Basic deduction

The unfolding situation in Japan isn't one that truly falls under the scope of this blog, so although it's consuming far too much of my screentime this morning it's best left to other places and smarter voices for commentary. However, a couple of random thoughts.

1) Any statement along the lines of "there is no need for alarm" does not jive with images of a large explosion at a nuclear power plant. It matters not whether radiation levels are reported to have dropped afterwards or that authorities tell us the main metal reactor wall was undamaged by the blast. Let's be clear here: There is every cause for a lot of alarm.

2) By a combo of geographical focus, ignorance and plain luck, your author doesn't hold much in the way of U exposure in the junior market. This may turn out to be a good thing, as anyone involved in the sector around the 3 Mile Island can testify. Talk to those guys and you'll hear how sector funding turned itself off like a spigot from one week to the other and it didn't matter a jot whether the decisions taken were rational or otherwise. I do feel a little callous about turning my thoughts to capitalism and markets at this early stage, but it's a reflection I have on the matter, so I'm noting it down here and being done.

And now I have a weekly to write. So I'd better get on with it and tear myself away from events that really deserve the undivided attention of us all.

Update: Reader AS sends in the following re-printable Stratfor piece:

A March 12 explosion at the earthquake-damaged Fukushima Daiichi nuclear power plant in Okuma, Japan, appears to have caused a reactor meltdown. 

The key piece of technology in a nuclear reactor is the control rods. Nuclear fuel generates neutrons; controlling the flow and production rate of these neutrons is what generates heat, and from the heat, electricity. Control rods absorb neutrons — the rods slide in and out of the fuel mass to regulate neutron emission, and with it, heat and electricity generation. 

A meltdown occurs when the control rods fail to contain the neutron emission and the heat levels inside the reactor thus rise to a point that the fuel itself melts, generally temperatures in excess of 1,000 degrees Fahrenheit, causing uncontrolled radiation-generating reactions and making approaching the reactor incredibly hazardous. A meltdown does not necessarily mean a nuclear disaster. As long as the reactor core, which is specifically designed to contain high levels of heat, pressure and radiation, remains intact, the melted fuel can be dealt with. If the core breaches but the containment facility built around the core remains intact, the melted fuel can still be dealt with — typically entombed within specialized concrete — but the cost and difficulty of such containment increases exponentially. 

However, the earthquake in Japan, in addition to damaging the ability of the control rods to regulate the fuel — and the reactor’s coolant system — appears to have damaged the containment facility, and the explosion almost certainly did. There have been reports of “white smoke,” perhaps burning concrete, coming from the scene of the explosion, indicating a containment breach and the almost certain escape of significant amounts of radiation. 

At this point, events in Japan bear many similarities to the 1986 Chernobyl disaster. Reports indicate that up to 1.5 meters (4.9 feet) of the reactor fuel was exposed. The reactor fuel appears to have at least partially melted, and the subsequent explosion has shattered the walls and roof of the containment vessel — and likely the remaining useful parts of the control and coolant systems. 

And so now the question is simple: Did the floor of the containment vessel crack? If not, the situation can still be salvaged by somehow re-containing the nuclear core. But if the floor has cracked, it is highly likely that the melting fuel will burn through the floor of the containment system and enter the ground. This has never happened before but has always been the nightmare scenario for a nuclear power event — in this scenario, containment goes from being merely dangerous, time consuming and expensive to nearly impossible. 

Radiation exposure for the average individual is 620 millirems per year, split about evenly between manmade and natural sources. The firefighters who served at the Chernobyl plant were exposed to between 80,000 and 1.6 million millirems. The Nuclear Regulatory Commission estimates that exposure to 375,000 to 500,000 millirems would be sufficient to cause death within three months for half of those exposed. A 30-kilometer-radius (19 miles) no-go zone remains at Chernobyl to this day. Japan’s troubled reactor site is about 300 kilometers from Tokyo. 

The latest report from the damaged power plant indicated that exposure rates outside the plant were at about 620 millirems per hour, though it is not clear whether that report came before or after the reactor’s containment structure exploded. 

This report may be forwarded or republished on your website with attribution to www.stratfor.com

UPDATE 2: A final chunkette and we're done. Here's a mail received from long-standing reader RB, a person with an opinion I always listen to. As usual, he makes good points

"2) By a combo of geographical focus, ignorance and plain luck, your author doesn't hold much in the way of U exposure in the junior market. This may turn out to be a good thing, as anyone involved in the sector around the 3 Mile Island can testify. Talk to those guys and you'll hear how sector funding turned itself off like a spigot from one week to the other and it didn't matter a jot whether the decisions taken were rational or otherwise. I do feel a little callous about turning my thoughts to capitalism and markets at this early stage, but it's a reflection I have on the matter, so I'm noting it down here and being done." 

Nothing to apologize for - when you train your mind to draw inferences from events, you automatically consider these things.

I agree up to a point - we'll definitely see a sell-off and anyone aiming to build nuclear plants in the US or anywhere with a strong green lobby is probably toast, but there's one element to the equation that wasn't there the last time around: China.  I expect they'll use the opportunity to pick up companies on the cheap, especially those with production or proven deposits outside the USA. The other thing that comes out of this is reduced supply, which over time means much higher u308 prices. I dare say this puts a bid under coal as well.

Moral dilemmas confront us at every stage of our lives, but there's a difference between reacting to an event, as opposed to taking advantage. Taking advantage is when you turn a blind eye to abuses of the kind you document in your blog. Reacting is simply recognizing the likely course of events and positioning yourself accordingly.  Both are part of the capitalist equation, but not exclusive to it. Human nature is what it is, and any other system of arranging our affairs will produce the same, or worse results.

This for the ages


Amazing.