Today's blog is a bit of a ramble. I'm sorry, but it's how I feel today after yet another scintillating discussion with my wife this morning, coupled by scads of work, and thoughts of Japan and its suffering people.
Okay... I don't know how governments do this - or if the data is culled (gathered) from a gaggle of insurance companies - but how the heck do the determine the cost of repairing the damages caused by a disaster.
On March 24, 2011, it was reported that Japan estimates the earthquake and tsunami may have caused over US$300-billion. I use the American dollar figure as our Canadian buck is worth more than the U.S., and thus would not be as round a figure for me when presenting this data.
Anyhow... while the costs of repairs covers: roads, homes, factories, water and sewage, it fails to take into account the Fukushima Dai-ichi facility.
Yes, there is some radiation in the surrounding areas... yes, the government will have to shell out money to farmers et al, loss of trade revenue, tourism... yes, there will be higher medical costs - all are things which are not covered in this mega-billion dollar total.
But what about the actual cost to replace the nuclear reactors. Remember... salt water was sprayed and dumped all over the reactors... salt water that was needed to cool to core... but has a long term concern of corrosion. The reactors will need to be replaced.
Now, it will be up top the government of Japan to determine what they are going to replace these reactors with, but replaced they will have to be.
For example, back in 2008 it was estimated that the costs for two new AP1000 reactors in Florida, US of A built within 18 months of each other would - depending on the kilowatt power generated per hour (one at $5,144 per kilowatt, and the other at $3,376 per kilowatt) would be $98.4-billion. Now, when you add in other factors like the purchase of lands, plant equipment, cooling towers, financing costs, licenses, regulatory fees, fuel, owner's costs, insurance and taxes, plus the inevitable escalation costs and contingencies fees, the total would rise to about US$14-billion.
And that's just for two reactors - based on 2008 costs.
Japan is going to need at least four - maybe as many as six. Plus, factor in that clean-up for the Fukushima facility is going to be pretty darn high - thanks to the radiation et al, and you have a pretty good idea that costs are not always what they seem, as even without my gruesome calculations, the disasters in Japan have already dwarfed those from the 1995 Kobe, Japan earthquake and America's Hurricane Katrina in 2005.
Where will the money come from?
Like most things in life, money is a made-up concept (like time... if man did not need to utilize it, it wouldn't actually exist - if you seriously think about it.) How is a piece of paper with the words $1 actually worth $1? Because the government says it is, and because people have some faith in the government.
Is money worth the money it is printed on? No.
In the U.S. to print any bill from $1 up to $1000, it costs $0.08 each. A $1 coin like we have in Canada - it costs $0.038 to produce. Paper money costs less but the shelf life is 18 months for a paper bill versus 30 years for a coin. Of course, I have some coins that date back to the 3rd century BC, so the shelf life of coins is higher - unless your country happens to go out of existence.
My point? Money is a concept. You and I can not actually fathom $1-billion dollars. Heck... imagine this... try counting one - adding another one every second, and see how long it would take you to get to one million. The answer is around one week. Now try that to get to a billion. That's a thousand weeks. Now multiply that by 300 (as in the initial damage estimate).. that's 300,000 weeks... or 2.1 million days.... or a little over 5,750 years.
That's a lot of time and a lot of money. Who has that kind of money, and who has it available for loan? No one. Just print more money, feed it into the system, devalue the currency - uh... in Japan's case... a Y1000 or Y5000 or Y10,000 or Y100000 paper bill should only cost about 4 yen ($0.04 US/Cdn). It sounds like the government has been saving money for just such an emergency.
It's like owning a Mint is a license to print money.
Having rambled on about how I believe that time and money are man-made concepts... it's still going to take Japan years, if not decades to extract itself from this financial and social mess brought on by a non-man-made disaster.
In the mean time, people still need food, shelter, electricity, jobs, school... these are just the financial costs... what about the emotional damage. Hell, I know how upset I was when I lost a few of my Japanese items in a fire a few years back.
The costs are high, my friends... and it's going to get higher.
I would be curious to hear from any of you dear readers about disasters in YOUR country, and how it affected you in your daily life. Even if you want to remain anonymous, just tell me and I'll present it that way.
Stay safe.
Somewhere with common cents,
Andrew Joseph
Today's rambling blog is by Aldo Nova: LEOPARDSUIT
PS: And you know what, I'd still go to Japan today if the opportunity arose. My son wants me to take him there one day -p and I promised him I would. All I need to do is start saving a penny a day... no, that won't do it... maybe $400 per year... hmm... that's not going to happen seeing as how I lose money every month... that's true, by the way... hmm... And, in 10 years time when he's 15 - the costs will be higher... maybe I shouldn't have made that promise. Yeesh.
