically explain the secrecy conditions imposed by the government, the failure of technocrats to collect data on the number and distribution of all of the radionuclides of major concern, and the restrictions placed on physicians against calling any medical findings radiation related unless the patient had been a certified “acute radiation sickness” patient during the disaster, thus assuring that only 1% of injuries would be so reported.

Stoneleigh: From John Vidal, writing in The Guardian:

Nuclear’s green cheerleaders forget Chernobyl at our peril

The doctors and scientists who have dealt directly with the catastrophe said that the UN International Atomic Energy Agency’s “official” toll, through its Chernobyl Forum, of 50 dead and perhaps 4,000 eventual fatalities was insulting and grossly simplistic. The Ukrainian Scientific Centre for Radiation, which estimated that infant mortality increased 20 to 30% after the accident, said their data had not been accepted by the UN because it had not been published in a major scientific journal [..]

While there have been thousands of east European studies into the health effects of radiation from Chernobyl, only a very few have been accepted by the UN, and there have been just a handful of international studies trying to gauge an overall figure [..]

Further, as Prof Dimitro Godzinsky, of the Ukranian National Academy of Sciences, states in his introduction to the report: “Against this background of such persuasive data some defenders of atomic energy look specious as they deny the obvious negative effects of radiation upon populations. In fact, their reactions include almost complete refusal to fund medical and biological studies, even liquidating government bodies that were in charge of the ‘affairs of Chernobyl’. Under pressure from the nuclear lobby, officials have also diverted scientific personnel away from studying the problems caused by Chernobyl.

Stoneleigh: I suggest that readers evaluate the evidence for themselves, beginning with this interview with one of its authors, Dr Alexey Yablokov, who was head of the Russian Academy of Sciences under Gorbachev.

 

 

 

Stoneleigh: Dr Helen Caldicott has been the focus of Monbiot’s ire since they began to debate the issue of radiation safety. She is a long standing opponent of nuclear power and has been a tireless campaigner on issues surrounding ionizing radiation for decades. Her position is that the consequences of Chernobyl constitute “one of the most monstrous cover-ups in the history of medicine”. In her opinion, Fukushima is “orders of magnitude” worse than Chernobyl.

 

 

 

Stoneleigh: Dr. Caldicott makes some questionable assertions in this video. For starters, her estimation of the quantity of spent fuel (10 to 20 times as much as in reactor cores) does not accord with other data sources, either per reactor and corresponding spent fuel pool, or for all reactors and spent fuel pools taken together with the common fuel pool included. While spent fuel is obviously a major issue, she appears to overstate it. She mentions bioaccumulation of isotopes in the food chain, but that will depend on the isotope, its radiological half-life, how it is taken up and distributed in the body and what its ‘biological half-life’ may be (ie how long it is retained in body tissues). Bioaccumulation is extremely complex.

Her comparison between Chernobyl and Fukushima is also problematic. While there is more radioactive material at Fukushima, it is likely that less of it has escaped into the environment, at least so far. The material from the reactor cores is still mostly contained, thanks to the containment structures that Chernobyl lacked entirely.

The containment at Fukushima is breached, but not appears not to be destroyed, at least at most units. Also, the accident mode at Chernobyl – a prompt neutron surge causing an operating reactor to explode – was not replicated in the Fukushima reactors, which did scram (shut down) in response to the earthquake.

The Chernobyl combination of a nuclear explosion, a moderator fire propelling radiation high into the atmosphere for days, and no containment whatsoever, was not replicated at Fukushima. Chernobyl dispersed radiation more effectively than it appears Fukushima will, meaning that at a distance the health impacts should be minimal (see this interview between Arnie Gundersen and epidemiologist Dr Stephen Wing for discussion of distance impacts).

However, that is no comfort to those close to the plant, where the impact will arguably be greater than it was in the region around Chernobyl. Given that this region is home to far more people than was the rural Ukraine, the scale of human suffering is likely to be much worse.

Dr. Caldicott also says that since 40% of Europe is contaminated with radioactive caesium fallout, one should not eat European food for the next 600 years. In an era of diminishing energy for food transportation, there will come a time when Europeans not prepared to eat European food will have a bigger problem in six weeks of starving to death than they would have taking a risk of possibly getting cancer in thirty year by eating locally available food.

Perspective is important, and Dr. Caldicott’s passion sometimes interferes with her ability to maintain it. She has made many cogent arguments, however, and her work is an important contribution to a vitally important debate, particularly in relation to raising awareness of the distinction between external and internal radiation emitters.

How nuclear apologists mislead the world over radiation

The former is what populations were exposed to when the atomic bombs were detonated over Hiroshima and Nagasaki in 1945; their profound and on-going medical effects are well documented. Internal radiation, on the other hand, emanates from radioactive elements which enter the body by inhalation, ingestion, or skin absorption. Hazardous radionuclides such as iodine-131, caesium 137, and other isotopes currently being released in the sea and air around Fukushima bio-concentrate at each step of various food chains (for example into algae, crustaceans, small fish, bigger fish, then humans; or soil, grass, cow’s meat and milk, then humans).

After they enter the body, these elements – called internal emitters – migrate to specific organs such as the thyroid, liver, bone, and brain, where they continuously irradiate small volumes of cells with high doses of alpha, beta and/or gamma radiation, and over many years, can induce uncontrolled cell replication – that is, cancer. Further, many of the nuclides remain radioactive in the environment for generations, and ultimately will cause increased incidences of cancer and genetic diseases over time.

Stoneleigh: See also Richard Bramhall, writing in The Guardian:

The Chernobyl deniers use far too simple a measure of radiation risk

The “sievert”, as Elliott says, is a dose unit for quantifying radiation risk. He did not add that it assumes dose density is uniform.

“There are many kinds of radiation”, he says, but he does not mention how they differ. In fact, external sources like cosmic rays and x-rays distribute their energy evenly, like the sun; others, notably alpha-emitters like uranium, are extremely uneven in the way they irradiate body tissue once they have been inhaled or swallowed.

Because alpha particles emitted from uranium atoms are relatively massive, they slow down rapidly, concentrating all their energy into a minuscule volume of tissue. Applying the sievert to this pinpoint of internal radiation means conceptualising it as a dose to the whole body. It’s an averaging error, like believing it makes no difference whether you sit by the fire to warm yourself or eat a burning coal. The scale of the error can be huge.

Radiation protection officials fell into this averaging trap in 1941. The Manhattan Project, rushing to build the atom bomb, was creating many new radio-elements whose health effects were unknown. Summing them all – external and internal, alpha, beta, gamma or whatever – into a single dose quantity gave an impression of certainty and precision.

Stoneleigh: Monbiot and Caldicott recently held a debate on Democracy Now, but it was not a particularly edifying spectacle, being marred by misconceptions on both sides. Monbiot clings to a willfully blind scientific consensus, while Caldicott is over-zealous in making her points, leading to exaggeration.

One particular problem with Caldicott’s perspective is a lack of understanding of future energy availability. In her opinion, “there’s enough renewable technology now, right now, which is relatively cheap, to supply the whole of the U.S.’s needs by 2040 without any carbon and any nuclear”. This is completely erroneous for many reasons including peak oil, the net energy cliff, and grid issues. Her sense that there are easy alternatives to nuclear makes it much easier to oppose.

On Monbiot’s part, his understanding of energy issues in general (as gleaned from a number of his previous writings) seems to be better, but he appears to be wedded to our current technological standard of living and feels that the risks of nuclear power are acceptable in order to preserve it.

In my view our current standard of living, or business-as-usual scenario will not be an option no matter what we do, and we will be forced to revert to a much lower level of socioeconomic complexity. Taking enormous risks in the attempt to preserve that which cannot be saved seems very foolish to me.

In order to present some perspective on (or near) the 25th anniversary of Chernobyl, we need to review the material that is available on Chernobyl and its aftermath. For starters, everyone should watch The Battle of Chernobyl, followed by Vladimir Shevchenko’s last film, Paul Fusco’s short documentary on the children of Chernobyl and the track of the Chernobyl caesium plume:

 

 

Stoneleigh: Chernobyl continues to have huge impacts, both on humans and wildlife in affected areas:

Chernobyl Cleanup Survivor’s Message for Japan: ‘Run Away as Quickly as Possible

“How much radiation were you subjected to?

We were never told. We wore dosimeters which measured radiation and we submitted them to the bosses, but they never gave us the results.

But didn’t you realize the danger and want to leave?

Yes, I knew the danger. All sorts of things happened. One colleague stepped into a rainwater pool and the soles of his feet burned off inside his boots. But I felt it was my duty to stay. I was like a firefighter. Imagine if your house was burning and the firemen came and then left because they thought it was too dangerous.

When did you discover the thyroid tumor?

They found it during a routine medical inspection after I had worked there several years. It turned out to be benign. I don’t know when it started to develop. I had an operation to remove half the thyroid gland. The tumor grew back, and last year I had the other half removed. I live on (thyroid) hormones now.

Why did you go back to Chernobyl after getting a thyroid tumor?

Right around the time of my operation, the government passed a law saying the liquidators had to work for exactly 4 1/2 years to get our pension and retire. If you left even one day early, you would not get any benefits.

Really? That seems beyond cruel.

It’s why the nuclear industry is dangerous. They want to deny the dangers. They kept changing the law about what benefits we’d get because if they admitted how much we were affected, it would look bad for the industry. Now we hardly get any benefits.

Did your health worsen after you finally finished work at Chernobyl?

I was basically disabled at 43. I was having fits similar to epileptic fits. My blood pressure was sky high. It was hard to work for more than six months a year. The doctors didn’t know what to do with me. They wanted to put me in a psychiatric ward and call me crazy. Finally they admitted it was because of the radiation.

Nuclear’s green cheerleaders forget Chernobyl at our peril

It was grim. We went from hospital to hospital and from one contaminated village to another. We found deformed and genetically mutated babies in the wards; pitifully sick children in the homes; adolescents with stunted growth and dwarf torsos; foetuses without thighs or fingers and villagers who told us every member of their family was sick.

This was 20 years after the accident but we heard of many unusual clusters of people with rare bone cancers. One doctor, in tears, told us that one in three pregnancies in some places was malformed and that she was overwhelmed by people with immune and endocrine system disorders. Others said they still saw caesium and strontium in the breast milk of mothers living far from the areas thought to be most affected, and significant radiation still in the food chain. Villages testified that “the Chernobyl necklace” – thyroid cancer – was so common as to be unremarkable; many showed signs of accelerated ageing.

Stoneleigh: From University of South Carolina biology professor Tim Mousseau, one of the few scientists to have probed biodiversity around Chernobyl in depth:

25 Years On, Chernobyl Fallout Still An Eco-Hazard

“Chernobyl is definitely not a haven for wildlife,” he said in a phone interview.

“When you actually do the hard work, of conducting a scientific study, where you rigorously control for all the variables, and you do this repeatedly in many different places, the signal is very strong.

“There are many fewer animals and many fewer kinds of animals than you would expect.”

In 2010, Mousseau and colleagues published the biggest-ever census of wildlife in the exclusion zone. It showed that mammals had declined and insect diversity, including bumblebees, grasshoppers, butterflies and dragonflies, had also fallen.

And in a study published in February this year, they netted 550 birds, belonging to 48 species at eight different sites, and measured their heads to determine the volume of their brains.

Birds living in “hot spots” had five percent smaller brains than those living where radiation was lower — and the difference was especially great among birds less than a year old. Smaller brains are linked to a lower cognitive ability and thus survival. The study suggested many bird embryos probably do not survive at all.

“This clearly ties to the level of background contamination,” said Mousseau. “There are bound to be consequences for the ecosystem as a whole.”

Stoneleigh: From Chernobyl: Consequences of the Catastrophe for People and the Environment:

”Chernobyl enriched medicine with new terminology and syndromes, and imparted a new ‘Chernobyl’ ring to old phrases: ‘premature aging,’ ‘diagnosis of cancer in younger patients,’ ‘in utero irradiation,’ ‘Chernobyl AIDS,’ ‘Chernobyl heart,’ and ‘Chernobyl limbs,’ as well as the syndromes of ‘vegetative-vascular dystonia’ (a functional disorder of nerve regulation of the cardio-vascular system with various presentations), the syndrome of ‘incorporation of long-lived radionuclides,’ (structural and functional changes to the cardio-vascular, nervous, endocrine, and reproductive systems and other organs as a result of the accrual of caesium-137 and strontium 90 in the human organism); the syndrome ‘acute inhalation depression of the upper respiratory system,’ ‘chronic fatigue’syndrome, and ‘lingering radiation sickness…”’

“Specialists with ties to the nuclear industry assert that the increase in illness rates around Chernobyl are not a result of irradiation but rather sociological, economic and psychological factors like stress and ‘radiophobia.’ Socio-economic factors cannot be the fundamental reason because compared groups identical in socio-economic conditions, physical and geographical characteristics of where they live, age and gender differ only in the level of their radiation load.

Radiophobia likewise cannot be a defining reasons because the rate of illness rose universally within a few years of the catastrophe, during which time radiophobia subsided. Finally, the above described health defects in humans have also been observed in animal populations on the radioactively contaminated territory.

Stoneleigh: The Chernobyl accident is still not over. Attempts to contain the impact continue, as the concrete sarcophagus isolating additional radiation from the environment urgently needs to be replaced. Plans are afoot, but they will be exceptionally expensive to implement, and like the previous, now crumbling, structure, this ‘solution’ also will not be permanent.

 

 

 

Stoneleigh: The Ukrainian ambassador to Norway, Oleksandr Tsvietkov, had this to say at a recent seminar on Chernobyl:

Chernobyl changed Ukraine fundamentally. Cities were uninhabitable, good farmland became useless overnight – and we still use the five percent of our gross domestic product to deal with the consequences of the accident.With international help, we have now managed to get about three quarters of the 730 million euro needed, and we hope for more support so that future generations in Ukraine will not have to grow up with this threat.

Stoneleigh: To me it is clear that the official story of Chernobyl has no credibility. Never-anticipated nuclear accidents continue to occur, and when they do the costs – in terms of health, ecological damage, energy demand for clean up, resource use and money – are astronomical.

The EROEI for nuclear power is already unimpressive over its whole lifecycle, and even a small number of dramatic accidents on the scale of Chernobyl and Fukushima can render the energy balance negative. The risk of nuclear accident is unacceptably high. The costs, even in the absence of accidents, are too high. We should learn from our mistakes and turn away from this technology.

Apr 212011
 
 April 21, 2011  Posted by at 12:36 am Primers Comments Off on Fukushima: Review of an INES Class 7 Accident

alt

Alfred Palmer War Workers October 1942 “Two assembly line workers at the Long Beach, California, plant of Douglas Aircraft Company enjoy a well-earned lunch period. Nacelle parts of a heavy bomber form the background”

Stoneleigh: The Fukushima disaster continues, and will do so for a long time to come. This is hardly surprising given the overwhelming force the plant was exposed to, which far exceeded the worst case scenario it was designed to withstand.

alt

alt

The 2 pictures above were taken at Fukushima Dai-Ni

 

The immediate devastation from the earthquake and tsunami was immense, even before the accident began.

 

alt

alt

 

As we have seen over the past several weeks, the loss of power to the site, and subsequent inability to circulate coolant in the reactors and the spent fuel pools, led to explosive consequences. We saw a series of hydrogen explosions at units 1, 3 and 2 and 4, and have seen at least three partial meltdowns, with varying degrees of apparent containment breach. Hydrogen is produced as an exothermic reaction when the fuel cladding reacts with water steam at high temperatures (Zr + 2 H2O -> ZrO2 + 2 H2), indicating damage to the reactor core from loss of coolant.

The first image below shows the four units, with unit 4 on the far left and unit 1 on the far right. The second shows a close up of units 3 and 4, where the buildings sustained the greatest visible damage.

 

alt

alt

 

Unit 4 is particularly interesting, since the reactor had been offline for maintenance at the time of the earthquake, with its fuel removed and stored in the spent fuel pool. The explosion in this unit must have been related to this accumulation of fuel. The pool is believed to have been damaged, leading to loss of cooling water and partial exposure of the fuel rods.

The first image below is of unit 4 and the second is a close up inside the unit taken by helicopter:

 

alt

alt

 

It is not difficult to see how the spent fuel pool, which is situated above the reactor, could have come to be damaged.

 

alt

 

Operators have been spraying the ground surrounding the plant with resin in order to prevent radioactive dust from the debris from becoming airborne:

 

alt

 

Engineers have been working intensively to restore power to the site under very difficult conditions:

 

alt

alt

alt

 

In the meantime, essential cooling has been ad hoc through the use of seawater, but this results in a salt build up that leads to further difficulty cooling the plant and also to rapid corrosion at high temperatures. Salt accumulation will need to be flushed out with fresh water. Seawater spraying into cracked vessels has also led to the accumulation of large quantities of radioactive water. As a result, 10,000 tons of contaminated water (measuring about 500 times above the legal limit for radioactivity) were emptied into the sea in order to make room for much more highly contaminated water.

 

alt

alt

 

In addition, the world’s largest concrete pumps are being sent to Japan, first to pump water, and later perhaps to create a concrete sarcophagus. Here’s one that arrived on an Antonov plane.

 

alt

 

Pumps used at the site would have to be abandoned there as they will be too radioactive to recover. The dimensions of a sarcophagus entombing at least 4 reactors would have to be truly gargantuan – considerably larger than the pyramids at Giza per reactor. This would be no small undertaking. Alternatively, Japan may attempt to drape the plants with fabric. There are clearly no easy long term solutions.

 

alt

 

The accident process is being reconstructed, often from foreign sources through nuclear forensics. French nuclear company Areva initially (and inadvertently) provided a particularly detailed explanation of the accident sequence in the early days, indicating a more serious accident in unit 2 than in units 1 and 3. At unit 2, the condensation chamber at the base of the reactor appears to have been damaged, leading to the loss of highly radioactive water into the environment. Thus, while unit 2 appears to the least damaged from the outside, the internal damage poses a larger threat than units 1 and 3.

This analysis fits with subsequent events. Operators faced a leak of highly radioactive water from a maintenance pool associated with unit 2. This took desperate measures to plug. Concrete initially failed to harden, whereupon operators resorted to sawdust, shredded newspapers, special polymers and screens were used. According to TEPCO, the leak was plugged on April 6th.

 

alt

alt

alt

The leak caused radiation levels to spike in the sea surrounding the plant:

The operator of Japan’s stricken Fukushima nuclear plant said Tuesday that it had found radioactive iodine at 7.5 million times the legal limit in a seawater sample taken near the facility, and government officials imposed a new health limit for radioactivity in fish. The reading of iodine-131 was recorded Saturday, Tokyo Electric Power Co. said. Another sample taken Monday found the level to be 5 million times the legal limit. The Monday samples also were found to contain radioactive cesium at 1.1 million times the legal limit.

It has also caused diplomatic difficulties with neighbours:

Regarding the release of radiation contaminated water into the ocean from Fukushima I Nuclear Power Plant, the South Korean government conveyed its worries to Japan’s Foreign Ministry through its Embassy in Japan at night of April 4 [when TEPCO started dumping], that “this may cause problems in international law.”

India has already banned the import of produce from Japan, and other countries are likely to follow suit. Seafood is likely to be the most affected. The Japanese authorities are still saying this is safe, although they have imposed new standards:

The plant operator insisted that the radiation will rapidly disperse and that it poses no immediate danger, but an expert said exposure to the highly concentrated levels near the Fukushima Dai-ichi plant could cause immediate injury and that the leaks could result in residual contamination of the sea in the area.

The new levels coupled with reports that radiation was building up in fish led the government to create an acceptable radiation standard for fish for the first time, and officials said it could change depending on circumstances. Some fish caught on Friday off Japan’s coastal waters would have exceeded the new limit.

Nuclear analyst Arnie Gundersen more recently identifies unit 2 as the reactor of most concern. There is a combination of temperature above boiling point and no additional pressure inside the reactor. The implication is that unit 2 is not currently water cooled and likely contains hot air or hydrogen instead. There is also not pressure in the containment system at unit 2. A containment breach in the bottom of unit 2 would be consistent with these observations.

Unit 1 has both high temperature and elevated pressure inside the reactor, indicating perhaps a water/steam combination, Unit 3 has low pressure and a temperature at boiling point, indicating relative stability. Both these units have somewhat elevated pressure inside the containment structures. Operators at Fukushima have sent robots into the damaged units to assess the radiation currently present:

 

alt

alt

 

The data released by TEPCO for units 1 and 3 are translated as follows:

Reactor 1 building: Date and time: 4:40PM to 5:30PM, April 17, 2011 Radiation (1st floor, through the north door): 10 to 49 milli-sievert/hr Reactor 3 building: Date and time: 11:30AM to 1:30PM, April 17, 2011 Radiation: 28 to 57 milli-sievert/hr

According to TEPCO, there were a lot of debris inside the Reactor 3 building, and the robots had a hard time moving forward and didn’t go much beyond the door.

Part of the reason why they had the robots enter through the north door was because of the high radiation level at the south door.

On April 16, the radiation level at the south door to the Reactor 1 building was measured at 270 milli-sievert/hr. The distance between the north door and the south door is about 30 meters, according to TEPCO. The radiation right outside the north door was also measured on April 16, and it was 20 milli-sievert/hr.

 

Apparently the unit 2 building was too steamy for the robots to record readings. This is also the location where readings are most urgently needed. Official Japanese radiation data have shown some disturbing values over the last couple of weeks. See for instance this screen shot for unit 1 taken April 9th:

 

alt

On April 17th the same site had the following radiation levels recorded for units 1-3:

Reactor 1 Dry Well: 121.4 Sv/hr Suppression chamber: 97.5 Sv/hr Reactor 2 Dry Well: N/A Suppression Chamber: 131 Sv/hr Reactor 3 Dry Well: 253.2 Sv/hr Suppression Chamber: 103.9 Sv/hr

A single dose of about 5Sv would be fatal in about 50% of cases according to the IAEA. The allowable emergency dose for nuclear workers has been climbing recently. It was originally 100 mSv/yr, was raised to 250 mSv/yr and is now to be raised again, likely to 500mSv/yr. Translated from Nihon Television News 24 on April 18th:

The radiation exposure limit for workers at nuclear power plants is 100 milli-sievert/year, but the limit has been raised to 250 milli-sievert/year to deal with the Fukushima I Nuke Plant accident. According to the government sources, the higher limit is being considered because it is getting increasingly difficult to have enough workers to work on the plant. Also, the radiation inside the Reactor buildings is high, and the annual limit of 250 milli-sieverts may not be high enough to achieve the goals laid out by the TEPCO road map.

The international standard allows 500 milli-sievert/year in an emergency work, but it hasn’t been decided how high the new limit will be. The government will carefully assess the timing of announcement, keeping in consideration the health concerns of the workers and the public opinion.

It continues to be difficult to secure skilled and experienced workers at Fukushima, likely because they know what happened to their counterparts at Chernobyl.

In my view the Japanese government is being far too sanguine about the risks in the neighbourhood of the stricken plant, while risks far from the plant are often overstated. The evacuation zone may be extended in light of continuing aftershocks, but probably not by enough, for logistical reasons:

One reason for the reluctance of the Japanese government to widen the evacuation from 20km to 40 km is because it will need to relocate another 130,000 people from the affected zone on top of the 70,000 people who are already evacuated from the 20km zone. So where are they going to resettle this 200,000 people as they can never return to their homes for the next few hundred years.

If the evacuation zone be enlarged to 80 km as recommended by the IAEA, it is estimated that they need to evacuate another 1.8 million people or making the total of 2 million residents out from the danger zone. Where are they going to put those 2 million refugees?

Another reason for the reluctance to widen the evacuation zone is due to logistics. The Tohoku expressway is a national expressway in Japan and links Tohoku region in the northernmost region in the Honshu Island with the Kanto region and Greater Tokyo.

So if the government decided to entomb the Fukushima reactors, it will need to cordoned off an area with a radius of 50km from Fukushima. Hence the cost of not able to move people and goods from Tokyo to Northern Honshu will be staggering . Moreover it will also prohibit traveling using train services as the main train track passes through the region in Sendai-Fukushima-Iwate and runs parallel to the coast.

 

The risk of further adverse events at the unstable plant will remain high for months, if not years, to come, and reactors at Onagawa and Fukushima II may also be vulnerable. Many other locations should urgently review their safety standards and design-basis accident scenarios in light of the catastrophe that is unfolding in Japan.

Mar 162011
 
 March 16, 2011  Posted by at 12:29 am Primers Comments Off on The Fukushima Fallout Files

alt

Detroit Publishing Co. After the Quake 1906 “The burnt out San Francisco Call newspaper building from Grant Avenue”
Stoneleigh:We have now seen a series of explosions at the stricken Fukushima Dai-ichi plant (Fukushima 1), and it is becoming increasingly clear that containment systems have been breached in at least some units. The pervasive consequences of station blackout began with a hydrogen explosion in unit 1, followed by a much larger explosion in unit 3, two explosions at unit 2 and one at unit 4. Units 1-3 had been operational prior to the earthquake and tsunami, but were automatically shut down with the quake. Units 4-6 had not been operational for some months, but reactors require constant cooling whether or not they are operational. It is likely that we will see all units compromised due to the loss of power that has prevented cooling.

 

alt

At nearby Fukushima Dai-Ni (Fukushima 2), where there are four units, outside power has apparently been restored and, although three units remain in a state of nuclear emergency. Slightly radioactive steam is being vented in order to reduce the internal pressure from overheating. Similarly, steam venting is being undertaken at the Onagawa plant, where there are an additional three units. Fire was previously reported at Onagawa.

Spent fuel also requires constant cooling in a separate pool, and we are beginning to see problems with its storage at Fukushima 1. The explosion at unit 4 appears to have involved a cooling pool, with water levels dropping. There is considerably more radiation contained in the spent fuel than in the reactor cores, and spent fuel can also suffer a meltdown if cooling cannot be maintained. There are seven spent fuel pools at Fukushima 1, many of them densely packed with some 20 years worth of spent fuel. (All spent fuel world-wide is stored in this way, near the reactors which produce it, as no country has yet developed and implemented a long-term storage solution for waste that will remain radioactive for thousands of years.)

 

alt

Explosion in reactor no. 3 at Fukushima 1 Monday

 

The most seriously affected reactor so far is unit 2 at Fukushima 1, where an initial hydrogen explosion was followed by a second explosion in the suppression pool below the reactor. A breach of containment in this unit seems to be the most likely source of the spike in radiation that has recently been noted. Radiation levels of 400 millisieverts per hour were observed at Fukushima, as compared to a normal yearly background radiation level of 3 millisieverts.

 

alt

Radiation levels have increased to levels harmful to human health, and all but 50 essential workers have been evacuated. The Japanese Prime Minister is has called for evacuation of a 20km exclusion zone. People have been asked to remain indoors and not to bring in laundry drying outside that may now be contaminated. Thousands are being screened for contamination and those with high levels are being showered on site in insulated tents or sent to hospital. Radiation levels are elevated as far away as Tokyo, following a change in wind direction. People are trying to leave the city, but that is becoming more and more difficult as fuel line-ups begin and long distance trains are often not available. Stores are already running out of some supplies as people engage in panic buying. Fear of shortages can easily become a self-fulfilling prophecy under such circumstances. As always, the human reaction to events can provide a major portion of the impact.

In towns and cities fearful citizens stripped supermarket shelves, prompting the government to warn against panic-buying, saying this could hurt the provision of relief supplies to quake-hit areas. But scared Tokyo residents filled outbound trains and rushed to shops to stock up on food, water, face masks and emergency supplies amid heightening fears of radiation headed their way.

The health damage from exposure to radioactive isotopes comes from the energy they release as they decay from unstable forms to stable ones. Each isotope has a specific decay path over a specific timeframe, defined by the half-life of the element. The half-life is the time it takes for quantity of material to be halved, halved again and so on. A short half life indicates a shorter term risk, as the material will release its decay energy over a short time. In contrast, materials with a long half life will be persistent in the environment.

 

alt

Photo: Kim Kyung-Hoon – Reuters

 

The health effects will depend on how the particular isotope is taken up in the body, what form the release of its decay energy takes, and what is the residence time of the isotope within the body. Isotopes can decay by releasing alpha, beta or gamma radiation. Alpha radiation is composed of helium nuclei (2 protons and 2 neutrons). These are large and energetic and therefore potentially very damaging), but do not penetrate far. Beta radiation is composed of fast moving electrons, and gamma radiation is composed of photons (light particles). Beta and gamma radiation penetrate to a much greater extent.

The radioactive material of most concern in the initial stages of a nuclear accident is iodine 131, a major fission product which was responsible for the majority of health effects seen so far in the Chernobyl area. Iodine 131 has a half life of only 8 days, so it is of most concern early on. It is taken up by the thyroid gland where it can be retained (especially in young children), greatly raising the risk of thyroid cancer. Taking potassium iodide tablets can protect the thyroid from taking up the radioactive isotope. People in the affected area should be given this option as a preventative measure.

Other isotopes of concern include Caesium 137, with a half life of 30 years, and strontium 90, with a half life of 29 years. Unlike iodine 131, both of these isotopes are persistent in a contaminated area. Caesium 137 is taken up by the body in place of potassium, while strontium 90 is taken up in place of calcium. Caesium accumulates primarily in muscles and organs, while strontium accumulates in bones. The risk is organ damage, leukaemia and bone cancer, depending on the dose. At Chernobyl, caesium 137 appears to have represented a much larger health risk than strontium 90.

Some units at Fukushima ran on MOX fuel (mixed oxide fuel), which would contain a quantity of plutonium 239. Plutonium 239 is an alpha-emitter with a half-life of some 24,000 years. If inhaled or ingested, alpha particles can affect the lungs or digestive system at close range. Explosions at sites where containment is impaired or destroyed are a major risk factor for inhalation of radioactive particles.

It is important to note that the distribution and level of radioactive contamination from the Fukushima disaster is likely to be very much less than at Chernobyl, as boiling water reactors (BWRs) like those at Fukushima do not have the potential for the same failure mode as occurred at the Chernobyl RBMK plant. Chernobyl suffered a nuclear explosion on an abrupt power surge aggravated by a moderator fire.

The Fukushima reactors, where the nuclear reaction had been immediately halted by the lowering of control rods, are instead at risk of meltdown from excess decay heat in the absence of the ability to dissipate that heat. In a full meltdown scenario, the molten core would melt through the pressure vessel and concrete containment, particularly if these have already been compromised by explosive force. The core could melt down into the groundwater, causing steam explosions. Relatively local contamination could eventually be considerable, depending on the final scope of this rapidly developing situation, but I would not expect major international contamination as happened following Chernobyl.

 

alt

Even within Japan I would not expect widespread gross levels of contamination even under a worst case scenario. Fear of radiation is likely to be widespread and extreme, however, as fear is a phenomenally ‘catching’ emotion, and that can have serious consequences of its own, especially under circumstances where social infrastructure is already overwhelmed. A perception of coverup would add significantly to this fear. It is therefore extremely important for the Japanese authorities to be consistently and completely forthcoming about the situation.

Frightened people are inherently suspicious that they are being kept in the dark to their own detriment, and TEPCO’s former behaviour (falsification of safety records) has aggravated this natural reaction. Japanese Prime Minister Naoto Kan has today criticized the TEPCO utility company for not sharing information after he was not informed of one explosion for an hour after he had already seen it on television.

The risk is that the aftermath of the earthquake and tsunami could be substantially aggravated by the effects of the human herding behaviour we discuss so often here at The Automatic Earth in relation to financial markets (where we are already seeing the effects of fear in Japan).

Those who live closest to Fukushima are the most concerned. “Our feeling is the government is hiding some things, that the information is not fully transparent,” said Hiroko Okazaki, a 60-year-old housewife in Koriyama, the city closest to the crisis-stricken plant. “Even if some experts explain [that it is safe], they might not know the reality on the ground.”

PS: Here is the latest headline from Reuters: Tokyo Electric says may drop water by helicopter onto Daiichi No.4 spent-fuel cooling pond.

This is not going well. This reeks of desperation.

PS 2: The no. 4 reactor at Fukushima 1 is out of control. Fuel rods have been exposed for hours at a time, and they can’t get (enough) water to it -hence the heli dropping “plan”-. What caused the fire in no. 4 is apparently unclear. Also, the suppression chamber at no. 2 appears to be damaged. And the IAEA demands better information sharing from the Japanese government, who in turn blame TEPCO for poor information.

Mar 142011
 
 March 14, 2011  Posted by at 12:04 am Primers Comments Off on How Black is the Japanese Nuclear Swan?

alt

Pillsbury Picture Co. “The Burning of the Call” 1906 The San Francisco Call newspaper building in flames after the April 18, 1906 earthquake

Ilargi: You may not be have been aware of it until now, but The Automatic Earth has an in-house full-blown nuclear safety expert. The subject of Stoneleigh’s master thesis at the law faculty of Warwick University in Coventry, England, where she studied International Law in Development, was nuclear safety research. After graduating in 1997, she became a Research Fellow at the Oxford Institute for Energy Studies, where her research field was power systems, with a specific focus on nuclear safety in Eastern Europe. The monograph she wrote sets the nuclear safety debate in the political and economic context of the collapse of the Soviet Union. It looks at the technical aspects of nuclear safety, safety upgrade programs, safety culture and the human factor, regulation at all levels and bargaining over reactor closures. It was published in 1999 under the title Nuclear Safety and International Governance: Russia and Eastern Europe, and it remains available online here at Oxford Institute for Energy Studies. Here’s her analysis of the situation in Japan:


Stoneleigh: The Japanese earthquake is a tragedy of epic proportions in so many ways. The situation continues to evolve, and the full scope of the disaster will not be understood for a long time. One critical aspect is the effect on Japan’s nuclear industry, which provides over 30% of the country’s electricity from 54 reactors. Some of the largest nuclear plants in the world (Fukushima Dai-ichi and Fukushima Dai-ni, 4696 MW and 4400 MW, respectively) are located close to the epicentre, and on the coast, directly in the path of the resulting tsunami:

 

alt

A state of emergency has been declared for five reactors, with the worst affected reactors being the forty year old Boiling Water Reactors (BWRs) at Fukushima Dai-ichi, 240 km north of Tokyo. These reactors shut down, as the control rods were automatically inserted to dampen the nuclear reaction (SCRAM). At least two reactors experienced a station blackout, which prevented the cooling system from functioning (a loss of coolant, or LOCA accident).

 

alt

Without the ability to cool the core, the risk is a meltdown, with the potential for explosions resulting from steam or hydrogen. Even after the cessation of a nuclear chain reaction, heat from radioactive decay continues to be produced, and this heat needs to be dispersed in order to avoid a meltdown of the components of the core. Workers have been desperately trying to cool the reactor cores at units 1 and 3, but there has already been an explosion at Fukushima 1. Footage of the plant shows only the skeleton of the building remains. An evacuation zone has been expanded from 10km to 20km, and close to 200.000 people have been evacuated from the area.

 

alt

Reactors are equipped with multiple cooling systems as part of the defence in depth design principle. The idea is that there should be redundant systems with no components in common, and therefore (theoretically) no possibility for common mode failures. Each system should be capable of independently preventing a design-basis accident. Japan is a sophisticated country with a long history of nuclear power, and also a long history of seismic activity. One could argue that this is Japan’s Hurricane Katrina moment, in that a predictable scenario was not adequately prepared for in advance despite the potential for very severe consequences.

 

 

The design-basis accident for Fukushima did not include earthquakes of the magnitude of this event (recently upgraded to 9.0 on the Richter scale).

Company documents show that Tokyo Electric tested the Fukushima plant to withstand a maximum seismic jolt lower than Friday’s 8.9 earthquake. Tepco’s last safety test of nuclear power plant Number 1—one that is currently in danger of meltdown—was done at a seismic magnitude the company considered the highest possible, but in fact turned out to be lower than Friday’s quake. The information comes from the company’s “Fukushima No. 1 and No. 2 Updated Safety Measures” documents written in Japanese in 2010 and 2009.

The documents were reviewed by Dow Jones. The company said in the documents that 7.9 was the highest magnitude for which they tested the safety for their No. 1 and No. 2 nuclear power plants in Fukushima. Simultaneous seismic activity along the three tectonic plates in the sea east of the plants—the epicenter of Friday’s quake—wouldn’t surpass 7.9, according to the company’s presentation. The company based its models partly on previous seismic activity in the area, including a 7.0 earthquake in May 1938 and two simultaneous earthquakes of 7.3 and 7.5 on November 5 of the same year.

 

alt

 

Fukushima 1 before the tsunami

alt

Fukushima 1 after the tsunami

 

The Fukushima 1 plant was equipped with 13 diesel back-up generators to power the Emergency Core Cooling System (ECCS), but all of these failed. Battery back-ups are available, but these function only for a few hours. Without the ability to cool the reactor, the outcome is a meltdown, which can occur rapidly after the failure of cooling:

  • Core uncovery. In the event of a transient, upset, emergency, or limiting fault, LWRs are designed to automatically SCRAM (a SCRAM being the immediate and full insertion of all control rods) and spin up the ECCS. This greatly reduces reactor thermal power (but does not remove it completely); this delays core “uncovery”, which is defined as the point when the fuel rods are no longer covered by coolant and can begin to heat up. As Kuan states: “In a small-break LOCA with no emergency core coolant injection, core uncovery generally begins approximately an hour after the initiation of the break. If the reactor coolant pumps are not running, the upper part of the core will be exposed to a steam environment and heatup of the core will begin. However, if the coolant pumps are running, the core will be cooled by a two-phase mixture of steam and water, and heatup of the fuel rods will be delayed until almost all of the water in the two-phase mixture is vaporized. The TMI-2 accident showed that operation of reactor coolant pumps may be sustained for up to approximately two hours to deliver a two phase mixture that can prevent core heatup.”
  • Pre-damage heat up. “In the absence of a two-phase mixture going through the core or of water addition to the core to compensate water boiloff, the fuel rods in a steam environment will heatup at a rate between 0.3 K/s and 1 K/s (3).”
  • Fuel ballooning and bursting. “In less than half an hour, the peak core temperature would reach 1100 K. At this temperature, the zircaloy cladding of the fuel rods may balloon and burst. This is the first stage of core damage. Cladding ballooning may block a substantial portion of the flow area of the core and restrict the flow of coolant. However complete blockage of the core is unlikely because not all fuel rods balloon at the same axial location. In this case, sufficient water addition can cool the core and stop core damage progression.”
  • Rapid oxidation. “The next stage of core damage, beginning at approximately 1500 K, is the rapid oxidation of the Zircaloy by steam. In the oxidation process, hydrogen is produced and a large amount of heat is released. Above 1500 K, the power from oxidation exceeds that from decay heat (4,5) unless the oxidation rate is limited by the supply of either zircaloy or steam.”
  • Debris bed formation. “When the temperature in the core reaches about 1700 K, molten control materials [1,6] will flow to and solidify in the space between the lower parts of the fuel rods where the temperature is comparatively low. Above 1700 K, the core temperature may escalate in a few minutes to the melting point of zircaloy (2150 K) due to increased oxidation rate. When the oxidized cladding breaks, the molten zircaloy, along with dissolved UO2 [1,7] would flow downward and freeze in the cooler, lower region of the core. Together with solidified control materials from earlier down-flows, the relocated zircaloy and UO2 would form the lower crust of a developing cohesive debris bed.”
  • (Corium) Relocation to the lower plenum. “In scenarios of small-break LOCAs, there is generally. a pool of water in the lower plenum of the vessel at the time of core relocation. Release of molten core materials into water always generates large amounts of steam. If the molten stream of core materials breaks up rapidly in water, there is also a possibility of a steam explosion. During relocation, any unoxidized zirconium in the molten material may also be oxidized by steam, and in the process hydrogen is produced. Recriticality also may be a concern if the control materials are left behind in the core and the relocated material breaks up in unborated water in the lower plenum.”

Other aspects of defence in depth failed as well:

1st layer of defense is the inert, ceramic quality of the uranium oxide itself. 2nd layer is the air tight zirkonium alloy of the fuel rod. 3rd layer is the reactor pressure vessel made of steel more than a dozen centimeters thick. 4th layer is the pressure resistant, air tight containment building. 5th layer is the exclusion zone around the reactor.

 

alt

 

The incident is being described as a hydrogen explosion. The official line is that the outer containment building was destroyed, but that the reactor vessel itself remains intact:

Top government officials assured the nation that an explosion that took place Saturday at one of the reactors at the Fukushima Daiichi plant merely knocked down the walls of its external concrete building, and that the reactor and the containment structure surrounding it remained intact.

US Nuclear Regulatory Commission analysts explain the hydrogen production process under accident conditions:

Former U.S. Nuclear Regulatory Commission (NRC) member Peter Bradford added, “The other thing that happens is that the cladding, which is just the outside of the tube, at a high enough temperature interacts with the water. It’s essentially a high-speed rusting, where the zirconium becomes zirconium oxide and the hydrogen is set free. And hydrogen at the right concentration in an atmosphere is either flammable or explosive.” “Hydrogen combustion would not occur necessarily in the containment building,” Bergeron pointed out, “which is inert—it doesn’t have any oxygen—but they have had to vent the containment, because this pressure is building up from all this steam. And so the hydrogen is being vented with the steam and it’s entering some area, some building, where there is oxygen, and that’s where the explosion took place.”

A hydrogen release is very much part of a meltdown scenario, and difficult to imagine hydrogen explosion scenarios on the scale of what was seen at Fukushima 1 that would not involve compromising the reactor pressure vessel:

If hydrogen were allowed to build up within the containment, it could lead to a deflagration event. The numerous catalytic hydrogen recombiners located within the reactor core and containment will prevent this from occurring; however, prior to the installation of these recombiners in the 1980s, the Three Mile Island containment (in 1979) suffered a massive hydrogen explosion event in the accident there. The containment withstood this event and no radioactivity was released by the hydrogen explosion, clearly demonstrating the level of punishment that containments can take, and validating the industry’s approach of defence in depth against all contingencies. Some, however, do not accept the Three Mile Island incident as sufficient proof that a hydrogen deflagration event will not result in containment breach.

 

alt

click to open interactive graphic in new window

 

One speculative scenario may be alpha-mode failure. This would involve an explosion sufficient to blow the head off the reactor pressure vessel, launching it at the outer containment system, which could then be breached as a result. The odds of this are considered low, but many supposedly very low probability events have in fact occurred at nuclear installations. Given the detection of radioactive caesium, which could only have come from inside exposed fuel rods beginning to burn, and the subsequent violent explosion, it is difficult to imagine scenarios not involving substantial destruction of the reactor.

Indeed it has been admitted that a major accident has occurred in one unit and another is at risk:

Meltdowns may have occurred in two reactors: Japan government

Japan’s top government spokesman Yukio Edano said Sunday that radioactive meltdowns may have occurred in two reactors of the quake-hit Fukushima nuclear plant. Asked in a press conference whether meltdowns had occurred, Edano said “we are acting on the assumption that there is a high possibility that one has occurred” in the plant’s number-one reactor. “As for the number-three reactor, we are acting on the assumption that it is possible,” he said.

There are 6 reactors at Fukushima 1 and an additional 4 at nearby Fukushima 2. Tokyo Electric (TEPCO) is now indicating that there are cooling problems and dangerous pressure increases at several of these units:

Tokyo Electric said Saturday another nuclear-power plant nearby, Fukushima Dai-ni, was experiencing rises of pressure inside its four reactors. A state of emergency was called and precautionary evacuations ordered. The government has ordered the utility to release “potentially radioactive vapor” from the reactors, but hasn’t confirmed any elevated radiation around the plant.

Loss of cooling ability appears to be the common problem:

Tokyo Electric Power Co. (TEPCO), operator and owner of Fukushima nuclear plants, said early on Sunday that a sixth reactor at the nuclear power plants has lost its ability to cool the reactor core since Friday’s quake. The No. 3 reactor at Fukushima No. 1 nuclear power plant lost the cooling function after No. 1 and No. 2 reactors at the No. 1 plant and No. 1, No. 2 and No. 4 at the No. 2 plant had suffered the same trouble.

And:

Kodama said the cooling system had failed at three of the four such units of the Daini plant [Fukushima 2]. Temperatures of the coolant water in that plant’s reactors soared to above 100 degrees Celsius (212 degrees Fahrenheit), Japan’s Kyodo News Agency reported, an indication that the cooling system wasn’t working.

Containment structures are being flooded with seawater and boric acid as a desperation move to lower the temperature and poison any capacity for further nuclear reactivity. The latter is important to absorb neutrons in order to avoid incidences of potential criticality during a meltdown. Such an event would have the potential to cause much more widespread releases of radiation. There seems to be considerable evidence that we are closer to the beginning of this disaster than to the end, and already it is almost unprecedented in scope.

“If this accident stops right now it will already be one of the three worst accidents we have ever had at a nuclear power plant in the history of nuclear power,” said Joseph Cirincione, an expert on nuclear materials and president of the U.S.-based Ploughshares Fund, a firm involved in security and peace funding.

Comparisons are being made with the accident at Chernobyl, but there are a number of very important differences, notably in terms of reactor design, and therefore accident implications. Nuclear safety in the former Soviet Union was once my research field (see Nuclear Safety and International Governance: Russia and Eastern Europe), and the specifics of the accident at Chernobyl could not be replicated in Japan. The risk in Japan is primarily meltdown, not a Chernobyl-style run-away nuclear reaction.

RBMK (Reaktor bolshoy moshchnosty kanalny [high-power channel reactor]), Chernobyl-type reactors have a very large positive void coefficient, meaning that reactivity increases as a positive feedback loop. The presence of steam from overheating increases reactivity, which increases steam production. The graphite moderator in an RBMK is flammable, and RBMKs also have no containment system. If two or three of the 1700 channels in an RBMK are breached, the steam pressure will lift the lid, introducing air, while shearing the remaining tubes. Essentially, the reactor will explode on a sharp spike of reactivity. The moderator will catch fire, and a nuclear volcano will be the result. At Chernobyl, some 50 million Curies of radiation was released over several days.

Like the Fukushima incident, Chernobyl began with a loss of power, undertaken in that case as a test of safety systems commissioned long after the reactor became operational (the Chernobyl reactor had been in a state of critical vulnerability to blackout for two years at the time of the accident.) It could have been worse, however. Attempts to extinguish the fire at Chernobyl 4 came very close to causing a loss of power to the other three reactors at the site, which could easily have sent four reactors into into a critical state rather than one.

Non-technical comparisons between Fukushima and Chernobyl are more apt, specifically in terms of governance in the nuclear industry and complacency as to risk. Nuclear insiders in many jurisdictions are notorious for being an unaccountable power unto themselves, and failing to release critical information publicly.

The Soviet nuclear bureaucracy ignored obvious risks and concealed accidents wherever possible. While nothing remotely like so serious has occurred previously in Japan, Fukushima 1 has been at the centre of transparency problems in the Japanese nuclear industry before. In 2002, the president and four executives of Tokyo Electric Power Corporation (TEPCO) were forced to resign over the falsification of repair records.

Japan’s nuclear power operator has chequered past

The company was suspected of 29 cases involving falsified repair records at nuclear reactors. It had to stop operations at five reactors, including the two damaged in the latest tremor, for safety inspections. A few years later it ran into trouble again over accusations of falsifying data. In late 2006, the government ordered TEPCO to check past data after it reported that it had found falsification of coolant water temperatures at its Fukushima Daiichi plant in 1985 and 1988, and that the tweaked data was used in mandatory inspections at the plant, which were completed in October 2005.

In addition, the Japanese government had been repeatedly warned about seismic risks:

[..] the real embarrassment for the Japanese government is not so much the nature of the accident but the fact it was warned long ago about the risks it faced in building nuclear plants in areas of intense seismic activity. Several years ago, the seismologist Ishibashi Katsuhiko stated, specifically, that such an accident was highly likely to occur. Nuclear power plants in Japan have a “fundamental vulnerability” to major earthquakes, Katsuhiko said in 2007. The government, the power industry and the academic community had seriously underestimated the potential risks posed by major quakes.

Katsuhiko, who is professor of urban safety at Kobe University, has highlighted three incidents at reactors between 2005 and 2007. Atomic plants at Onagawa, Shika and Kashiwazaki-Kariwa were all struck by earthquakes that triggered tremors stronger than those to which the reactor had been designed to survive.

In the case of the incident at the Kushiwazaki reactor in northwestern Japan, a 6.8-scale earthquake on 16 July 2007 set off a fire that blazed for two hours and allowed radioactive water to leak from the plant. However, no action was taken in the wake of any of these incidents despite Katsuhiko’s warning at the time that the nation’s reactors had “fatal flaws” in their design[..] The trouble is, says Katsuhiko, that Japan began building up its atomic energy system 40 years ago, when seismic activity in the country was comparatively low. This affected the designs of plants which were not built to robust enough standards, the seismologist argues.

Many countries are currently looking to nuclear power to carry the load as energy production from conventional fossil fuels declines. Japan has previously unveiled very ambitious plans to expand nuclear capacity:

The Japan Atomic Energy Agency has modelled a 54 percent reduction in CO2 emissions from 2000 levels by 2050, leading on to a 90 percent reduction by 2100. This would lead to nuclear energy contributing about 60 percent of primary energy in 2100 (compared with 10 percent now), 10 percent from renewables (now 5 percent) and 30 percent fossil fuels (now 85 percent).

Proponents argue that the energy returned on energy invested (EROEI) for nuclear power is sufficient to power our societies, that nuclear power can be scaled up quickly enough as fossil fuel supplies decline, that there will be sufficient uranium reserves for a massive expansion of capacity, that nuclear is the only option for reducing carbon dioxide emissions, and that nuclear power can be operated with no safety concerns through probabilistic safety assessment (PSA).

I disagree with all these assertions. Looking at the full life-cycle energy inputs for nuclear power, it seems to be barely above the minimum EROEI for maintaining society, and the costs (in both money and energy terms) are front-loaded.

Scaling up nuclear capacity takes extrordinary amounts of both money and time. While construction can be speeded up, where this has been done (as it was in Russia), the deleterious effect on construction standards was significant. Uranium reserves, especially the high-grade ores, are depleting rapidly. The reduction in carbon dioxide emissions over the full life-cycle do not impress me. In addition, nuclear authorities make risk decisions without informing the public. They have consistently made risk calculations that have grossly underestimated the potential for accidents of the kind that can have generational impacts.

In my view, nuclear power represents an unjustified faith in the power of human societies to control extremely complex technologies over the very long term. Any activity requiring a great deal of complex and cooperative control will do badly in difficult economic times.

Also, no human society has ever lasted for as long as nuclear waste must be looked after. It needs to be held in pools on site for perhaps a hundred years in order to cool down enough for permanent disposal, assuming a form of permanent disposal could be conceived of, approved and developed. During this period, the knowledge as to how this must be done will need to be maintained, and this may be more difficult than is currently supposed.

We need to evaluate the potential for a nuclear future in light of the disaster in Japan. This was not unpredictable, and should have been accounted for in any realistic assessment of nuclear potential. It cannot realistically be described as a black swan event.

Japan has few energy alternatives, as it lacks indigenous energy reserves and must import 80% of its energy requirements. It was therefore prepared to make Faustian bargains despite what should have been obvious risks. The impact of the loss of so much capacity, much of it probably permanently, on available electric power following the accident is very likely to impede Japan’s ability to recover from this disaster, potentially strengthening the parallels with America’s Hurricane Katrina.

We need to assess the risks inherent in using nuclear power in other locations, whether or not the risk they face is seismic (see Metsamor in Armenia, for instance, or Diablo Canyon in California). There are risks in many areas, most of which are grounded in human behaviour, either at the design stage or the operational phase. Human behaviour can easily turn what should be a one in one hundred thousand reactor-year event in to something all too likely within a human lifespan. Nuclear power may allow us to cushion the coming decline in fossil fuel availability, but only at a potentially very high price.

Feb 272011
 
 February 27, 2011  Posted by at 11:32 pm Primers Comments Off on The Receding Horizons of Renewable Energy

alt

Detroit Publishing Co. Payday 1906 “New Orleans : Payday on the levee”

Stoneleigh: Renewable energy has become a topic of increasing interest in recent years, as fossil fuel prices have been volatile and the focus on climate change has sharpened. Governments in many jurisdictions have been instituting policies to increase the installation of renewable energy capacity, as the techologies involved are not generally able to compete on price with conventional generation.

The reason this is necessary, as we have pointed out before, is that the inherent fossil-fuel dependence of renewable generation leads to a case of receding horizons. We do not make wind turbines with wind power or solar panels with solar power. As the cost of fossil fuel rises, the production cost of renewable energy infrastructure also rises, so that renewables remain just out of reach.

Renewable energy is most often in the form of electricity, hence subsidies have typically been provided through the power system. Capital grants are available in some locations, but it is more common for generators to be offered a higher than market price for the electricity they produce over the life of the project. Some jurisdictions have introduced a bidding system for a set amount of capacity, where the quantity requested is fixed (RFP) and the lowest bids chosen.

Others have introduced Feed-In Tariff (FIT) programmes, where a long-term fixed price is offered essentially to any project willing to accept it. Tariffs vary with technology and project size (and sometimes inversely with resource intensity) with the intention of providing the same rate of return to all projects. FIT programmes have been much more successful in bringing capacity online, especially small-scale capacity, as the rate of return is higher and the participation process much less burdensome than the RFP alternative. Under an RFP system accepted bids often do not lead to construction as the margin is too low.

The FIT approach has been quite widely adopted in Europe and elsewhere over the last decade, and has led to a great deal of capacity construction in early-adopter countries such as Germany, Spain and Denmark. In Canada, Ontario was the first north American jurisdiction to introduce a similar programme in 2009. (I was involved in negotiating its parameters at the time.)

Renewable energy subsidies are becoming increasingly controversial, however, especially where they are very large. The most controversial are those for solar photovoltaics, which are typically very much higher than for any other technology. In a number of countries, solar tariffs are high enough to have produced a bubble, with a great deal of investment being poured into infrastructure production and capacity installation. Many of the countries that had introduced FIT regimes are now backing away from them for fear of the cost the subsidies could add to power prices if large amounts of capacity are added.

As Tara Patel wrote recently for Bloomberg:

EDF’s Solar ‘Time Bomb’ Will Tick On After France Pops Bubble:

To end what it has called a “speculative bubble,” France on Dec. 10 imposed a three-month freeze on solar projects to devise rules that could include caps on development and lowering the so-called feed-in tariffs that pay the higher rate for renewable power. The tariffs were cut twice in 2010. “We just didn’t see it coming,” French lawmaker Francois- Michel Gonnot said of the boom. “What’s in the pipeline this year is unimaginable. Farmers were being told they could put panels on hangars and get rid of their cows.”…. ….EDF received 3,000 applications a day to connect panels to the grid at the end of last year, compared with about 7,100 connections in all of 2008, according to the government and EDF.

Stoneleigh: The policy of generous FIT subsidies seems to be coming to an end, with cuts proposed in many places, including where the programmes had been most successful. The optimism that FIT programmes would drive a wholesale conversion to renewable energy is taking a significant hit in many places, leaving the future of renewable energy penetration in doubt in the new era of austerity:

Germany:

Half of the 13 billion euro ($17.54 billion) reallocation charges pursuant to Germany’s renewable energy act was put into solar PV last year. The sector produced about 7 GW of electricity, surpassing the 5-GW estimate. The government deemed the industry boom as counterproductive, pushing it to reduce subsidies and narrow the market.

The Czech Republic:

In an attempt to get hold of what could be a runaway solar subsidy market, the Senate approved an amendment April 21 that will allow the Energy Regulatory Office (ERÚ) to lower solar energy prices well below the current annual limit of 5 percent cuts. At the start of 2011, the state will now be able to decrease solar energy prices up to 25 percent – if President Klaus signs the amendment into law. Even with a quarter cut, the government’s subsidies for feed-in tariffs remain so high that solar energy remains an attractive investment.

France:

The Ministry of Sustainable Development is expected to cut the country’s generous feed-in tariffs by 12 percent beginning September 1 in an effort to rein in demand and curb spending, according to analysts and news reports from France.

Italy:

Incentives for big photovoltaic (PV) installations with a capacity of more than 5 megawatts (MW) will be slashed every four months by a total of up to 30 percent next year, said Gianni Chianetta, chairman of the Assosolare industry body. Incentives for smaller PV installations will be gradually cut by up to 20 percent next year. One-off 6 percent annual cuts are set for 2012 and 2013 under the new plan, the industry source said.

The UK:

The U.K. government signaled it may cut the prices paid for electricity from renewable energy sources, saying it began a “comprehensive review” of feed-in tariffs introduced last year. Evidence that larger-scale solar farms may “soak up” money meant for roof-top solar panels, small wind turbines and smaller hydropower facilities prompted the study, the Department of Energy and Climate Change said today in an statement. A review was originally planned to start next year.

The move will allow the government to change the above- market prices paid for wind and solar electricity by more than already planned when the new prices come into force in April 2012. The department said it will speed up an analysis of solar projects bigger than 50 kilowatts and that new tariffs may be mandated “as soon as practical.” “This is going to put the jitters into some market segments,” Dave Sowden, chief executive officer of the Solihull, England-based trade group Micropower Council, said today in a phone interview.

Portugal:

The Portuguese government has announced that it will review the existing feed-in tariff mechanism following calls that the subsidies are excessive and contribute to the increase of electricity prices to final consumers.

Ontario

Initial enthusiasm among ratepayers for the scheme is flagging in the wake of perceived links between the FiT and increased energy prices. The FiT passed into law in May 2009 as part of the Green Energy Act, which aims to promote the development of wind and solar generation in the province. With provincial elections slated for 6 October next year, the opposition Progressive Conservative Party is threatening to substantially revise and possibly even scrap the FiT should it win. Even if it the subsidy scheme were to be revoked, the legal implications of rescinding the over 1500MW in existing FiT contracts would be highly problematic.

Stoneleigh: Spain is the example everyone wishes to avoid. The rapid growth in the renewable energy sector paralleled the bubble-era growth of the rest of Spain’s economy. The tariffs offered under their FIT programme now come under the heading of ‘promises that cannot be kept’, like so many other government commitments made in an era of unbridled optimism. Those tariffs are now being cut, and not just for new projects, but for older ones with an existing contract. People typically believe that promises already made are sacrosanct, and that legal committments will not be broken, but we are moving into a time when rules can, and will, be changed retroactively when the money runs out. Legal niceties will have little meaning when reality dictates a new paradigm.

Spain:

Spain’s struggling solar-power sector has announced it will sue the government over two royal decrees that will reduce tariffs retroactively, claiming they will cause huge losses for the industry. In a statement, leading trade body ASIF said its 500 members endorsed filing the suit before the Spanish high court and the European Commission. They will allege that royal decrees 156/10 and RD-L 14/10 run against Spanish and European law. The former prevents solar producers from receiving subsidized tariffs after a project’s 28th year while the latter slashes the entire industry’s subsidized tariffs by 10% and 30% for existing projects until 2014. Both bills are “retroactive, discriminatory and very damaging” to the sector. They will dent the profits of those companies that invested under the previous Spanish regulatory framework, ASIF argued.

Austerity bites:

The government announced soon after that it would introduce retroactive cuts in the feed-in tariff program for the photovoltaic (PV) industry in the context of the austerity measures the country is currently undergoing. According to this plan, existing photovoltaic plants would have their subsidies cut by 30%, a figure that would go up to 45% for any new large scale plants. Smaller scale roof installations would lose 25% of their existing subsidy, while installations with a generating capacity of less than 20 KW would have 5% taken from their tariff.

Spain is to big to fail and too big to bail out:

Spain has been forced to cut back on solar subsidies because of the impact on ratepayers. But Spain’s overall economy is in much worse shape and the subsidies for feed in tariff are threatening to push the country into bailout territory or, at lease, worsen the situation should a bailout be needed.

FIT and Debt:

The strain on government revenue is in part due to the way Spain has designed its feed-in tariff system. Usually, this type of subsidy is paid for by utilities charging more for the electricity they sell to consumers, to cover the cost of buying renewable energy at above-market prices. Therefore no money is actually paid out of government revenues: consumers bear the cost directly by paying higher electricity bills.

In Spain, however, the price of electricity has been kept artificially low since 2000. The burden has been shouldered by utilities, which have been operating at a loss on the basis of a government guarantee to eventually pay them back. The sum of this so-called ‘tariff deficit’ has accumulated to over €16 billion (US$ 20 billion) since 2000. For comparison, Spain’s deficit in 2009 was around €90 billion (US$ 116 billion) in 2009 and its accumulated debt around €508 billion (US$ 653 billion).

Stoneleigh: Ontario threatens to take the Spanish route by instituting retroactive measures after the next election. For a province with a long history of political interference in energy markets, further regulatory uncertainty constitutes a major risk of frightening off any kind of investment in the energy sector. Considering that 85% of Ontario’s generation capacity reaches the end of its design life within 15 years, and that Ontario has a huge public debt problem, alienating investment is arguably a risky decision. FIT programmes clearly sow the seeds of their own destruction. They are an artifact of good economic times that do not transition to hard times when promises are broken.

Ontario

The outcome of an autumn election in Ontario could stunt a budding renewable energy industry in the Canadian province just as it is becoming one of the world’s hot investment destinations. If the opposition Progressive Conservatives win power on Oct. 6, the party has promised to scrap generous rates for renewable energy producers just two years after their launch by the Liberal government. That could threaten a program that has lured billions of dollars in investment and created thousands of jobs.

The Conservatives, who are leading in the polls, have yet to release an official energy manifesto. Even so, the industry is privately voicing concern, especially after the party said it would scrutinize contracts already awarded under Ontario’s feed-in tariff (FIT) program. “They are going to go through the economic viability of the energies and review all of the past contracts … I think that is going to cause a lot of delays, a lot of problems and a lot of risk to Ontario,” said Marin Katusa, chief energy analyst at Casey Research, an investor research service.

George Monbiot, writing for The Guardian in the UK, provides an insightful critique of FIT programmes in general:

The real net cost of the solar PV installed in Germany between 2000 and 2008 was €35bn. The paper estimates a further real cost of €18bn in 2009 and 2010: a total of €53bn in ten years. These investments make wonderful sense for the lucky householders who could afford to install the panels, as lucrative returns are guaranteed by taxing the rest of Germany’s electricity users. But what has this astonishing spending achieved? By 2008 solar PV was producing a grand total of 0.6% of Germany’s electricity. 0.6% for €35bn. Hands up all those who think this is a good investment…. .

As for stimulating innovation, which is the main argument Jeremy [Leggett] makes in their favour, the report shows that Germany’s feed-in tariffs have done just the opposite. Like the UK’s scheme, Germany’s is degressive – it goes down in steps over time. What this means is that the earlier you adopt the technology, the higher the tariff you receive. If you waited until 2009 to install your solar panel, you’ll be paid 43c/kWh (or its inflation-proofed equivalent) for 20 years, rather than the 51c you get if you installed in 2000.

This encourages people to buy existing technology and deploy it right away, rather than to hold out for something better. In fact, the paper shows the scheme has stimulated massive demand for old, clunky solar cells at the expense of better models beginning to come onto the market. It argues that a far swifter means of stimulating innovation is for governments to invest in research and development. But the money has gone in the wrong direction: while Germany has spent some €53bn on deploying old technologies over ten years, in 2007 the government spent only €211m on renewables R&D.

In principle, tens of thousands of jobs have been created in the German PV industry, but this is gross jobs, not net jobs: had the money been used for other purposes, it could have employed far more people. The paper estimates that the subsidy for every solar PV job in Germany is €175,000: in other words the subsidy is far higher than the money the workers are likely to earn. This is a wildly perverse outcome. Moreover, most of these people are medium or highly skilled workers, who are in short supply there. They have simply been drawn out of other industries.

Stoneleigh: Widespread installed renewable electricity capacity would be a very good resource to have available in an era of financial austerity at the peak of global oil production, but the mechanisms that have been chosen to achieve this are clearly problematic. They plug into, and depend on, a growth model that not longer functions. If we are going to work towards a future with greater reliance on renewable energy, there are a number of factors we must consider. These are not typically addressed in the simplistic subsidy programmes that are now running into trouble worldwide.

We have power systems built on a central station model, which assumes that we should build large power station distant from demand, on the grounds of economic efficiency, which favours large-scale installations. This really does not fit with the potential that renewable power offers. The central station model introduces a grid-dependence that renewable power should be able to avoid, revealing an often acute disparity between resource intensity, demand and grid capacity. Renewable power (used in the small-scale decentralized manner it is best suited for) should decrease grid dependence, but we employ it in such a way as to increase our vulnerability to socioeconomic complexity.

Renewable energy is best used in situ, adjacent to demand. It is best used in conjunction with a storage component which would insulate consumers from supply disruption, but FIT programmes typically prohibit this explicitly. Generators are expected to sell all their production to the grid and buy back their own demand. This leaves them every bit as vulnerable to supply disruption as anyone who does not have their own generation capacity. This turns renewable generation into a personal money generating machine with critical vulnerabilities. It is no longer about the energy, which should be the focus of any publicly funded energy programme.

FIT programmes typically remunerate a wealthy few who install renewables in private applications for their own benefit, and who may well have done so in the absence of public subsidies. If renewables are to do anything at all to help run our societies in the future, we need to move from publicly-funded private applications towards public applications benefitting the collective. We do not have an established model for this at present, and we do not have time to waste. Maximizing renewable energy penetration takes a lot of time and a lot of money, both of which will be in short supply in the near future. The inevitable global austerity measures are not going to make this task any easier.

We also need to consider counter-cyclical investment. In Ontario, for instance, power prices have been falling on falling demand and increased conventional supply, and are now very low. In fact, the pool price for power is often negative at night, as demand is less than baseload capacity. Under such circumstances it is difficult to develop a political mandate for constructing additional generation, when the spending commitment would have to be born by the current regime and the political benefits would accrue to another, due to the long construction time for large plants.

Politicians are allergic to situations like that, but if they do not make investments in additional generation capacity soon, most of Ontario’s capacity could end up being retired unreplaced. Large, non-intermittent, plants capable of load following are necessary to run a modern power system. These cannot be built overnight.

Many jurisdictions are going to have to build capacity (in the face of falling prices in an era of deflation) if they are to avoid a supply crunch down the line. Given how dependent our societies are on our electrified life-support systems, this could be a make or break decision. The risk is that we wait too long, lose all freedom of action and are then forced to take a much larger step backwards than might other wise have been the case.

Europe’s existing installed renewable capacity should stand it in good stead when push comes to shove, even though it was bought at a high price. Other locations, such as Ontario, really came too late to the party for their FIT initiatives to do any good. Those who have not built replacement capacity, especially load-following plants and renewables with no fuel cost going forward, could be very vulnerable in the future. They will be buffeted first by financial crisis and then by energy crisis, and there may be precious little they can do about either one.

Feb 222011
 
 February 22, 2011  Posted by at 6:34 pm Primers Comments Off on The View from the Bottom of the Pyramid

alt


Marion Post Wolcott Sea Level View January 1941 “Sarasota, Florida, guests of Sarasota trailer park picnicking at the beach”

Stoneleigh: People occasionally comment that we only consider the circumstances of the relatively wealthy in articles like, for instance, our Lifeboat Primer. It is true that by no means everyone can achieve the ideal circumstance of holding no debt, having cash on hand and having some control over the essentials of their own existence, however there are many other important factors in play that may decide the balance of advantage.

It seems important to consider explicitly the plight of those lower down the financial food-chain. The decisions people have to make will depend critically on their personal circumstances. However unfair it may be, all of us face constraints grounded in where we find ourselves in life, and we do not all have the same options available to us. This may seem overwhelmingly to favour the currently better off, but this is not always the case by any means. There are different ways of being well off besides the conventional monetary definition.

If one is going to fall out of a window, how much it hurts when one hits the ground will depend on how many stories high the window was. Some of those who live a relatively hand to mouth existence may find themselves falling out of a ground floor window. They will dust themselves off and move on. This will be much less painful than falling from the hundredth floor, as many of the better off will end up doing. People who may have nothing, but also owe nothing, are not so badly off in comparison with those who have a lot, but owe far more than they have. The latter is a very common situation, and will become increasingly common as assets prices fall in a deflationary environment, and debt servicing becomes ever more onerous. Very many seemingly wealthy people are over-stretched “like butter spread over too much bread”, as Bilbo put it in The Lord of the Rings. Essentially, it is far better to have nothing, than less than nothing in net monetary terms.

As we have pointed out before (see Trickles, Floods and the Escalating Consequences of Debt), indebtedness can have serious consequences. Just because we have not seen these recently in developed countries does not mean they are gone forever (in an ever-increasing spiral of civilized behaviour). For the time being, civilized methods exist for getting out from under unrepayable debt, but these are unlikely to persist once too many people try to rely on them. For those who think they may need to have recourse to bankruptcy, it would be better not to wait too long, as that particular door may close. Being in debt gives others power over one’s life, and that power may be exerted in many different ways, none of which are likely to be pleasant for the debtor.

We have seen the subprime crisis, which involved primarily the poor in an exploitative and predatory relationship with the financial system. That is now essentially over. The interest rate adjustments on those negative amortization loans (where borrowers were offered a low teaser interest which reset after a few years, and the unpaid interest was added to the principle at the end of that time) are mostly in the past. Loan re-adjustments will continue until 2012, but now for prime mortgages. These are typically people who are much wealthier, but couldn’t resist, for instance, the Palm Springs beach house or the New York condo. These are people whose lives have always been thoroughly embedded in in our modern bubble economy, and whose decisions have all been based on the assumption of its continued existence. A significant percentage of such people is carrying many other forms of debt in addition to mortgages. Many wealthy people are in at least as deep a hole compared to their income as any subprime borrower, and many of them will lose their shirts as well.

Also, everything you own you may have to protect in one way or another, and this can require significant resources, as well as cause significant stress. Many wealthy people in disparate parts of the world effectively live in gilded prisons, where they have to pay for protection services (and never know when someone else may outbid them for the services of their private security guards). In some parts of the world, kidnapping the children of the wealthy approaches the level of national sport. While there are obvious comforts to being wealthy, it is no panacea and no real predictor of surviving or thriving.

The critical factor is not so much available money, as adaptability. Although money represents unmade choices, and is therefore an advantage in one way, the ready availability of money has also made many people soft, and prone to take the path of least resistance. This has often lulled them into a false sense of security. Some people know how to be poor and others do not. Better yet, some know how to be both poor and happy. For some, poverty would be merely a frustration, and for others an insurmountable obstacle. <The Future Belongs to the Adaptable>, not necessarily to the currently wealthy. Wealthy people are too often dependent on a functioning system – a system they have learned well how to navigate and function within, but a system that is extremely brittle in its economic efficiency. Without that all-encompassing life-support system, they may not be able to function at all. During the Soviet collapse, the former pillars of community (most often middle-aged men) frequently drank themselves to death because they could not adapt to a new reality.

The wealthy may have deliberately chosen to buy themselves out of the need for ‘messy’ human entanglements and interdependencies in favour of maximizing autonomy, but this can be an acute vulnerability in hard times. Community matters far more than money. No man is an island, and pooling resources can do a lot to help a group of people get through a bottle-neck, even if none of them is wealthy. Time, skills, creativity and emotional support are at least as important to share as money in building a mutual support system. Doing so can greatly reduce the dependence on money to the benefit of all involved, given that money will be very scarce. Pooling resources across the generations can be particularly important, and represents the way the vast majority of humanity already lives, where top-down services and other external supports have never been available. Extended family is a tried-and-tested, and very robust, structure.

In difficult times, who you know, and how well you know them, matters at least as much as what you know, and the most important connections are not necessarily those with the wealthy or powerful. There is simply strength in numbers, especially where those numbers are based on relationships of trust, and a trust born of mutual interdependence can be far more common in the lower echelons of society where it has been more necessary, and may therefore have been more firmly established already. It is necessary to know whom to trust, and towards whom to maintain a healthy scepticism. The poor are often more adept at telling the difference.

As Dimitri Orlov said, Real Communities are Self-Organizing:

“The rich get to play, while other, less privileged parts of the population, such as the immigrants, the squatters and the homeless, the chronically unemployed or underemployed, the bums (the real ones, not the ones in government), simply don’t have the same options. At the same time, their need for community is much greater, and so they spontaneously self-organize, network informally, and defend their interests as best they can. They all know that “a nail that sticks up gets hammered down” and so they don’t advertise their efforts or make them official or explicit.”

 

We need to learn from those who have lived a life where they have had to learn on their feet. It is not possible, nor indeed necessary, to avoid all difficult environments, but it is quite likely to be necessary to learn to operate within them, and this is not a subject taught in school. As TAE commenter Subgenius said recently:

I also bought a LOT of unpleasant people drinks, etc. over the first few years. A few years in and a situation got very out of control and I found I had a small army backing me up, which saved me from a pretty nasty set of possibilities. Remember – neighbors are ALL. You don’t have to LIKE them, but treat them with what THEY perceive as respect and they will look out for you.

 

Finally, we can take comfort in the words of John Steinbeck, expressed by Ma Joad in The Grapes of Wrath:

I ain’t never gonna be scared no more. I was, though. For a while it looked as though we was beat. Good and beat. Looked like we didn’t have nobody in the whole wide world but enemies. Like nobody was friendly no more. Made me feel kinda bad and scared too, like we was lost and nobody cared…. Rich fellas come up and they die, and their kids ain’t no good and they die out, but we keep on coming. We’re the people that live. They can’t wipe us out, they can’t lick us. We’ll go on forever, Pa, cos we’re the people.

Feb 082011
 
 February 8, 2011  Posted by at 8:31 pm Primers Comments Off on An Unstable Tower of Breaking Promises

alt

Lewis Wickes Hine What difference 100 years make January 1911 “Tom Vitol (also called Dominick Dekatis), 76 Parsonage Street, Hughestown Borough; Works in [coal] Breaker #9; Probably under 14: Pittston, Pennsylvania. “


Stoneleigh: Despite the continuing atmosphere of optimism and denial (that’s par for the course during long-lived counter-trend rallies), we are witnessing a slow-motion crash of the juggernaut that is the real US economy. The unemployment situation is already the worst since the Great Depression and showing no signs of recovery.

 

alt

David Rosenberg provides his take on the data from the latest Bureau of Labor Statistics report:

Just How Ugly Is The Truth Of America’s Unemployment

The data from the Household survey are truly insane. The labour force has plunged an epic 764k in the past two months. The level of unemployment has collapsed 1.2 million, which has never happened before. People not counted in the labour force soared 753k in the past two months. These numbers are simply off the charts and likely reflect the throngs of unemployed people starting to lose their extended benefits and no longer continuing their job search (for the two-thirds of them not finding a new job). These folks either go on welfare or they rely on their spouse or other family members or friends for support.

 

Stoneleigh: The middle class is forced to run on a treadmill that is increasing in speed, so that they have to run faster and faster just to keep up. More and more people are failing to do so and being flung off the back all the time, but so far their plight goes largely unnoticed. For now there are sufficient bread and circuses to distract the rest of the masses, and enough opportunities for short-term profit for those at the top of the pyramid to focus their attention away from reality as well. In the meantime the pressure builds quietly closer to criticality, and as we’ve seen recently in Egypt, a social pressure cooker can suddenly erupt. Prevailing social mood can turn on a dime.

As bad as unemployment is now, it is destined to get vastly worse, likely at an accelerating pace. The real economy is facing a squeeze from both ends that stands to get dramatically worse, as we move into the next phase of the credit crunch and the effective money supply begins to shrink in earnest (deflation). Many employers are already having difficulty maintaining salaries and benefits, and many employees are struggling with a rising cost of living that leaves them increasingly stretched. This is before credit contraction moves into high gear, as it will once the rally is over.

The relative optimism of a rally keeps both sides hanging on, hoping that the hard times are temporary and that greener pastures lie around the corner. When that optimism evaporates, and those hopes prove to be unfounded, the reaction could be rapid, especially on the part of employers. Those who have been trying to kick the can of current difficulties down the road far enough for recovery to get underway are very likely to hit a wall, especially if postponing the inevitable has been achieved by digging themselves into an even deeper hole in the meantime. The likelihood of a spike in unemployment in the not too distant future is very high.

The public sector is particularly vulnerable, as the crunch is already becoming acute in many places. Public sector employees have been offered relatively generous terms, especially for benefits such as pensions, but the ability of public authority employers to keep those promises hinges on maintaining tax revenues, and that is already proving to be impossible at both the municipal and state levels. Mechanisms are being sought to walk away from these promises-that-cannot-be-kept, which compete with essential social functions for increasingly scarce revenues, as Mary Williams Walsh noticed in the New York Times last month:

A Path Is Sought for States to Escape Their Debt Burdens

Policymakers are working behind the scenes to come up with a way to let states declare bankruptcy and get out from under crushing debts, including the pensions they have promised to retired public workers [..]

Beyond their short-term budget gaps, some states have deep structural problems, like insolvent pension funds, that are diverting money from essential public services like education and health care [..]

Bankruptcy could permit a state to alter its contractual promises to retirees, which are often protected by state constitutions, and it could provide an alternative to a no-strings bailout. Along with retirees, however, investors in a state’s bonds could suffer, possibly ending up at the back of the line as unsecured creditors.

Stoneleigh: The parallels between muni bonds and the housing bubble are significant, notably the shift in perception from low risk to high risk in a short period of time. Says Veronique de Rugy for Reason Magazine:

The Next Housing-Style Crisis Will Be The Municipal Debt Bubble

Like homeowners, states and cities splurged on debt and found inventive ways to get around borrowing limits to finance projects they couldn’t pay for otherwise. And recently the federal government encouraged investors to pour their money into the coffers of these less-than-creditworthy borrowers. Now some of those investors, like the few lonely mortgage-industry short sellers in 2005–06, have started betting against the borrowers. Time reports that some of them “are jumping into the credit default swap market to bet against cities, towns and states”.

 

alt

Stoneleigh: Municipalities, which have been borrowing for years to fund spending of all kinds, are shortly going to find it very much more difficult to access the money they would require to maintain their current spending. We are already seeing large scale layoffs in many places, and this is the thin end of the wedge. Tami Luhby at CNN:

Camden, N.J., to lose nearly half its cops

There will be fewer cops patrolling the streets of Camden, N.J., come Tuesday. Struggling to close a $26.5 million budget gap, the city with the second highest crime rate in the nation is laying off 163 police officers. That’s nearly 44% of the force. And Camden will also lose 60 of its 215 firefighters. Some people with desk jobs will be demoted and reassigned to the streets. The mayor’s office says that the cuts will not affect public safety.

Stoneleigh: This assurance is highly optimistic considering recent experience elsewhere. Jerry White at WSWS wrote back in September:

Detroit firefighters denounce city budget cuts

A virtual firestorm erupted Tuesday night, destroying or severely damaging 85 homes, garages and other structures and leaving dozens of families homeless. Burning debris and embers were blown by winds spreading flames house-to-house and across streets and alleys. Shorthanded and underequipped firefighters, grappling with malfunctioning hydrants and exhaustion, fought to protect lives and property. They were aided by residents desperately fighting back the flames with garden hoses [..]

In a press conference Wednesday, Detroit Mayor David Bing sought to deflect attention from the crippling budget cuts imposed on the fire department and other city services….In reality, cutbacks carried out by Bing and previous Democratic administrations had a direct impact on the severity of the fires and the damage they wrought. Between 8 and 12 of the city’s 66 fire companies are “browned out” each day, meaning they are temporarily decommissioned and unavailable to fight fires due to budget cuts. One of the decommissioned stations was reportedly the closest to a neighborhood that erupted in flames. Residents complained of long delays while waiting for fire engines, even running to nearby firehouses that were empty.

Stoneleigh: Our societies face many hard choices as to priorities in our developing era of broken promises to ourselves and each other. We cannot have it all. Both employers and employees are caught between a rock and a hard place (as are those they serve with their activities). So far the hard choices are being avoided, but that does nothing but compound the inevitable pain. Desperation measures such as encouraging gambling in order to gain revenue from social addictions is clearly not a solution. Neither is selling future revenue streams to pay current bills. Consistently failing to pay those bills is reminiscent of the collapse of the Soviet Union, where employees were paid months late if at all.

Illinois is in particularly bad shape. Cue Steve Kroft at CBS’ 60 Minutes:

State Budgets: The Day of Reckoning

Hynes is the [Illinois] paymaster. He currently has about $5 billion in outstanding bills in his office and not enough money in the state’s coffers to pay them. He says they’re six months behind.

“How many people do you have clamoring for money?” Kroft asked. “It’s fair to say that there are tens of thousands if not hundreds of thousands of people waiting to be paid by the state,” Hynes said.

Asked how these people are getting by considering they’re not getting paid by the state, Hynes said, “Well, that’s the tragedy. People borrow money. They borrow in order to get by until the state pays them.” “They’re subsidizing the state. They’re giving the state a float,” Kroft remarked. “Exactly,” Hynes agreed.

“And who do you owe that money to?” Kroft asked. “Pretty much anybody who has any interaction with state government, we owe money to,” Hynes said. “The state’s a deadbeat,” Kroft remarked.

Stoneleigh: And Tim Jones for Bloomberg:

Illinois Has Days to Plug $13 Billion Deficit That Took Years to Produce

“Illinois is probably in the worst shape,” Gross said in a Dec. 28 interview on CNBC. The widening gap between Illinois’s expenses and revenue drew criticism from Moody’s. The disparity underscored the state’s “chronic unwillingness to confront a long-term, structural budget deficit,” it said in a Dec. 29 study.

The worst financial crisis since the Great Depression and politicians’ unwillingness to cut budgets explain the descent since 2008, said Tom Johnson, president of the nonpartisan Taxpayers’ Federation of Illinois. Annual sales and income-tax revenue fell for the first time in modern history, he said. “The state was hoping for a quick recovery or inflation, and they didn’t get it,” Johnson said in a telephone interview. “And there was no appetite to reduce the escalating costs of spending.”

The falloff in revenue aggravated the state’s historic practice of delaying payments to vendors and carrying those costs on from one year to the next. “Revenues went south, spending went north,” Johnson said. “It’s unsustainable.” The current-year budget deficit of $13 billion is roughly half the size of the state’s general-fund budget. Borrowing to pay bills continues. In November the state sold $1.5 billion of bonds backed by tobacco settlement payments to help pay vendors.

“We have seen a lot of the budgetary tools that really don’t qualify as real solutions used, whether it’s short-term borrowing, pension borrowing, delays in payments, the sale of future revenues,” Hynes said. Illinois business leaders have warned that the state’s failure to properly fund pensions means the plans will run out of money to pay promised benefits before the decade ends.

Stoneleigh: The common ground where bargains acceptable to both sides of a dispute can be found is rapidly disappearing or already gone. All parties are looking for more in order to dig themselves out of a hole, when there is much less overall to go around. This creates a clear potential for an entrenched and confrontational mentality that can easily make matters worse.

Unfortunately deflation (the collapse of money plus credit relative to available goods and services) aggravates natural human impulses arising out of increasing scarcity. Under deflationary conditions, where credit can evaporate at lightning speed, the purchasing power of very scarce remaining physical cash increases. In other words, over time, a salary would go further than it used to, or alternatively the purchasing power of a salary could be maintained if the salary was cut. Employees would be very unlikely to see a salary cut in those terms however, and would likely become very defensive. People typically think in nominal terms, not in real terms, even though it is affordability that matters rather than merely price.

Squeezed employers are not going to be able to maintain the purchasing power of the salaries they pay. They will be looking to pay fewer people and to hand over less purchasing power to each remaining employee than before. Employees will have little or no bargaining power, either individually or collectively, under circumstances where unemployment is high and rising (for a very evocative illustration of this in relation to the Great Depression see John Steinbeck’s The Grapes of Wrath).

The odds of very substantial pay and benefit cuts in the not too distant future are very high, and the odds of this being extremely badly received by the workforce are even higher. We could see many more public sector employers trying to pay their bills in IOUs, as California resorted to during phase one of the credit crunch.

At the moment employees are watching prices rise (as a lagging indicator of previous expansion coupled with commodity market speculation), and in many places they are facing tax increases and/or the introduction of service user fees at one or more levels of government. While prices are likely to fall in a deflation, this will not mean greater affordability where people’s purchasing power is falling faster than price due to rapidly falling wages and benefits, so the rise in the effective cost of living will continue, and so will the pain.

So far interest rates are still moderate, which matters a great deal to heavily indebted individuals, but this is not likely to remain the case for too long as lenders face higher risk of non-payment. The typical reaction, apart from drastically curtailing lending, would be a higher risk premium placed on credit. Debt will become much less serviceable as a result. The burden on ordinary people, as almost everything gets less affordable, will be a heavy one indeed.

As we have written here before, there is considerable potential for war in the labour market. It is entirely likely that we will see general strikes, and a considerable amount of unrest, which can in turn trigger a repressive response. There are many commenters who take one side or the other in calling for a solution to the employment predicament, but that is too simplistic. Blame games serve no one (except nascent demagogues).

We have built our civilization on an unstable tower of promises. We have all been part of the problem, and now we must all look for ways forward that cause the least harm to the fabric of society. There are no ‘solutions’ in that there is nothing that will get us business as usual, but there are better and worse ways to address the intractable situation we are facing.

Unions are a favourite target for criticism. They are only one side of the story, but they are major players. Steve Maich for Macleans:

Are labour unions a blessing or a curse?

Despite arguments to the contrary, this economic muddle wasn’t triggered because ordinary Americans don’t make enough money or because they lack adequate job protection. It wasn’t sparked by big businesses being saddled with high labour costs or debilitating strikes either. Our problems are rooted in the fact that ordinary Americans spent wildly beyond their means for more than a decade, and big business rode that debt-fuelled spending boom until it crashed.

Stoneleigh: The union movement has done a lot over the last hundred years to redress a balance of power that had enabled the Dickensian exploitation of the masses, but now has the potential to be a significant obstacle to what must happen going forward, namely financial haircuts for all parties. It will not be possible, nor is it desirable, to defend the rights of one group at the expense of all others, and all competing priorities for public expenditure.

Pressing the case for one segment of society only would be extremely divisive, particularly between working people. Where unions exist to maintain large disparities between workers through closed shops with substantial barriers to entry, they act to benefit a few relatively privileged workers at the expense of the many, not to redress the balance of power between the top and the bottom of the pyramid. As such they become self-serving, as most human institutions typically do over time.

They can also be used by the powerful as a tool to divide and rule. As Ilargi said at The Automatic Earth some time go, We’re going to play you all against each other, until you make as much as a Chinese peasant. This clearly does nothing to advance the cause of working towards a more just society, as unions claim to do.

As high unemployment will undercut bargaining power, unions are not likely to survive in their present form. If they cling to rigid demands based on promises made in manic times, they will be broken. This is a recipe for a return to outright exploitation under conditions where desperate people have no choice. It would be far better to leave behind that which cannot survive and work to find any kind of common ground that could be built on. Such ‘solutions’ are not likely to please anyone, as having to accept less never does, but it would be better than fighting the inevitable.

Looking for ways to move forward during a period of contraction will be of major importance in almost every sphere of society. Those with mediation skills, who can help to identify the least worst approach for all concerned, could be worth their weight in gold. I would expect it to be a thankless task, given how patently unrealistic most people’s expectations are, but if it can help to avoid our societies making a bad situation worse as expensively as possible, then it will be well worth the effort.

Jan 222011
 
 January 22, 2011  Posted by at 7:10 pm Finance, Primers Comments Off on Debunking Gonzalo Lira and Hyperinflation

alt

Howard Hollem Primary Colors February 1943 “War production workers at the Heil Co. making gasoline trailer tanks for the Army Air Corps, Milwaukee, Wisconsin. Elizabeth Little, age 30, mother of two, spraying small parts. Her husband runs a farm”

Ilargi: When I first saw the Gonzalo Lira pieces, it took me less than five minutes to delete them. Their basis is simply too slim: if A happens, than B. C and D must also happen. Yeah, but what if A does not happen? A lot of our readers didn’t see what was obvious to me from the get-go, and kept asking for a riposte. So here’s Stoneleigh, who does it better than anyone. By the way: it really is this simple: as long as the US sells its debt on the international markets, hyperinflation is entirely impossible. No ifs or buts. The simplicity may be deceiving, and apparently is for many, but sometimes things really are that simple. (Almost) nobody bought German debt in 1923, or Zimbabwe’s in 2000 or thereabouts. In order to achieve hyperinflation, you first need economic and financial isolation. Ergo: if for instance Greece leaves the eurozone, it could go that road. The US, however, will be kept in check by the markets for quite a while to come. And at the right price (re: interest rate), the markets will be willing takers. Hyperinflation in the US is a long way away.


Stoneleigh: Some time ago, Gonzalo Lira wrote a couple of interesting pieces on hyperinflation, and I promised to respond to them. This has taken me a while, as there is much material to go through, many arguments to pick apart, areas of agreement and disagreement, differences in definitions and matters of timing. The first article, How Hyperinflation Will Happen, is a long, thoughtful and detailed piece that I found interesting. There are many aspects I fundamentally disagree with, however, some for reasons of substance and others for reasons of timing.

Essentially the central proposition is that the US dollar is in danger of imminent demise due to a widespread loss of confidence, and that treasuries will be dumped en masse within a year, leading to hyperinflation, by which Mr Lira means price spikes. I do not see a loss of confidence in the dollar going forward, at least not soon. We have seen a long slide in the value of the dollar coincident with the rally in stocks. This is a reflection of a resurgence of confidence in being invested rather than being liquid, but this confidence is fragile and subject to rapid reversal.

I regard the extremely bearish sentiment regarding the dollar specifically as typical of a bottom. Trends take time to become established as received wisdom, and by the time they come to be generally accepted, they are much closer to an end than a beginning. When everyone is bearish, and has acted upon that sentiment, who is left to carry the trend any further in that direction? Market insiders will be taking the other side of the bet, as they always do at turning points. This is how they make their money – by recognizing and feeding off the sentiment of the herd.

When the market rally tops, I expect people to begin chasing liquidity in earnest – too late for many, as liquidity will get much harder to come by. Only a small minority will be able to cash out at the top. I fully expect the dollar to surge in relation to other currencies when this happens, on a knee-jerk flight to safety into the reserve currency as the least-worst option. At that time, I would not expect the US to have difficulties selling treasuries, because I think they will be regarded as the safest option in a horribly unsafe world. This is not rational, as the US is far past the point of no return on repaying its debt, but rationality is not the point, as herding impulses are never rational.

I would also expect the purchasing power of the remaining dollars (i.e. physical cash, of which there is actually very little) to increase substantially in relation to available goods and services domestically, as dollars will be both scarce and essential once credit virtually ceases to exist. Central authorities cannot print cash to alter this situation, as this would trigger an enormous increase in the risk premium charged by the bond market. Hence, cash will remain scarce, and people will hoard what little there is, compounding the effect of deflation through a fall in the velocity of money. In this regard, my view is diametrically opposed to Mr Lira’s.

I see far more imminent problems ahead for the euro than for the US dollar. I expect the shift from optimism to pessimism, that will define the end of the stock market rally, to lead to a rapid resurgence of fear over sovereign debt default risk in Europe. This can only exacerbate the widening regional disparities, and I think it will widen them to breaking point, for the eurozone and perhaps later for the EU itself.

As I have said before, the austerity measures coming for the whole European periphery are going to be severe enough to amount to political suicide for domestic politicians to implement. I think peripheral countries will choose to leave the euro, however high the cost of doing so, as the cost of staying in the eurozone could be even higher. If this does in fact happen, I think we would see an Argentine scenario, where savings are converted into the local currency (which would probably fall even compared with a falling euro), while debts remain in euros. These unpayable debts would then be defaulted on somewhat later. The level of uncertainty would almost certainly lead to massive capital flight from Europe, to America’s temporary benefit.

Naturally the dollar, like all fiat currencies, will eventually die, but I would argue that the time for that is not now. A dollar rally could be measured in years, although not many by any means. My best guess is that we would see perhaps a year or two of dollar rally in a world going increasingly haywire. After that I expect an end to the system of floating currencies, with all manner of attempts at competitive devaluation, currency pegs established and rapidly blown away, and beggar-thy-neighbour policies all round. The risk of currency reissue will rise over time, and be highly locational. I think the risk of reissue in the US is not imminent, but in Europe it should be a much larger concern, especially in peripheral countries.

I agree with this passage from Mr Lira’s article:

But this Fed policy—call it “money-printing”, call it “liquidity injections”, call it “asset price stabilization”—has been overwhelmed by the credit contraction. Just as the Federal government has been unable to fill in the fall in aggregate demand by way of stimulus, the Fed has expanded its balance sheet from some $900 billion in the Fall of ’08, to about $2.3 trillion today—but that additional $1.4 trillion has been no match for the loss of credit. At best, the Fed has been able to alleviate the worst effects of the deflation—it certainly has not turned the deflationary environment into anything resembling inflation.

Yields are low, unemployment up, CPI numbers are down (and under some metrics, negative)—in short, everything screams “deflation”.

This has been occurring under the most favourable of circumstances – a major rally during which people are prepared to suspend disbelief and give central authorities the benefit of the doubt. In all this time, and with all its efforts, the Fed has only been able to slow deflation. Once we turn the corner, confidence (and therefore liquidity) will evaporate again, and the headwind against the Fed will get very much stronger.

If they could not stop deflation under favourable circumstances, their odds of doing so under unfavourable ones must be extremely low. Periods of intense pessimism are not kind to central authorities. Everything they do is too little and too late. Every time they try and fail they look more desperate, which only acts to confirm people’s pessimism in a self-reinforcing spiral. Deflation has a massive psychological component, which the Fed has no tools to fight.

The second major proposition Mr Lira makes is that commodity prices will spike as a consequence of a meltdown in the treasury market:

At the time of the panic, commodities will be perceived as the only sure store of value, if Treasuries are suddenly anathema to the market—just as Treasuries were perceived as the only sure store of value, once so many of the MBS’s and CMBS’s went sour in 2007 and 2008.

It won’t be commodity ETF’s, or derivatives—those will be dismissed (rightfully) as being even less safe than Treasuries. Unlike before the Fall of ’08, this go-around, people will pay attention to counterparty risk. So the run on commodities will be for actual, feel-it-’cause-it’s-there commodities.

As I do not think such a treasury meltdown is imminent, I do not think such knock-on consequences are imminent either. In contrast, I think we are already seeing evidence of a top in commodities, which typically peak on fear of scarcity. I regard the sentiment indicators as strong evidence of such fear, and am therefore looking for a reversal, roughly coincident with a stock market top and a dollar bottom.

We have already seen significant speculative gains in commodities, similar to 2008, and I think that speculation will go into reverse, probably quite sharply. I would then expect a demand collapse to carry prices further to the downside. As I see a speculative reversal followed by a demand collapse setting up a supply collapse, I can see Mr Lira’s scenario possibly playing out in the future, quite possibly coincident with a bond market dislocation as he suggests. It is difficult to predict the timing for such an event, but I see it as being much further in the future than he does.

Because of my objection to the timing, I disagree with Mr Lira’s next assertion:

People—regular Main Street people—will be crazy to buy up commodities (heating oil, food, gasoline, whatever) and buy them now while they are still more-or-less affordable, rather than later, when that $15 gallon of gas shoots to $30 per gallon.

If everyone decides at roughly the same time to exchange one good—currency—for another good—commodities—what happens to the relative price of one and the relative value of the other? Easy: One soars, the other collapses.

When people freak out and begin panic-buying basic commodities, their ordinary financial assets—equities, bonds, etc.—will collapse: Everyone will be rushing to get cash, so as to turn around and buy commodities….[..] …..

This sell-off of assets in pursuit of commodities will be self-reinforcing: There won’t be anything to stop it. As it spills over into the everyday economy, regular people will panic and start unloading hard assets—durable goods, cars and trucks, houses—in order to get commodities, principally heating oil, gas and foodstuffs. In other words, real-world assets will not appreciate or even hold their value, when the hyperinflation comes.

In my view, by the time we see a commodity price spike, the value of people’s financial assets will already have evaporated, they will already have unloaded hard assets, and the dash for cash will already be in the past. I think at that point we will be well into a state of economic seizure, where credit will have disappeared, unemployment will have spiked, incomes will be very precarious, scarce cash will be being hoarded and it will be exceptionally difficult to connect buyers and sellers. Consequently, I do not see most people being in a position to engage in panic buying.

Some many be able to do this, but I think the resource grab is more likely to be a phenomenon operating at the level of the state than at the level of the individual, as most individuals will already have lost almost all their purchasing power. In my opinion, states will certainly engage in a resource grab, and will take supplies off the market, either by sending the tanks or the bilateral contract negotiators into resource-rich regions. States know perfectly well that oil is liquid hegemonic power, and they will be trying to secure their supply in whatever way they can.

I agree with Mr Lira that almost everything will be very much less affordable than it is now, and that this will happen quickly. I do not agree that prices will rise in nominal terms, or that this is in any way a requirement of a drastic fall in affordability. I expect prices to fall in nominal terms, but for purchasing power to fall much more quickly as credit evaporates. Thus as prices fall in nominal terms, affordability decreases, and the essentials end up being the least affordable of all. They will receive relative price support as a much larger percentage of a much smaller money supply ends up chasing them, hence any fall in their prices should be much smaller than for other goods and services. Thus I agree with Mr Lira that the essentials will be drastically less affordable, but I do not think nominal prices need to rise for this to happen.

When we see the inevitable price spike in the future, once demand collapse has led to supply collapse, we could easily see price increases in nominal terms. Against a backdrop of monetary contraction, this would mean prices were going through the roof in real terms (ie adjusted for changes in the money supply). Being able to obtain essentials will be a huge problem, and I fully expect ordinary people to be priced out of the market for many things at that point.

Their survival may then depend on rationing and bare-minimum level handouts. I think the problem will begin before this though, as a collapse in purchasing power prevents people buying essentials for lack of money long before essentials actually become scarce.

The next point of contention between my view and Mr Lira’s is his discussion of Japan’s fortunes:

That’s right: The parallels with Japan are remarkably similar—except for one key difference. Japanese sovereign debt is infinitely more stable than America’s, because in Japan, the people are savers—they own the Japanese debt. In America, the people are broke, and the Nervous Nelly banks own the debt. That’s why Japanese sovereign debt is solid, whereas American Treasuries are soap-bubble-fragile.

In my view, we are looking at a Japanese scenario in some ways, but on more of an Argentine timeline. Japan has been mired in a long and drawn out deflation, because they had an enormous pile of money to burn through before having to address their banking problems and also because they had an export-oriented economy at a time when they could exploit the largest consumer boom in global history. We are not so fortunate. We find ourselves in a huge debt hole, and as the economic seizure will be global, we will not be able to export our way out of anything, even if we still had yesterday’s productive capacity, which is in any case long gone thanks to global wage arbitrage.

I do not regard Japanese sovereign debt as solid. In fact I think Japan is very close to the final day of reckoning where the problems of the past must finally be faced head on. I see a banking collapse in their near future, compounded by their extreme dependence on imported resources, which they will not be able to afford if their export markets die for lack of consumers with purchasing power.

The main point of contention I have with Mr Lira centres around the longer-term prospects for the USA:

Instead, after a spell of hyperinflation, America will end up pretty much like it is today—only with a bad hangover. Actually, a hyperinflationist spell might be a good thing: It would finally clean out all the bad debts in the economy, the crap that the Fed and the Federal government refused to clean out when they had the chance in 2007–’09. It would break down and reset asset prices to more realistic levels—no more $12 million one-bedroom co-ops on the UES.

And all in all, a hyperinflationist catastrophe might in the long run be better for the health of the U.S. economy and the morale of the American people, as opposed to a long drawn-out stagnation. Ask the Japanese if they would have preferred a couple-three really bad years, instead of Two Lost Decades, and the answer won’t be surprising.

I do not see this as a transitory problem leading back to business as usual, and I mean NEVER returning to what we would now regard as business as usual, let alone doing so in only a couple of years.

Deflation and depression are mutually reinforcing. This is a persistent dynamic that should last at least as long as the last depression, and likely longer as every parameter is worse going into depression this time. We have more debt, far more structural dependencies (on cheap energy and cheap credit primarily), looming resource limitations, far higher expectations, a much larger population, a far smaller skill base etc.

I think we are looking at an economic catastrophe of unprecedented proportions, not a bump in the road that can be quickly consigned to history, if only we face our problems head on. In my view we are going to have to live through deflationary deleveraging, a long and grinding depression, and then quite possibly hyperinflation once the international debt financing model is broken, and with it the power of the bond market to constrain currency printing.

This could easily take twenty years to play out, and even then the upheaval is very unlikely to be over. The last time a major bubble burst – the South Sea Bubble of the 1720s – the aftermath lasted for several decades and culminated in a series of revolutions. This bubble is much larger, and the aftermath is likely to be proportional to the excesses of the preceding bubble. This is why I call the presentation I travel to deliver A Century of Challenges.

Moreover, I do not see a return to what we consider to be business as usual at any point, because our business as usual scenario is critically dependent on cheap energy, and the energy subsidy inherent in fossil fuels has been a once in a planet’s lifetime deal. We are going to be living on an energy income instead of an energy inheritance, and this will mean living a life none of us in the developed world will recognize.

Jan 112011
 
 January 11, 2011  Posted by at 8:04 pm Primers Comments Off on The Future Belongs to the Adaptable

alt


Detroit Publishing Co. Always the First with the Big News 1908 “Smallest news & post card stand in New Orleans, 103 Royal Street”

Stoneleigh: As our readers know, we do not provide investment advice. We do not exist to help people make money in the markets, but to help them avoid losing what they have in a deflationary crisis, at a time when almost everyone will lose a great deal. Our position is that being in cash on the sidelines is by far the safest option at this point, and where most people would be better off by far. Those who are still in the markets are playing a very dangerous game. Many of them know this perfectly well, but they can’t walk away from the casino. The upside is limited, possibly very limited, and the risks are steadily increasing.

Stock market bubbles (and housing bubbles etc) are ponzi schemes. As with all ponzi schemes, only a few manage to cash out, and the majority are those who do so early. Those who do not cash out become the designated empty bag holders, but that empty bag can look awfully attractive at a market top. Trying to catch the top tick, and wring every last ounce of profit out of a collapsing system, is foolish. Most investors who play that game are likely to lose badly.

They may be convinced that they are clever and quick enough to get out before the rest, but the odds are not good. Also, the rules of the game are likely to be changed along the way, so that one would have to be both right and lucky in order to profit. For instance, shorting is likely to be banned at some point, and speculators demonized. There will be opportunities to make a killing, but many more ‘opportunities’ to lose your shirt.

Capital preservation is essential in a deflation, and the best way to preserve capital at this point is to be liquid. Cash constitutes uncommitted choices, and in a world of uncertainty, one needs to be flexible. There will be plenty of opportunities over the next few years (both to improve circumstances and avoid disaster) that will only be available to the few who still have the options cash provides. It isn’t necessary to have a fortune. Even a small amount of cash can go a long way as deflation causes prices to fall.

Those without any cash, or the means to earn some (in what will be a very difficult earning environment), will be at the mercy of whatever the world has to throw at them. Most of us are accustomed to far more choice and self-determination than most people have had in human history, and there would be nothing harder to lose. Nothing is as addictive as freedom.

The best way to approach a major threat with attendant uncertainty is to minimize the consequences of being wrong. If people follow our suggestions then they will have reduced or eliminated debt, will have cash on hand and will have perhaps some control over the essentials of their own existence. In short they will be far more resilient in a world where many families are brittle, with little ability to weather even minor turbulence.

These measures are actually prudent under most circumstances. If one takes such steps and things do not go as badly wrong as we think they will, what is the downside? There may be some opportunity cost, but the result will not be catastrophic. Alternatively, if one does nothing to prepare, on the assumption that the situation is under control when it is not, then being wrong could easily be an unrecoverable disaster.

The herd is always fully invested at tops and fully liquid at bottoms, meaning that they are never in a position to take advantage of opportunities. They typically buy high and sell low. Naturally insiders do the opposite, behaving as any predator would. They are currently selling vastly more than they are buying, and this should be a very large red flag to anyone who is paying attention. They know the bag they are selling to the public is empty. Financial markets are a very effective mechanism for exploiting the masses and separating greater fools from their money.

People are always asking us about timing. It’s no surprise that people should want as clear a picture as possible, especially since we are talking about a very major change in most people’s circumstances. As a society we are collectively not used to risk and uncertainty and it is very unsettling. We offer our informed opinion as to when we are likely to see the events we predict unfold, but we do not have a crystal ball and cannot offer an infallible view of the future. Nor can anyone else, so if that is what you expect, any analyst will disappoint you.

Market timing is by its very nature probabilistic. There are always many interpretations of the market’s fractal movements, but one can identify more and less probable options by assessing each in comparison with the guidelines for fractal behaviour. The tops of rallies are difficult to call, as corrective patterns are very complex, and can extend into multiple patterns. When a pattern completes, the correction could be over, so it is appropriate to identify a relatively high risk juncture. There are limits to how far rallies can extend, in terms of multiple patterns and extent of retracement.

This rally has extended as a complex multiple pattern, but is nowhere near a retracement limit for a counter-trend move (limits grounded in fibonacci mathematics). In fact the retracement is quite standard. For vastly more detail than we discuss here, I suggest to anyone who may be interested to read through the Elliottwave primer material on Bob Prechter’s site. Essentially, what Elliottwave analysis does is to allow people to identify high risk junctures, and margins for error of one interpretation over another.

The rally we are living through has done nothing whatsoever to change the nature of our times. We have lived through the largest credit expansion in human history. Credit expansions create excess claims to underlying real wealth through ponzi finance. When the debt created can no longer be serviced, the bubble will implode and the excess claims will be messily extinguished. This is deflation, and it is inevitable once a bubble has developed. The aftermath of a bubble implosion is generally proportionate to the scale of the excesses that preceded it, hence we can expect the impact to be extremely severe.

Being grounded in positive feedback, deflation builds momentum relatively slowly at first, but later at an increasing pace. When credit contraction reaches a ‘critical mass’ it can unfold with terrifying speed, and for this reason extreme caution is warranted. It is well possible for the global banking system to seize up in a matter of hours, as it came very close to doing in September 2008. Given the scale of the threat, and how long it can take to extract oneself from an over-leveraged and highly vulnerable position, it is entirely appropriate to convey a sense of urgency. In fact it would be irresponsible of us not to do so.

People ask us when deflation will begin, but it has already begun. It has been underway since at least 2007, when the markets topped and the credit crunch made its first made significant appearance. At this point I published The Resurgence of Risk (the version linked to here is the October 2008 reprint, since the old TOD:Canada archives no longer exist).

I had been warning of a coming credit crunch since October 2005, just about at the point where the housing bubble in the US was topping. These were timely warnings for anyone who was paying attention, although they were treated as the ravings of the lunatic fringe at the time, as is always the case for contrarian views. Unfortunately, timely warnings are never credible at the point when heeding them would do the most good, because they contradict the received wisdom of the bubble years.

We are now seeing a firmly established received wisdom that recovery is underway and that the Fed has saved the day with quantitative easing. Bullishness is at an extreme. The psychology of the market is the opposite of what it was at the March 2009 bottom. This represents a large red flag, as sentiment extremes are major indicators of approaching trend changes. It takes time for a position to be widely accepted and internalized, and the greater the extent to which that has happened, the closer one is to a reversal. I think we are close to one, but it really doesn’t matter whether the top is this week, next month, or even next year. It is coming soon enough that evasive action is thoroughly warranted now.

In fact several years ago, when we first began warning people, would have been a better time to act. Those who did are now sitting comfortably liquid on the sidelines with little or (preferably) no leverage. They didn’t suffer huge loses in the first phase of the credit crunch, which other less lucky people have been using this rally to recover from (and if the less lucky hang on too long they will see even larger losses once the decline resumes). The prudent early movers can sleep at night because they will not be wiped out in a bubble implosion. They may have forgone a certain amount of profit in the meantime, but they have also avoided an enormous amount of risk.

Those who are addicted to the leverage game are often looking only at the fortunes of Wall Street in their blind enthusiasm for recovery. They are ignoring the on-going trainwreck happening on Main Street. Ordinary people are suffering staggeringly high unemployment and underemployment, and are losing homes and pensions. Mortgage interest resets will continue until 2012, helping to drive sky-high inventory levels that will depress housing prices drastically for years, and have knock-on consequences for individuals and for the banking system (as we have repeatedly pointed out).

Approximately one in seven Americans is on food stamps already. The number one cause of personal bankruptcy in the US, even among people who have health insurance, is healthcare emergencies, as the co-pays are so high. More and more people are falling off the edge all the time. Their plight is ignored higher up the financial food chain, but it cannot be ignored forever. The middle class is dying, and the already poor are being driven into destitution. Eventually the ruined will reach a critical mass, and people who have nothing left to lose, lose it. This is a recipe for a degree of social unrest that will threaten the fabric of society.

There are many actions one can take to lessen the impact of deflation for family, friends and community. The challenge is reaching enough people who are aware to be able to work together with a group rather than in isolation. The effort is absolutely worth it, as those who prepare will be very much better off in a few years time than those who do not. It can be difficult to convince others, however. It certainly strains relationships when people have widely differing views of the future, hence we work to disseminate the information people need to make informed decisions that will allow them to retain their freedom of action. The future belongs to the adaptable.

There will definitely be hard choices to be made, as we have collectively invested so much in a way of life that cannot continue, and extracting oneself from the resulting structural dependencies can be both difficult and time consuming. Trying to live with a foot in two different worlds during the transition to a more resilient life can initially mean all the work of both, without the many of the benefits of either. This is not an easy path to walk. We wish all our readers the very best of luck in walking it, and we intend to remain your traveling companions.