Panels call for urgent legislation to prepare for huge quake

By YOSUKE AKAI/ Staff Writer

Saying Japan’s very survival is at stake, two advisory panels urged the government to take immediate action--including finding an alternative capital--to prepare for an earthquake that could devastate the Tokyo area.

The working groups are discussing measures to deal with massive quakes that could be triggered by movement along the Nankai Trough as well as one directly under the capital.

In an unusual move, the groups called on the government to pass legislation for the quake-preparedness measures even before estimating the number of fatalities and damage from such temblors.

"There is a need for the entire society to deal with the two quakes that are expected to cause extensive damage," according to interim reports released on July 19 by the two working groups, respectively.

Passage of special measures laws would allow a wide area covered by the studies to take effective measures to deal with the possibility of the huge earthquakes.

The Nankai Trough extends from Suruga Bay near Shizuoka Prefecture to off the coast of Kyushu in southern Japan.

Special measures laws were passed in 1978 to deal with a possible Tokai quake and in 2002 to prepare for Tonankai and Nankai quakes. But there is no law for a unified response to a Nankai Trough quake with an expected magnitude over 9.0.

One estimate for possible damage from a Nankai Trough quake was 400,000 fatalities.

The two working groups have yet to come up with their own damage estimates. But their recommendation for swift passage of legislation underscores their sense of urgency from not being able to pinpoint when such a destructive quake might hit.

In preparing for a crippling quake directly under Tokyo, the interim report proposes selecting beforehand alternative sites that could provide back-up for capital functions. Among the cities named as possible alternative capitals were Sapporo, Sendai, Nagoya, Osaka and Fukuoka.

The interim report also called for measures to deal with long-period seismic ground movements and the huge number of people who will likely be stranded in Tokyo after a major quake.

It urged the government to secure revenues for the necessary measures, but it did not specify a figure. In the current fiscal year, about 480 billion yen ($6.1 billion) has been set aside for such measures.

The working group looking at a possible Nankai Trough quake is expected to release its estimates for fatalities and injuries as well as structural damage in late August. However, the group dealing with the quake expected to hit directly under Tokyo has not reached the stage of presenting specific estimates.

The interim report, warning that a Nankai Trough quake could trigger a tsunami 20 to 30 meters high, called on areas with indented coastlines to construct levees and move schools and social welfare facilities to higher ground. It also suggested building those structures to greater heights.

In addition, the reports said construction of straight evacuation routes on flatter areas are needed, as well as measures to make evacuations using cars more efficient.

Ex-Soros Adviser Fujimaki Says Japan May Default by 2017

By Mariko Ishikawa and Yumi Ikeda

Investors should buy assets in U.S. dollars and other currencies of strong developed nations because Japan may default within five years, said Takeshi Fujimaki, former adviser to billionaire investor George Soros.

“Japan is likely to default before Europe does, which could be in the next five years,” the president of Fujimaki Japan, an investment advising company in Tokyo, said in an interview yesterday. Japanese should hold foreign-currency products, such as those denominated in the greenback, Swiss franc, sterling, Australian and Canadian dollars, Fujimaki said.

Should the Japanese government default, the yen may weaken to 400-500 per dollar, and the yields on benchmark 10-year bonds could surge above 80 percent, according to Fujimaki. “I’m buying dollars in case of an emergency,” he said.

The yen rose 0.6 percent to 78.91 per dollar as of 6:07 a.m. in London from its close in New York yesterday. The currency touched the postwar high of 75.35 per dollar on Oct. 31 and has averaged about 103 over the past decade. Japan’s 10-year yields were little changed at 0.855 percent. Rates on June 4 dropped to 0.79 percent, the lowest since June 2003.

Five-year credit-default swaps that insure Japan’s debt from nonpayment were at 90.9 basis points yesterday, up from a seven-month low of 90.1 on March 27, according to CME Group Inc.’s CMA. The contracts pay the buyer face value in exchange for the underlying securities if a borrower fails to meet its debt agreements. A drop signals improving perceptions of creditworthiness, while an increase suggests the opposite.

Ballooning Debt

Japan’s public borrowings, the world’s biggest, will balloon to 245.6 percent of its annual economic output in 2014, up from 67.3 percent in 1984, an estimate by the International Monetary Fund shows. Japanese Prime Minister Yoshihiko Noda is struggling to gather support for his plan to double the 5 percent sales tax by 2015 to help reduce debt.

“The yen and the JGB market are in a bubble,” Fujimaki said. “With the gigantic debt Japan has accumulated, a thin needle, or even a gentle breeze may pop this. Events in Europe can possibly trigger this to blow up.”

Greeks vote in a general election on June 17 after balloting in May failed to produce a coalition government. The result may determine whether Greece abides by spending reductions imposed upon it to receive two international bailouts and stay in the euro. The euro currency bloc may break up in the next 5 to 10 years, Fujimaki said.

Default or Inflate

“There’s no way out of Japan’s crisis,” Fujimaki said. “The only option left for Japan is either default or print money into hyper-inflation.”

The Bank of Japan left the size of its asset-purchase fund unchanged at a policy meeting today. The central bank kept the fund at 40 trillion yen ($507 billion) and a credit lending program at 30 trillion yen, matching the forecasts of 13 economists surveyed by Bloomberg News.

Fujimaki’s agreement with Soros Fund Management, once the world’s biggest hedge fund group, ended in October 2000. He has since written a book and lectured at Waseda University and Hitotsubashi University in Tokyo. He was born in 1950.

Radioactive waste at Fukushima threatens second nuclear catastrophe

By Hiroko Tabuchi, Matthew Wald.

TOKYO: What passes for normal at the Fukushima Daiichi nuclear plant today would have caused shudders among even the most sanguine of experts before an earthquake and tsunami set off the world's second most serious nuclear crisis after Chernobyl.

Fourteen months after the accident, a pool brimming with used fuel rods and filled with vast quantities of radioactive caesium still sits on the top floor of a heavily damaged building, covered only with plastic.

The public's fears about the pool have grown in recent months as some scientists have warned that it has the most potential for setting off a new catastrophe. The three nuclear reactors that suffered meltdowns are in a more stable state, but frequent quakes continue to rattle the region.

The worries gained new traction in recent days after the operator of the plant, Tokyo Electric Power Co., or TEPCO, said it had found a slight bulge in one of the walls of the reactor building, stoking fears over the building's safety.

To try to quell such worries, the government sent the Environment and Nuclear Minister to the plant on Saturday, where he climbed a makeshift staircase in protective garb to look at the structure supporting the pool, which he said appeared sound. The minister, Goshi Hosono, added that although the government accepted TEPCO's assurances that reinforcement work had shored up the building, it had ordered further studies because of the bulge.

Some outside experts have also worked to allay fears, saying that the fuel in the pool is now so old that it cannot generate enough heat to start the kind of accident that would allow radioactive material to escape.

But many Japanese have scoffed at those assurances and point out that even if the building is able to withstand further quakes, a claim that they question, the jury-rigged cooling system for the pool has already malfunctioned several times, including a 24-hour failure in April. Had the failures continued, they would have left the rods at risk of dangerous overheating.

Government critics are especially concerned, since TEPCO has said the soonest it could begin emptying the pool is late next year, dashing hopes for earlier action. ''The No. 4 reactor is visibly damaged and in a fragile state, down to the floor that holds the spent fuel pool,'' said Hiroaki Koide, an assistant professor at Kyoto University's research reactor institute and one of the experts raising concerns. ''Any radioactive release could be huge and go directly into the environment.''

The fears over the pool at reactor No. 4, amplified over the web, are helping to undermine assurances by TEPCO and the Japanese government that the Fukushima plant has been brought to a stable condition and are highlighting how complicated the clean-up of the site, expected to take decades, will be. The concerns are also raising questions about whether Japan's all-out effort to convince its citizens that nuclear power is safe kept the authorities from exploring other - and some say safer - options for storing used fuel rods.

''It was taboo to raise questions about the spent fuel that was piling up,'' said Hideo Kimura, who worked as a nuclear fuel engineer at the Fukushima Daiichi plant in the 1990s. ''But it was clear that there was nowhere for the spent fuel to go.''

The worst-case situations for reactor No. 4 would be for the pool to run dry if there is another problem with the cooling system and the rods catch fire, releasing enormous amounts of radioactive material, or that fission restarts if the metal panels that separate the rods are knocked over in a quake. That would be especially bad because the pools, unlike reactors, lack containment vessels to hold in radioactive material.

Attention has focused on No. 4's spent fuel pool because of the large number of assemblies filled with rods that are stored at the reactor building.

According to TEPCO, the pool at the No. 4 reactor, which was not operating at the time of the accident, holds 1331 spent fuel assemblies, which each contain dozens of rods.

Professor Koide and others warn that TEPCO must move more quickly to transfer the fuel rods to a safer location. But such transfers have been greatly complicated by the accident. Ordinarily the rods are lifted by cranes, but at Fukushima those cranes collapsed during the series of disasters that started with the earthquake and included explosions that destroyed portions of several reactor buildings.

TEPCO has said it will build a separate structure next to reactor No. 4 to support a new crane. But under the plan, released last month, the fuel removal will begin late next year.