Japan's Accidental Intervention in the Currency Wars?

The Japanese situation makes clear the need to restore democracy to the world's economy. We need to take power back from the capital markets and the speculators and return it to politicians who are responsive to their people. At a time of such dire national crisis, how can it be right that Japan's politicians have to be distracted by the need to appease those whose only interest is to extract value from the country?

The unexpected response by the foreign exchange traders to the greatest natural disaster in Japanese history was to force up the value of the Yen. As usual in economics, the raised value of the Yen cuts both way for the Japanese. In the short term it will make it cheaper for them to import the goods and resources they need to rebuild. In theory, in the longer term it will make their exports more expensive and so will impeded recovery. In fact, given the failure of electricity supplies and the consequent decline in production, this is likely to be less of a concern to the people of Japan.

It is, however, of concern to Japan's competitors. Hence the decision by the G7 countries to intervene in the foreign exchange markets by selling their stocks of Yen in order to reduce its price. The figure shows the immediate success of this market intervention yesterday, both proving the self-interest of G7 governments and giving the lie to their repeated statements that the markets rule supreme.

But why the rapid rise in the Yen (illustrated in the second graphic) in the first place, when the performance of the economy from which it arises will clearly be severely impacted by the destruction of infrastructure and power shortages? The answer appears to be that Japanese institutions and the government are expected to repatriate Japanese savings held overseas. The resulting firesale of US bonds and stocks could be the event that pulls the plug on the USA's 40-year beano at the expense of the rest of the world.

In spite of the very low returns, the Japanese and Chinese have continued to hold US debt, allowing US citizens to consume way beyond the level their productive effort merits. The power of the dollar as the global reserve currency permits this, but that power has been challenged during the recent 'currency wars'. If the Japanese crisis forces that US to the negotiating table to agree a fairer system of international exchange, it might prove to be a dark cloud with a silver lining for us all.
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Why Are Nuclear Reactors Like Dangerous Dogs?

Across the world we are waiting to find out whether Fukushima is to join the list of nuclear disaster zones: a place which, once unfamiliar, becomes a household name. In spite of the familiar faces of 'nuclear experts' trailing through TV and radio studios, it is clear that nobody can answer this question. The situation is out of control and the only science that is relevant is statistics. We are in the realm not of knowledge but of chance.

As a retired anti-nuclear agitator I find it amusing to watch the Grimes and Grimston show. Their webpages indicate that both are pro-nuclear, yet their TV appearances are bravura performances of scientific disinterest and thoughtful reassurance. The emerging line is that the power-station was damaged in the earthquake, which seems to me to gloss over the fact that the reason it is in trouble is that electricity and water supplies have failed. Such failues are common even in highly technological societies, and can only become more frequent as climate change leads to more unpredictable and more extreme weather events.

But what does all this have to do with our canine companions? I have been afraid of dogs since I was a child. What made me suspicious was my instinct that they were not really domesticated. That somewhere within them lurked the potential for sudden savagery. I can still remember my rage when owners used to say blandly 'He won't hurt you'. 'He won't hurt you', I thought back, but that isn't really the point is it? Just as the owners of those dogs thought they had them under control, so the proponents of nuclear power boast of their ability to 'tame the atom'. But the release of the energy of the nuclear bond has always been a high-risk endeavour. The myth of control is undermined by routine emissions and occasional catastrophes. It cannot be any other way, which is why Greens have always opposed nuclear power.

When the unpredictability of the dangerous dog is expressed the damage is one dead child or a person with a patchwork face. These are tragedies, of course, but on a relatively small scale. The tragedies that will be caused if Fukushima is in the midst of meltdown will be far more devastating. Direct deaths will be the source of infinite debate, and may even be statistically massaged away altogether. The brave workers who sacrifice their lives to save their fellow citizens, like the Chernobyl liquidators, will have their courage insulted by scientific manipulation of data. Who knows where the indirect deaths will occur? If the emergency results in radioactive emissions into the atmosphere we will all spend the rest of our lives with a few more atoms of Caesium or Strontium ticking away, decaying unpredictably, within our cells.
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