MLR - Nuclear crisis in Japan - Where investors should put their money NOW

Published : March 15 2011 at 10:03 ET

Q&A with Dr. Kacher

NUCLEAR POWER: How much of the world gets its power from nuclear plants?

There are now over 440 commercial nuclear power plants operating in 30 countries. 14% of the world's energy comes from nuclear power:

US gets 20% of its power from nuclear reactors

France 75%

Japan 30%

China 1.5%

China plans to quadruple its nuclear capacity to 40,000 megawatts by 2020, and the U.S. may build as many as 30 new reactors in the next several decades.

MELTDOWN EFFECTS: We have heard the media stories about the concerns that the nuclear power reactors in Japan could meltdown. What are the effects of a meltdown?

Operator error and a faulty shutdown system led to the chernobyl meltdown. A sudden, massive spike in the neutron multiplication rate caused the core to increase in temperature to unsafe levels. This caused the water coolant to flash to steam, causing a sudden overpressure within the reactor pressure vessel (RPV). The primary threat to the public safety was the dispersed core gasses.

Although the Chernobyl accident had dire off-site effects, much of the radioactivity remained within the building. To prevent another accident, nuclear reaction steps have been taken (such as adding neutron poisons to key parts of the reactor).

A modern reactor is designed both to make a full blown meltdown unlikely, and to contain one should it occur. In a modern reactor, a nuclear meltdown, whether partial or total, should be contained inside the reactor's containment structure. Thus while the meltdown will severely damage the reactor itself, possibly contaminating the whole structure with highly radioactive material, a meltdown alone should not lead to a significant radiation release or serious danger to the public.

MELTDOWN / JAPAN: Is there a threat that Japan's nuclear reactors could have a full scale meltdown that could endanger life?

Three hours after the explosion, the radiation level at the plant measured 11,930 micro sieverts per hour. That level is several times the amount a person can safely be exposed to in one year.

But radiation levels shrank dramatically within the next six hours, to 496 micro sieverts per hour. Government spokesman Yukio Edano called it "much higher than the normal level ... but one that causes no harm to human health."

The fire in reactor No 4 at the fukushima nuclear plant was put out without issue, but the explosion in reactor No 2 is now leaking radiation. Due to this leakage, radiation levels are rising but are still far from being dangerous. Within a 30km radius from the reactor, people are to stay inside. Plant personnel are taking effective measures to cool the plant down. Radiation levels at the plant spiked after the explosion, but radiation levels shrank dramatically within the next 6 hours to where the level, while higher than normal, causes no harm to human health. By the time any additional radiation gets to Tokyo, it will be harmless because it will have mostly dissipated. Radiation levels around Toyko have dropped from 40 times the normal amount to 9 times the normal amount. Keep in mind that this would have to rise to well over 1000 times to have any lasting impact on the human body. And while media sources talk about the estimated $180 billion in damages and more than 10,000 deaths, this is due to the tsunami and the earthquake, not radiation.

According to the head of the International Atomic Energy Agency, or IAEA, despite problems at nuclear power plants in Japan stemming from last week's earthquake and tsunami, and partial meltdowns, there is no indication of a full nuclear reactor meltdown, and reactors 1,2,and 3 are in cold shutdown status. Despite the hydrogen explosions at the Fukushima nuclear power plant, containment vessels stayed mostly intact and radiation leakage should not create serious health issues. The nuclear reactors have multiple safety measures. The nuclear core is contained in reactor vessels that are made of top [grade] steel, and the reactor's vessel is contained in a primary containment vessel that is made of concrete.

A core meltdown occurs when nuclear fuel is not cooled for several hours and begins to melt then falls to the bottom of the reactor's containment vessel. If the heat ruptures the vessel, it could result in a release of radiation with health effects. But it's important to keep this in perspective. Murray Jennex, a nuclear expert at San Diego State University said this is nothing like Chernobyl. At Chernobyl you had no containment structure – when it blew, it blew everything straight out into the atmosphere.

NOTHING TO FEAR BUT FEAR ITSELF: Since the media has at times portrayed nuclear power in such a dark light, is it possible fears are way overblown?

Interestingly, even if the nuclear issue in Japan were to worsen, the psychological effects are the biggest health effects by far. This viewpoint is shared by Fred Mettler, a University of New Mexico professor emeritus and one of the world's leading authorities on radiation, who studied Chernobyl for the World Health Organization.

Fears of contamination and anxiety about the health of those exposed and their children led to significantly elevated rates of suicidal thinking and anxiety disorders, and rates of post-traumatic stress disorder and depression about doubled, according to Mettler.

To put the situation that's going on in Japan in perspective, the average amount of radiation that victims in Hiroshima and Nagasaki were exposed to would increase the risk of dying from lung cancer by about 40 percent. Yes, there were those at ground zero that died quickly, and the media is never shy about showing those horrifying pictures, but for the survivors, it was not anywhere what the media portrayed. While there was a 40% increase in lung cancer among the survivors, smoking a pack of cigarettes a day increases the risk of dying of lung cancer by about 400%. As it turns out, radiation is a weak carcinogen compared to other carcinogens. But the fear of radiation is the strongest. As soon as we hear the words nuclear contamination, our brains go on red alert. We think of mushroom clouds, radiation burn victims, radiation sickness, and cancer.

That said, the worst commercial nuclear disaster in history, Chernobyl, was nowhere near Hiroshima and Nagasaki... and Japan's Fukushima nuclear power plant situation is nowhere near Chernobyl.

COAL VS NUCLEAR POWER: Nuclear power carries a stigma compared to coal plants. What is your view on this?

Japan was hit by the fourth most powerful earthquake since the year 1900, recently upgraded from 8.9 to 9.0 on the richter scale. Yet local authorities are saying the level of radiation around the site is far from cause for concern as reactor containment vessels have held. Nuclear power has been blasted by the media over the years. Three Mile Island and Chernobyl are the only two major reactor accidents in the history of commercial nuclear power, and one was contained with no harm to anyone. These are the only major accidents to have occurred in some 14,000 cumulative reactor-years of commercial operation in 32 countries. Nevertheless, the media massively distorts the dangers of nuclear power.

Given that I was part of one of the most prestigious groups at UC Berkeley, the Glenn Seaborg nuclear science group, we used to discuss this subject at length. Nuclear power is far cleaner than coal burning plants. Coal causes all sorts of health problems to those within miles of the plant as its pollution is thick and far reaching. But these health problems occur over a period of many years, rather than the sudden, instantaneous horror of a nuclear plant meltdown. The media often brings images of Hiroshima and Nagasaki into the public conscious to further blast a technology that is, on balance, far safer than coal. Then you have popular shows like the Simpsons with the evil Mr. Burns running his nuclear power plant, the three eyed fish that swim nearby, and Homer's low sperm count.

In truth, coal power creates far more waste product than nuclear plants, resulting in acid rain and greenhouse gas emissions. The fly ash waste generated by coal plants is actually 100 times more radioactive than waste product from nuclear power plants generating the same amount of energy. Coal contains radioactive uranium and thorium. When coal is burned, both uranium and thorium are concentrated in the fly ash waste product at up to 10 times their original levels. Those living within a mile radius from the coal plant may ingest small amounts of radiation. Fly ash is also disposed of in landfills posing a potential risk to people living in those areas. Coal clean up is also far more costly. That said, the overall health risks from coal plants are not radioactive in nature, as the average person gets 360 millirems of annual background radiation from natural and man-made sources per year (smoke detectors, cosmic rays, x-rays, the sun, the earth's crust, etc), far greater than any radiation ingested as a result of living near a coal plant. The real risks of coal plants are acid rain, air quality, and greenhouse gas emissions.

FOSSIL FUELS VS NUCLEAR POWER: How do fossil fuels in general compare to nuclear power?

First, using coal to produce electricity releases a very high level of contaminants into the atmosphere where it is impossible to manage, contributing to the greenhouse effect and causing acid rain. Though the waste caused through producing nuclear power is highly toxic, it is all contained and therefore manageable, rather than released into the environment.

Second, there is very little oil left and there is enough coal to power the world for about 200 years; however there is enough uranium with the potential to provide earth with power for billions of years!

Third, fossil fuels, in particular oil, rely on access to relatively volatile countries; uranium can be mined in several, more 'stable' countries, such as Canada and Australia, meaning Western countries can be more self-sufficient in their energy production.

Finally, a nuclear plant costs very little to run once it is established; energy plants running on fossil fuels always cost significantly more to run.


How will Japan economically survive their current crisis?

The current crisis in Japan in just that, a crisis, and all crises are economically generally short-lived. Japan has a long history of massive earthquakes and it has always quickly bounced back. The long term impact of this crisis on Japan and the rest of the world will be benign. What will not be benign, but malignant, is Japan's government policy that encouraged bad loans in the 1980s with no regard for the quality of the borrower which helped inflate the bubble in Japan to grotesque proportions. After the bubble burst in 1990, the Japanese government tried a series of economic stimulus programs and bank bailouts, throwing good money after bad, so their 2.4% budget surplus in 1991 turned into a deficit of 10% by 1998, and today, their national debt to GDP ratio stands at a whopping 249%.

Japan's post Nikkei bubble policies have been disastrous. The government lowered interest rates as far down as possible hoping to restart the economy, but government policies hamstrung corporations with crippling pieces of legislation. For example, one law made it nearly impossible for a company to fire an employee once hired, so companies could not function on a competitive level. Japan has not just a lost decade, but now two decades going on three, due to inept government policy.

How are Japan's Fiscal Policies that have resulted in two lost decades similar to the U.S.?

The rescuing of zombie banks and businesses did not work in Japan and it will not work in the U.S. Japan practiced a zero interest rate policy, expanding the money supply to encourage borrowing, but companies in Japan decided to pay down their debts rather than borrow to invest and expand, thus the recovery in Japan has been protracted and painful.

A similar situation is liable to occur in the U.S. as the fed embarked upon its most aggressive rate-cutting campaign ever. It then began rescuing zombie banks and businesses, first with JPMorgan Chase & Co (JPM) then Fannie Mae and Freddie Mac. The bailout added several trillions to the U.S. debt load. Bernanke effectively snubbed the free market system, thinking the central bank can do better, even though numerous historical examples abound that this only postpones the recovery.

The fact of the matter is that free markets are remarkably resilient such that if any banks or businesses are in such trouble that they are bound to fail, the free market philosophy says let them fail. It also says no enterprise or institution is too big to fail. With central bank intervention prohibiting free markets from doing their thing, trillions have been flushed away into poorly run enterprises, depriving well-run companies from expanding. Ultimately, U.S. taxpayers and savers are left holding the bag, as growth is curtailed, recovery is postponed, taxes are hiked, and the devaluation of the dollar continues.

So what should investors do now?

Gap downs in stocks, commodities, and precious metals in the U.S. market that we are seeing are short lived during such crises situations. This is true going back many decades. Invest in hard assets [stocks, real estate, precious metals, commodities] as they should continue their rise (with the occasional correction) due to the following factors: QE, commodity supply shortages, and demand exerted from emerging creditor countries such as China and India. Such countries should continue to increase their gold and silver reserves since they assume that debtor nations will continue to devalue their currencies. As always, we will continue to provide specific investment ideas in stocks and ETFs in real-time to members at

Recommended ETFs: AGQ (2-times silver), DGQ (2-times gold), JJS (commodities- agriculture), QQQQ (1-times NASDAQ-100), TQQQ (3-times NASDAQ-100)

This information is provided by Virtue of Selfish Investing, LLC (VoSI) is issued solely for informational purposes and does not constitute an offer to sell or a solicitation of an offer to buy securities. Information contained herein is based on sources which we believe to be reliable but is not guaranteed by us as being accurate and does not purport to be a complete statement or summary of available data. VoSI reports are intended to alert VoSI members to technical developments in certain securities that may or may not be actionable, only, and are not intended as recommendations. Past performance is not a guarantee, nor is it necessarily indicative, of future results. Opinions expressed herein are statements of our judgment as of the publication date and are subject to change without notice. Entities including but not limited to VoSI, its members, officers, directors, employees, customers, agents, and affiliates may have a position, long or short, in the securities referred to herein, and/or other related securities, and may increase or decrease such position or take a contra position. Additional information is available upon written request. This publication is for clients of Virtue of Selfish Investing, LLC. Reproduction without written permission is strictly prohibited and will be prosecuted to the full extent of the law. ©2016 Virtue of Selfish Investing, LLC. All rights reserved.