Dez: Welcome back everyone this is Dez Morgan here reporting in from the Gulf State of Abu Dhabi.
Skip: And this is Skip Montreux still reporting from the earthquake battered nation of Japan. You are listening to Down to Business English.
Dez: How are things over there Skip? Are you still getting aftershocks on a regular basis?
Skip: Yes, we most certainly are Dez. In fact, I’m using a very popular earthquake warning application on my iPhone and we are getting several dozen earthquakes and aftershocks everyday. And many of them are quite strong, the largest so far measuring 7.2 on the Richter scale.
Dez: Wow, and importantly are any of those quakes having any effect on the damaged reactors in Fukushima?
Skip: Funny, that’s the first question that goes through everyone’s mind immediately after an aftershock.
Dez: I don’t doubt that.
Skip: Well to answer your question, the relief workers at the plant have been forced to pull back several times for safety reasons and that of course prevents them from continuing to inject water into the reactors.
Dez: And those water injections are what is keeping the cores of the damaged reactors from overheating?
Skip: That’s right Dez.
Dez: So would it be fair to say that you’re not out of the woods yet then?
Skip: Unfortunately, no we’re not. Even though things are slowly going in the right direction, they are far from being stable. TEPCO, the Tokyo Electric Power Company who owns the plant says it may take til the end of this year before they can confidently say that the situation is stable.
Dez: Is that right?!
Skip: Yes, radiation is still leaking. They have had to release tons of radioactive water into the Pacific ocean, the government has had to expand the evacuation zone from 20km to 30km, and experts are saying that area around the nuclear facility may end up being uninhabitable for the next 10 to 20 years. It is truly a devastating situation.
Dez: It must be a very stressful situation for everyone living in Japan. How are people where you are, in Tokyo, coping.?
Dez: Well, here in Tokyo, trains are running on time and other than some products like bottled water still being a bit of a rarity and a lot of nervousness over whether or not the vegetables and fish you are buying in the supermarket contain dangerous levels of radiation, well..yeah, things are slowly returning to normal.
Dez: Well, difficult though it must be, I guess. It’s important for Japan to start looking forward towards rebuilding the earthquake damaged areas and the economy in general.
Skip: And of course there is the wider issue of the effects that this is having on nuclear energy around the world and the world economy in general.
Dez. Yeah, I mean with the way economies around the world are connected something as big as an earthquake and a tsunami in the world’s third largest economy is having and will continue to have a huge effect.
Skip: Well Dez, it looks like you and I have a lot to discuss so lets do it lets get D2B, Down to Business with Counting the Costs of Earthquakes, Tsunamis, and Nuclear Catastrophes.
Dez: As this is such a big topic we’re going to divide it up into two separate sub-topics. I will talk about how this will affect nuclear energy, then Skip will tell you all about the effects on the domestic Japanese economy and on the wider world economy.
Skip: Now, I know that because of the recent crisis at Fukushima, there have been a wide range of countries from Germany to the U.S. to China who have been reviewing their current nuclear power facilities and planned nuclear sites for the future.
Dez: That is indeed true but I think that much of this is a knee jerk reaction due to understandable public fears of nuclear radiation. What I think we need to remember is that the Fukushima plant was a first generation plant designed in the 70s and the plants under development now are 4th generation with much improved automated safety features. Importantly the Fukushima plant basically exceeded its design brief and stood up to an 9.4 degree earthquake. In fact it was the tsunami wave that caused the problems that Japan is now facing.
Skip: So what you are saying is that had it not been for the tsunami the Fukushima plant would have survived just fine?
Dez: That’s quite true and even with the rogue events that took place around the plant there still hasn’t been any explosive leak of radiation.
Skip: To put things into perspective then what we have here is an early generation facility hit by a disaster beyond its design specifications and it survived. Do you think the fears in countries like the U.S. and Germany are being overplayed?
Dez: Yes I do. Clearly power stations on fault lines in California need to be looked at carefully but in Germany that doesn’t have any history of earthquake activity I think it is being overplayed. The main issue here is that the media loves a good fear story and people react to that in a way which is often irrational.
Skip: I guess the problem is that if we can’t rely on nuclear energy going forward then what are the alternatives?
Dez: Alternative clean energy like solar and wind look attractive but the production is irregular and even if we ramped up production using those technologies we would still need some other forms of production at night and when it isn’t windy.
Skip: What about fossil fuels?
Dez: Well immediately following the disaster the price of uranium fell like a stone and coal rose dramatically showing that the market asked the same question. However as we all know burning coal is an ecological disaster which was until now being slowly used less and less. I think it will be a real tragedy if we do return to using more coal again for power production.
Skip: And how about oil or gas?
Dez: Oil is mostly used for transportation but natural gas is a viable source of production that is widely used in Europe and United States. The main problem with gas is that it is very difficult to transport requiring long pipelines or special LNG ships that are both costly.
Skip: I’m sorry, Dez…what is an LNG ship?
Dez: It is a very expensive ship for transporting liquefied natural gas under great pressure.
Skip: Okay. Liquified Natural Gas. LNG. I see.
Dez: Also we need to remember that although gas is less damaging than coal it’s far more damaging to the environment than nuclear energy.
Skip: So the choice then at this moment in time is really between coal or nuclear energy. And even if we were able to build more solar arrays or wind farms they wouldn’t be able to become the main source of power at least until some more efficient batteries or storage systems are discovered.
Dez: That is where we are right now, yes.
Skip: Moving on to the economic effects on the Japanese economy this is a difficult question. Some people, the great investor Warren Buffet among them, see this disaster as having little effect on Japan’s future. He compared it to September 11th in the United States saying that just as 9/11 didn’t have any lasting effect on the U.S. economy the 3/11 Earthquake won’t have any lasting effect on Japan.
Dez: It would be a brave man to bet against Warren.
Skip: However others are very concerned by the effects that this will have on Japan’s debt situation which is already the largest in terms of GDP in the developed world. I think it is probably too early to tell so I’m going to sit on the fence for this one.
Dez: Warren Buffet ‘The sage of Omaha’ makes a prediction while Skip Montreux ‘The sage of Tokyo’ sits on the fence, interesting.
Skip: Well, in the shorter term Japan is having problems meeting export orders as many factories, especially those making car components were in the stricken area.
Dez: Okay, how about the effects on the wider world economy?
Skip: Well the effects on the world economy are perhaps a little clearer. Immediately following the earthquake the Japanese Yen shot up on fears that Japan will need to repatriate funds from the U.S. to pay for the reconstruction. This of course was a disaster for Japanese exporters with the result that central bankers around the world intervened to bring the yen down and aid Japan in its reconstruction efforts.
Dez: So the Japanese will be selling U.S. government bonds rather than purchasing them?
Skip: That is true and given the size of the U.S. budget deficit, this will cause problems for the U.S. who depend on Japan’s purchase of bonds. Another potential area that could be affected is the price of fuel. Much of Japan’s refining capacity was destroyed by the Tsunami with the result that Japan is having to import refined fuel for transportation rather than importing oil and refining it here domestically.
Dez: So importing already refined fuels must be considerably more expensive?
Skip: It is and this will cause the price of refined oil products to rise around the world.
Dez: So expect prices for petrol to rise even further with the knock on effects such as a rise in the fuel surcharge that airlines charge. I hope all our listeners have booked any summer holidays they are thinking of taking as prices are sure to rise.
Skip: Well those are some of the more immediate effects of this catastrophe in Japan but there are sure to be a myriad of other effects which will surface in the not too distant future.
Dez: So now it’s time for us to get D2V…Down to Vocabulary.
Skip: I will start us off today with the verb to batter which means when something or someone is hit many times and so is in poor condition. In the story I say that Japan has been battered by many earthquakes and aftershocks that have been hitting the country since March 11.
Dez: And a more literal example would be in a boxing match when one boxer literally hits the other or batters him onto the floor. In a business context we often say that stock markets have been battered when they fall due to an unexpected event.
Skip: And that is just what happened to the Tokyo Nikkei when they reopened the Monday after the quake last month.
Dez: Exactly. My first expression is a little less violent and it is out of the woods which means to be out of danger. In the story I comment to Skip that the situation at the Fukushima power plant was not yet out of danger or out of the woods.
Skip: I know this expression very well. I was playing poker a few weeks ago and on the final hand of the night, there was only one card that could get me out of the woods.
Dez: And did it come up?
Skip: No it didn’t but that is another story. Next I have another phrase which is a knee jerk reaction. What this phrase literally means is the involuntary reaction you have to kick if someone taps you on the knee. More generally, a knee jerk reaction means any reaction that happens following an event that hasn’t been well thought out. In the story Dez says that much of the anti-nuclear reaction to Fukushima hasn’t been thought through or is a knee jerk reaction.
Dez: A further example would be a company changing its entire sales strategy based one bad quarter’s earnings without thinking through the reasons for the fall in sales.
Skip: That would certainly be a knee jerk reaction.
Dez: Okay, and next I have the adjective rogue which is used to describe an unexpected or unpredicted event. In the story I talk about the rogue events that battered the power station which could not have been predicted by the original designers.
Skip: To return to my favorite company Apple, they released the Apple Cube in the mid 1990s. It was a rogue failure for the company which was certainly unexpected as all of the products that have come afterwards have been great successes.
Dez: You…you didn’t buy one did you?
Skip: Luckily no. Next I have the noun perspective which means to look at something in a certain, usually clearer way. In the story I say that we need to put things in perspective regarding the age of the Fukushima plant compared with more modern designs.
Dez: A further example would be the budgeting argument going on in U.S. today. Both parties recognize that they need to make cuts which on the surface appear to be sizable amounts of money but when we put that into the perspective of the overall deficit they really are tiny.
Skip: That topic of the U.S. budget is something we should talk about on a later show as it is having a big impact on business.
Dez: True. Next I have the adjective irrational which is of course the opposite of rational and means an action or decision that doesn’t make sense. In the story I talk about how the public often reacts to media stories in a nonsensical or irrational way.
Skip: A further example would be a company or a person who buys the latest very high end computer irrationally when all they need it for is word processing and emails.
Dez: Sounds like someone you know doesn’t it Skip?
Skip: Very funny. I knew you were going to say that. Next I have the expression to sit on the fence which means to take the middle path and favor neither one choice nor the other. In the story I say that I am undecided as to whether this event will be positive or negative for Japan. In effect I am sitting on the fence.
Dez: To return to Warren Buffet a lot of people accused him of sitting on the fence in the 90s when he refused to invest in technology companies. Which as it all turned out proved to be very well informed fence sitting.
Skip: Amazing. Some people are so good they can even make money by doing nothing.
Dez: How true. Now I have the monetary expression to intervene which is when reserve banks go into the market and buy or sell a currency to affect its value. In the story I discuss how the world’s banks intervened to bring the value of the yen down.
Skip: We may have talked about this before but the most famous case of ill advised intervention was when the Bank of England lost a billion pounds intervening in the markets to keep the value of the pound high.
Dez: Yes, well thanks for that example Skip.
Skip: Not a problem. Next up I have the expression knock on effects which are the often unexpected indirect effects of an action or decision. In the story Dez talks about one knock on effect of the worldwide rise in fuel prices which will be a rise in airline surcharges.
Dez: And as a further example many companies have an in house sports team which is good for employee’s health but also has the knock on effects of improving company morale and team building.
Skip: I wish my company had an ice hockey team.
Dez: In Tokyo yeah right. Finally I have the adjective myriad which means a great number of, or many. In the story Skip talks about the myriad of further economic effects from the earthquake which will become clear later.
Skip: Sticking with the earthquake story many Japanese car makers are having production problems due to the myriad of components that they outsource to smaller Japanese companies. Those companies had facilities in the Sendai area. Well that is it for vocabulary today. Please go back to the story and listen for those keywords.
Dez: So that brings us to the end of another episode of Down to Business English.
Skip: Be sure to visit the website where you can download the free audio script for today’s program. Our website address is www.downtobusinessenglish.com .
Dez: And we would also like to ask you to support Down to Business English by purchasing the D2B Year in Review 2010. This comprehensive study guide is a review of the top 5 stories Skip and I covered in 2010.
Skip: The Year in Review includes 50 new vocabulary explanations, over 50 test style listening comprehension questions, and a never before released 30 minute episode of D2B.
Dez: All that for the very reasonable price of 20.10. You can support D2B, improve your English listening skills and, most importantly, support relief efforts in Northern Japan. 25% of all proceeds will be donated to the relief efforts
Skip: Just visit the website and look at the top of the page for the link to the Year in Review 2010. We appreciate your support. See you next time.
Dez: Yes. See you next time. Bye.