What Could Possibly Go Wrong?

In Japan, an explosion at a nuclear power station tore down the walls of one building. Japanese officials said they feared the reactor could melt down following the failure of its cooling system in the earthquake and tsunami.

It was not clear if the damaged building housed the reactor. Tokyo Power Electric Co., the utility that runs the Fukushima Dai-ichi plant, said four workers were injured but details were not immediately available.

It could always get worse, and has:

Japanese Defense Reviews on China

Background:

Japan defence review warns of China's military might

17 December 2010 BBC

The major strategic review will shape Japan's defence policy for the next 10 years

Japan has unveiled sweeping changes to its national defence polices, boosting its southern forces in response to neighbouring China's military rise.

It said Beijing's military build-up was of global concern. Japan shares a maritime border with China.

It will also strengthen its missile defences against the threat from a nuclear-armed North Korea.

China has responded saying it is a force for peace and development in Asia and threatens no-one.

China's Foreign Ministry said no country had the right to make irresponsible comments on China's development.

Flashpoints
The National Defence Programme Guideline has been approved by the cabinet and will shape Japan's defence policy for the next 10 years.

Japan is changing its defence policy in response to the shifting balance of power in Asia, analysts say.


Reorganised Defences

• Troops moved from north to south, near maritime border with China
• More Patriot missiles to counter possible North Korean attack
• Defence budget of 23.49tn yen (£180bn; $280bn) for next five years, down 3%
• More submarines (up from 16 to 22); fewer tanks (down from 600 to 400)
• Review labels China military build-up "matter of concern"; US-Japan alliance "indispensable"
• Defences will be scaled down in the north, where they have been deployed since the Cold War to counter potential threats from the former Soviet Union.

The military focus will now be in the south of Japan, closer to China and remote flashpoint islands near Taiwan.

The guidelines say Japan is concerned by China's growing military spending, modernisation of its armed forces, and increased naval assertiveness in the East China and South China seas.

"These movements, coupled with the lack of transparency on China's military and security issues, the trend is a concern for the region and the international community," the new guidelines say.

Relations between Japan and China deteriorated sharply in September, after collisions between a Chinese trawler and Japanese patrol boats near a chain of disputed islands in the East China Sea.

North Korea concerns

The review paper outlines a shift in resources from the army to the air force and navy.

Japan's submarine fleet will be expanded from 16 to 22 and fighter jets upgraded, while the number of tanks will be cut by a third to 400.

Japan's military is constitutionally banned from taking offensive action
North Korea's missile and nuclear programmes were also described as a "pressing and serious destabilising factor".

Pyongyang has fired missiles over Japan and staged nuclear tests in recent years.

Last month it unveiled a new uranium enrichment plant to US experts, and launched an artillery attack on a South Korean island, killing four people.

In response, Japan says more Patriot interceptor batteries will be deployed across the country, and the number of warships which can shoot down missiles will be increased from four to six.

It also plans to cut the number of soldiers by 1,000 to an official headcount of 154,000.

The US has an almost 50,000-strong troop presence in Japan. The paper called the Japan-US alliance "indispensable".

The review paper added that it was necessary to reduce the burden on communities hosting US bases, including Okinawa.

Japan said it would "promote confidence and co-operation with China and Russia" while also developing ties with the EU and Nato.

Russian President Dmitry Medvedev sparked a diplomatic row with Japan earlier this year by visiting the Southern Kurils, which Japan calls the Northern Territories.

The islands, off the north coast of Japan's Hokkaido island, were seized by Soviet troops at the end of World War II, but Japan still regards them as part of its territory.

Japan has a pacifist constitution. Article Nine of the constitution, which was written under US post-war occupation in 1947, renounces the use of force by Japan in settling international disputes.

The BBC's Roland Buerk, in Tokyo, says the new strategic stance will be closely watched in Asia, where Japan's World War II aggression has been neither forgotten nor forgiven.

North Korea is the Responsibility of China, Japan and South Korea

Let's face it, there would be no North Korean belligerence or threat of nuclear weapons without the role played by China in the region. Without Chinese economic support, Kim Jong-il would have disappeared years ago.

Without the criminal gang-related state of North Korea, there would be little reason or justification for US presence in the region. The South Koreans would have had us leave twenty years ago.

China allowed this sore to fester and at a minimum is guilty of benign neglect. North Korea is a problem for China, South Korea and Japan. Between the three of them they are holding $1.8 trillion in US debt. If they want us to solve the problem it is at least worth half of that, call it an even trillion. If they don't like the price, let them fix it themselves.

China- Japan and Rare Earth Elements

Islands row has China -Japan ties 'at ground zero'
John Garnaut, Beijing
October 21, 2010

The Age

A LEADING Japanese statesman who helped mend relations with China in the 1980s says China's ''diplomatic shock and awe campaign'' over disputed islands has reduced the relationship to ''ground zero''.

Yoichi Funabashi, editor-in-chief of the Asahi Shimbun, said consequences of China's aggressive response would have a larger impact in Japan than US president Richard Nixon's secret meeting with Chairman Mao in 1971.

''Japan and China now stand at ground zero, and the landscape is a bleak, vast nothingness,'' wrote Mr Funabashi, in a letter sent to dozens of high-ranking friends in China.

If China continues to undermine its own ''peaceful rise'' doctrine then ''Japan would discard its naivety, lower its expectations, acquire needed insurance and, in some cases, cut its losses'', he wrote.

In the 1980s Mr Funabashi worked to restore ties and send thousands of Chinese students on exchange programs to Japan.

Many Chinese commentators are also concerned that China's rising assertiveness is harming its relations across the region.

''The Asahi Shimbun is the best Japanese newspaper and its standpoint is neutral. This is why Funabashi's article is so shocking,'' wrote Wang Shuo, editor of one of China's leading news outlets, Caixin. Mr Wang posted Mr Funabashi's letter and his response on the Caixin website.

Tens of thousands of Chinese students took part in mass demonstrations in several cities over the weekend.

Some damaged Japanese cars and others brandished placards of racially inflammatory slogans.

The Chinese government has taken measures to contain those protests and has recently toned down its propaganda onslaught.

Chinese and Japanese diplomats are believed to be working to get their prime ministers and foreign ministers together for a peacemaking meeting on the sidelines of next week's ASEAN summit in Hanoi.

But Japanese anger appears unabated. Former prime minister Shinzo Abe this week likened China's growing territorial ambitions to those of Nazi Germany and Lebensraum - Adolf Hitler's philosophy that the German people needed more ''living space'' in which to grow.

''Perhaps the party's leaders, despite their fear of meeting the same fate as the Soviet Union, are unable to resist the call of the People's Liberation Army for a military build-up,'' Mr Abe said.

Professor Peter Drysdale, of the Australian National University, said the mainstream of Japanese politics was nevertheless working to rebuild relations between the two countries, given Japan's reliance on investments in, and exports to, China.

''The practical hardheads that understand this know that Japan is into China up to its armpits … and they are trying to sort this out,'' he said.

The dispute began in September when the Japanese coast guard arrested a Chinese fisherman in what it considers its territorial waters near the Senkaku Islands, north of Taiwan, for ''ramming'' Japanese ships.

China's diplomatic and propaganda machine went into overdrive when Japan renewed its detention of the captain of the ship. China repeatedly summoned Japan's ambassador to Beijing and implemented what the Japanese government says was an embargo on rare-earth exports from China to Japan.

Japanese Foreign Minister Seiji Maehara this week criticised Beijing's ''hysterical'' reaction to the dispute over the Senkaku Islands, which China calls the Diaoyu Islands.

A Chinese foreign ministry spokesman said he was ''deeply shocked that a foreign minister of a country could make such remarks''.

Bank of Japan Throws in the Towel

Zero percent interest rates and huge governmental deficits have not helped in Japan. Why do we expect they will work in the United States?

Japan's fall also followed a huge property bubble. Real wages in Japan have been falling for twelve years. These trends hit the middle class the hardest. The middle class is the bedrock of any society. What is the lesson for the US?

Falling wages in the private sector and rising wages in the government is a toxic combination. Add to that the government and Wall Street sponsored breaking of US manufacturing and the resultant structural rise in unemployment and wages and you have a very nasty combination.

US federal deficit spending was aided and abetted by the pernicious additional affect of allowing and encouraging Japan and China to buy US sovereign debt. Stopping that practice is a necessary step in any serious effort at stopping the slide.

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Bank of Japan Cuts Rates to as Low as Zero Percent
By HIROKO TABUCHI
Published: October 5, 2010

NY Times

TOKYO — In a surprise move, Japan’s central bank lowered its benchmark interest rate to a range of 0 percent to 0.1 percent Tuesday, a tiny change from its previous target of 0.1 percent but a significant move back into an age of zero-interest rates.

The Bank of Japan also said it would set up a new ¥5 trillion, or $60 billion, fund to buy Japanese government bonds, commercial paper and other asset-backed securities amid concerns over weakening growth in the world’s third-largest economy. The bank also kept its credit facility for banks at ¥30 trillion.

With the interest rate cut, a bid to kick-start lending in Japan’s moribund economy, the central bank effectively reintroduces a zero interest rate policy for the first time since July 2006. The decision underscores concerns that a strong yen and persistent deflation threaten the country’s economic recovery.

In a statement, the bank confirmed that it would maintain its “virtually zero interest rate policy” until it achieved “medium- to long-term price stability”— or an end to deflation.

Hirokata Kusaba, senior economist at the Tokyo-based Mizuho Research Institute, said in a note to clients that the bank’s move went beyond market expectations. “The latest move gives off a much more powerful impression than past, incremental measures, which had sparked market disillusionment,” Mr. Kusaba said.

“Though there will be debate over the effects of the monetary loosening, I believe the Bank of Japan has done all it can at this time,” Mr. Kusaba said. But that also meant that the bank “had now depleted most of its policy options,” he said.

The dollar rose against the yen on the announcement, climbing 0.7 percent on the day to ¥83.90 from about ¥83.55 before the decision.

“The central outlook for the economy, and prices, have worsened more than had initially been predicted,” Bank of Japan Gov. Masaaki Shirakawa told reporters following the decision. Working out a package of policies, Mr. Shirakawa said, would allow the bank to draw out their maximum effects. He said he would consider expanding the 5 trillion yen asset-buying scheme, depending on its effectiveness.

The unanimous vote to lower the key interest rate came after a two-day meeting of the central bank’s nine-member policy board. The Bank of Japan had been under increasing pressure from the government to take more drastic steps to shore up the economy.

In particular, Prime Minister Naoto Kan has called on the bank to do more to help battle the powerful yen, which has surged to 15-year highs against the U.S. dollar in recent months, wreaking havoc with the country’s export-led economy.

A strong yen hurts Japanese exporters by making their goods more expensive overseas, and eroding the value of their earnings. Despite the weaknesses in Japan’s economy, the yen tends to strengthen against other currencies in times of global financial uncertainty, partly because the country still runs a current-account surplus, making a run on the yen unlikely.

The yen’s value is also related to the difference between Japan’s interest rates, and those elsewhere. The lower Japan’s interest rates, the bigger the difference between interest rates in Japan and higher rates overseas.

That gives investors more incentive to sell the yen to invest in higher-yielding currencies, weakening the yen. More purchases by the central bank of government bonds and other assets have a similar effect.

After weeks of talking down the yen in what economists called “verbal intervention,” the government finally intervened in currency markets on Sept. 15, the first such maneuver in six years, selling about ¥2.125 trillion to tame the yen’s persistent climb. But a lack of international support has undermined Japan’s efforts, and the yen is back to levels seen before the intervention. Meanwhile, some investors have warned that other Asian countries could also try to weaken their currencies as a means to boost exports, sparking a “currency war.”

With intervention yielding little effect, many within the Japanese government have stepped up demands that the Bank of Japan lower rates and buy more government bonds, both steps that would bring downward pressure on the currency. But Gov. Shirakawa had been reluctant for the central bank to play a role in financing Japan’s public debt, fast approaching twice the size of its gross domestic product.

Moreover, future moves by the U.S. Federal Reserve to further ease monetary would again reduce the effective interest rate spread between Japan and the United States, limiting the impact of the Bank of Japan’s actions.

The U.S. Federal Reserve has also kept short-term interest rates near zero since December 2008. In the past week, momentum has build toward resuming large-scale purchases of government debt to help the flagging economic recovery.

Japan’s central bank had also long come under fire for failing to end deflation, the general fall in prices that eats into profits and wages that has weighed heavily on Japan’s economy for the past 12 years.

Core consumer prices, which had shown signs of stabilizing in 2008, have fallen since early 2009. Consumer prices fell by 0.9 percent in the year to August, according to latest numbers from the Organization for Economic Cooperation and Development.

As the American economy also flirts with deflation, some economists have warned of a Japan-style deflationary trap that could delay recovery for years.

Indeed, Japan’s experience shows that deflation can creep up on an economy — and can be difficult to shake.

It took about four years for Japan’s economy to hit rock bottom following its spectacular asset bubble burst in 1990, and another four for deflation to take hold in 1998. The following year, the Bank of Japan responded by lowering its policy interest rate to zero; by that time, however, the country’s economy was so depressed that even zero interest rates could not bring about recovery.

Critically, it was not until another five years later, in 2003, that the central bank sharply increased its purchases of financial assets to expand the money supply, setting the stage for a gradual recovery. Despite stable economic growth of about 2.5 percent between 2004-2007, however, deflation did not disappear completely.

Still, emboldened by a nascent recovery, the Bank of Japan raised its lending rate in July 2006, bringing it to 0.5 percent the following March — a controversial step some economists, as well as politicians, called premature.

Before that debate had fully played out, however, the global economic crisis ravaged Japan’s export markets, plunging the country into its worst recession yet since World War II. In December 2008, the Bank of Japan slashed interest rates to 0.1 percent.

The Bank of Japan’s perceived ineffectiveness has sparked a debate over its independence from the government in decision-making, guaranteed by a 1998 law that protects the bank’s governor from dismissal by the government, and prohibits the government from supervising the bank’s operations.

The law was put in place after criticism that the bank, overly influenced by government euphoria in Japan’s booming eighties, did not raise interest rates quickly enough, letting the asset bubble grow to massive proportions before it burst in 1990.

Your Party, an opposition group, plans to soon submit a bill to Japan’s parliament that would give the government greater influence over the central bank. Officials within the government have made similar suggestions.

I wonder what Hans Blix thinks about the Nuclear Norks?

Why? I have a suspicion that what Blix thinks is close to what the international community leader Obama thinks and will say so in a much less guarded manner.

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U.S., Japan, S Korea reaffirm position on DPRK's nuclear issue
www.chinaview.cn 2009-05-30

SINGAPORE, May 30 (Xinhua) --

U.S. Defense Secretary Robert Gates reaffirmed here on Saturday that the United States, Japan and South Korea, along with some other countries, will strengthen cooperation to try to resolve the Korean peninsula nuclear issue.

Speaking at a joint press briefing on the sidelines of the 8th Asia Security Summit, Gates said that the United States' policy has not changed. Washington's goal is complete and verifiable denuclearization of the Korean peninsula, and will not accept the Democratic People's Republic of Korea (DPRK) as a nuclear weapon state.

Gates said that the DPRK's programs and actions constitute a threat to regional peace and security.

"We unequivocally reaffirm our commitment to the defense of our allies in the region. The transfer of nuclear weapons or material by the DPRK to states or non-state entities would be considered a grave threat to the United States and our allies. And we would hold the DPRK fully accountable for the consequences of such action," Gates said.

On the same occasion, Japan's Defense Minister Yasukazu Hamada and South Korea's Minister of National Defense Lee Sang Hee stressed the significance of the trilateral meeting, saying that the three parties will further exchange views and enhance cooperation to solve the problem.

The annual Asia Security Summit, organized by the London International Institute for Strategic Studies, is being held in Singapore from May 29 to 31.

The forum brings together about 22 ministerial-level guests, along with parliamentarians, military leaders and security experts from more than 27 countries and regions for discussions on regional security issues and defense cooperation.