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The U.S. dollar is down, as is the Canadian and Aussie dollars, reflecting the decline in commodity prices, while the yen benefits from massive repatriation of capital by insurers and others with a need to rebuild or reinvest in yen-denominated assets. Japan is the second largest foreign owner of U.S. Treasuries, but despite what might be Japanese selling, the safe-haven characteristics of Treasuries are dominating the price movement. Oddly enough, gold prices are falling. Maybe the Japanese and others are selling gold, too. The gold bugs who argue that gold provides the only haven in a global crisis appear to be wrong, at least for now. The acceleration in the market rout is apparently in response to nuclear-meltdown concerns. Not having any expertise in nuclear science, and having heard conflicting view, I set about to discover how reliable the media hyperbole really is. In this process, my attention was drawn to a new blog hosted and maintained by the MIT Department of Nuclear Science and Engineering (NSE). Members of “the NSE community are monitoring and posting comments, updates and new information” at https://mitnse.com/, the MIT NSE Nuclear Information Hub. If you are interested in the background and details, see https://mitnse.com/2011/03/13/why-i-am-not-worried-about-japans-nuclear-reactors/, a revised version of an original post written by Dr. Josef Oehmen called “Why I am not worried about Japan’s nuclear reactors,” first posted on March 13. In simple language, here are some of the points I gleaned from the technical analysis:

• The Fukushima Daiichi nuclear power plant was designed to withstand an earthquake of 8.2 on the Richter scale. The actual earthquake that hit the plant was at least five times more powerful than what had been anticipated as a worst-case scenario (now estimated at 9.0 on the Richter scale—a logarithmic scale).
• All nuclear plant operators are trained day-to-day in the procedural steps to be taken in case of emergency following the “Depth in Defense” approach.
• When a reactor is shutdown, residual heat (caused by the radioactive decay of fission products) must be removed by cooling systems to prevent overheating that breaks down the barriers to radioactive release. This occurred at Units 1, 2 and 3, while 4, 5, and 6 were not affected because they were not in operation when the quake hit.
• Maintaining enough cooling to remove the decay heat in the reactor has been the main challenge in Japan. According to recent report, warnings were made as far back as 1972 suggesting that if the cooling systems ever failed at a Mark 1 reactor, the primary containment vessel surrounding the reactor would probably burst as the fuel rods inside overheated. Dangerous radiation would spew into the atmosphere.
• When the earthquake hit on March 12, the reactors Units 1, 2 and 3 automatically shutdown. The quake destroyed the external power supply to the reactor Units 1 and 3. This “loss of offsite power” is not good, but the reactor and its backup systems (diesel generators) were designed to keep the coolant pumps working. This worked just fine for the first hour, until the tsunami hit, which flooded the generators and caused them to fail.
• This is very bad, but engineers designed the reactors to mitigate this event by putting everything in the reactor into a containment structure.
• When the generators failed, the plan is to switch to battery power which lasts 8 hours and it did.
• It was at this point that people started talking about the possibility of a “nuclear meltdown.”
• If the core could not be cooled it would eventually (after several days) melt; according to MIT scientists, it would likely be contained in the containment vessel (structure). Nuclear engineers say that “nuclear meltdown” is too vague a word and prefer the term “fuel failure” (which certainly sounds a lot less scary.)
• But a “fuel failure” was still days away on Saturday, so the operators had to do whatever they could to get rid of as much heat as possible to reduce the steam (and other gas) pressure from building up. The idea is to keep the pressure at a manageable level by venting the steam periodically through a pressure relief valve. There are several of these in the containment structure.
• This venting does release some radioactive particles, but in small quantities through filters and scubbers. This poses no health safety risk, even for the plant operators on site.
• During this time, mobile generators were transported to the site and some power was restored. However, and here’s the rub,more water was boiling off and being vented than was being added to the reactor, thus decreasing the cooling ability of the remaining cooling systems. This allowed the fuel rod cladding to overheat initiating a reaction (called oxidizing) that produces hydrogen gas. That this would happen next was well known, but no one knew how much hydrogen would build up. Hydrogen is highly combustible when mixed with air. There is no air in the containment structure, but when the structure was vented to the air an explosion occurred. Still, everything was ok at Unit 1, because the explosion took place outside the containment vessel (but inside and around the reactor building “which has no safety function.”)
• A similar explosion also occurred at the Unit 3 reactor, and did not damage the containment structure or the pressure vessel.
• At this point, the nuclear material was still intact, but the surrounding shell (Zircaloy shell) had started to fail and some of the radioactive fission products (cesium, iodine, etc.) started to mix with the water and steam and a small amount was released into the atmosphere.
• Engineers decided to inject seawater mixed with boric acid—a neutron absorber to ensure the fuel rods remained covered with water. Normally, there is only distilled (demineralized) water in the reactor to limit corrosion. Injecting seawater “would require more cleanup after the event,” but was reported by global media as tantamount to shutting down the reactor forever. The seawater reduced the temperature to a non-damaging level and it was reported on the Monday night, March 14 that Units 1 and 3 at the Fukushima plant were stable and radiation levels had fallen.

North America awakened to the news this morning an explosion at Unit 2 may have caused a containment breach. Pressure relief of Unit 2 was complicated by a faulty pressure relief valve, which complicated the injection of sea water and the evacuation of the steam and hydrogen. It is reported that the fuel rods were completely exposed twice. More recently, it was reported that they are still pouring water on Unit 2 and have not confirmed where things now stand. Prime Minister Naoto Kan had ordered an evacuation of the area after. The explosion was reported to have, “released a surge of radiation 800 times more intense than the recommended hourly exposure limit in Japan”. As well, the PM confirmed a report of a fire at Unit 4 and a powerful explosion that blew a 26-foot-wide hole in the side of the unit. The fire was subsequently extinguished. According to the International Atomic Energy Agency (IAEA) in Vienna, radiation levels had plunged by early afternoon Japanese time. At noon today, Tuesday March 15, the New York Times reported that, “Japan verged on a nuclear catastrophe after a blast further damaged one of the reactors and a fire at another spewed large amounts of radioactive material into the air.” Temperatures at Units 5 and 6 have risen slightly and are being monitored closely. This was already the worst nuclear accident since the Chernobyl disaster April 26, 1968, nearly 25-years ago. At Chernobyl, the explosion was caused by an excessive pressure buildup, hydrogen explosion and rupture of all structures, propelling molten core material into the environment. Chernobyl did not have a containment structure as a barrier to the environment. When it blew, it blew everything straight into the atmosphere. Thick containment walls at the Fukushima Daini plant shield the reactor cores so that even if there were a meltdown of the nuclear fuel it was believed by many to be unlikely to lead to a major escape of dangerous radioactive clouds into the atmosphere. Bottom Line: At this point, there is a great deal uncertainty and some conflicting information. In addition, some are accusing the regulatory authorities, Tokyo Electric Power Co., which is working to avert a meltdown in Fukushima is being heavily criticized for responding slowly, ignoring previous warnings, and faking reports on repairs. The distrust follows a 2002 whistleblower report that forced them to admit to some abuses and fake reports. Its chairman and president resigned and all 17 of its reactors were temporarily shut by government inspectors. There have, reportedly, been a string of other such incidents over the past decade or more. (See https://www.bloomberg.com/news/2011-03-15/debt-tsunami-fights-radiation-for-bigger-risk-commentary-by-william-pesek.html.) Government authorities are now suggesting that the elevated radiation levels were caused by the debris from Monday’s explosion coming to rest near the gauge and the high levels of radiation are not permanently leaking out. In this environment, panic selling doesn’t pay. Markets hate uncertainty, and there is plenty of that to go around. Conditions at the plant appear to have stabilized, at least for now.