a) Rebels in Benghazi said Libyan leader Moammar Gadhafi is rushing troops and tanks into the city in an attempt to crush the rebellion before the West can act. Allied forces struck at Libyan tanks to immobalise attacks by Gadaffi forces when the Allies patrol the sky. Intelligence that Gadhafi wanted to take hold of Benghazi before the Allies really turn it on was thwarted immediately. In a dramatic statement, French President Nicolas Sarkozy announced the planes would prevent Gadhafi’s aircraft from bombarding the city and also attack tanks on the ground if necessary to end any assault. The West will oppose any aggression against the civilian population in Benghazi, Sarkozy said. At a press conference in Paris where she took part in the talks, Secretary of State Hillary Clinton said “there will be other actions to follow” the deployment of the French planes.
b) The Allies action include U.N. backing and the involvement of two countries from the Arab League, the involvement and presence of these two unnamed countries is crucial in showing global support, even from the Arab states.
c) The G7 intervention the yen was a crucial development is stabilising the yen. In a bold stroke it comforted fears of a dramatic appreciation of the yen (Japanese companies buying yen to bring it back). This is critical as the financial markets cannot get investors to move back in if a major currency is going to be extremely volatile. This paves the way for a sensible recovery. By pushing the yen lower, it helps revive Japan's competitiveness. The willingness by the G7 to act so decisively solves a lot of risks issues - there were some overhyped critics who said that Japan will have to sell their US Treasuries to get funds for rebuilding, blah, blah,... If Japan has to sell the Treasuries, wouldn't it be saner if China was roped in to buy en-bloc from the Japanese - who in the hell would derail global financial markets unnecessarily???
d) The nuclear fallout risks have been over amplified. Yes, its a massive tragic event, but let's look at things realistically. P. Guna wrote an important piece in StarBiz on Saturday on the issue. He quoted British Government's chief scientific officer Professor Sir John Beddington on what his views were on the worst-case scenario of a total meltdown? Here is his answer: “If the Japanese fail to keep the reactors cool and fail to keep the pressure in the containment vessels at an appropriate level, you can get this, you know, the dramatic word meltdown'. But what does that actually mean? What a meltdown involves is the basic reactor core melts, and as it melts, nuclear material will fall through to the floor of the container. There it will react with concrete and other materials ... remember this is the reasonable worst case, we don't think anything worse is going to happen. In this reasonable worst case you get an explosion. You get some radioactive material going up to about 500m up into the air. Now, that's really serious, but it's serious again for the local area. It's not serious for elsewhere; even if you get a combination of that explosion, it would only have nuclear material going into the air up to about 500m. If you then couple that with the worst possible weather situation, i.e. prevailing weather taking radioactive material in the direction of Greater Tokyo and you had maybe rainfall, which would bring the radioactive material down, do we have a problem? The answer is unequivocally no. Absolutely no issue. The problems are within 30km of the reactor. And to give you a flavour for that, when Chernobyl had a massive fire at the graphite core, material was going up not just 500m but to 30,000ft (or 9,144m). It was lasting not for the odd hour or so but lasted months, and that was putting nuclear radioactive material up into the upper atmosphere for a very long period of time. But even in the case of Chernobyl, the exclusion zone that they had was about 30km. Outside that, there is no evidence whatsoever to indicate people had problems from the radiation. The problems with Chernobyl were people were continuing to drink the water, continuing to eat vegetables and so on and that was where the problems came from. That's not going to be the case here. So what I would really re-emphasise is that this is very problematic for the area and the immediate vicinity and one has to have concerns for the people working there. Beyond that 20 or 30km, it's really not an issue for health.”
e) Some readers ask me why is the rebuilding a positive for markets in general. This has to do with the velocity of money. Of course the issue is where will funding come from? The majority of Japanese bonds holders are Japanese public and corporations. Now they will have to tap from foreign sources, which should not be a problem but will be a tad higher than the 1% usual JGBs. Balance sheet wise, Japan's situation is as bad as the US but that issue should not combust overnight, its a long term issue that we can address at a later time. When you rebuild, each dollar spent is worth at least 8x-10x to the economy depending on which study you like to rely on. Its the trickle down effect. That is as good as suddenly introducing a massive spending budget. Again, I am not trying to capitalise heartlessly on a tragic situation, but that's how it works. Of course some cynics will say, then we should tear bits of our own cities down and rebuild every few years - yes, that would have the same effect, but where would the funding come from. What we are talking about here is from a reality that no one wishes it to happen to anyone on the face of this earth. But it has, and how things will play out now.
I surely hope that Japan comes out of this with resolute action and stronger faith in humanity. We are all connected, its time we all acknowledge and accept this truth.