Bankruptcy Plans Cast Shadow Over Nuclear Power

The potential bankruptcy of Westinghouse Electric Company LLC is the most dramatic sign yet of the financial troubles of the global nuclear sector. Westinghouse Electric Co., in recent years a subsidiary of troubled Japanese manufacturing giant Toshiba, is involved in one way or another in close to half of the world’s nuclear power stations. According to Reuters, the company has retained bankruptcy lawyers and is seriously looking at the option of bankruptcy among other options.

Toshiba's Westinghouse brings in bankruptcy lawyers; disclosure deadlines loom

Nuclear power has historically relied on complicated business arrangements based on government subsidies and private investment, and with few exceptions, both sides have taken losses on every nuclear power station. Adding to the financial pressure, uranium is in short supply as the world’s mines and military surplus are depleted. With the high cost of fuel, some reactors in recent years have opted to close as their fuel is exhausted. The lower cost of solar-generated electricity makes it highly unlikely that new nuclear plants will be launched beyond a subset of those already on the drawing board.

If Westinghouse Electric Co. goes into bankruptcy, though, that casts a shadow of the whole sector. It could turn nuclear power into a legacy technology almost overnight. One scenario to consider is that military operations take over nuclear power stations country by country to keep them operating safely, and ultimately to decommission them safely.

Radio Shack Closes 200 Stores in Bankruptcy

Radio Shack is in bankruptcy again. It will close 200 stores, convert a larger number to Sprint stores, then try to weave together a plan for the roughly 1,000 stores that remain. Stories at Reuters: https://www.reuters.com/article/us-radioshack-bankruptcy-idUSKBN16G06J Bloomberg: https://www.bloomberg.com/news/articles/2017-03-09/radioshack-successor-enters-bankruptcy-as-retail-woes-persist-j01psvmv

Bank Failure: Proficio Bank

The FDIC tonight shut down Utah’s Proficio Bank. This bank’s troubles stretch back at least 10 years, and after a particularly disastrous examination of the bank in 2010 the FDIC ordered the bank to raise capital and stop keeping phantom assets on its books.

Apparel Retreat Continues

It has been a bad season for U.S. retail, and the fallout has continued into February. West Seal and Eastern Mountain Sports can be added to the official list of retail chain bankruptcy liquidations. Smaller chains are also part of the trend. Luke’s Locker, which at its peak had at least 10 fitness clothing stores in Texas, plans to emerge from bankruptcy with just three stores. Marbles, a Chicago-based game retailer, will close all of its 37 stores in bankruptcy.

There are worries in general about private equity owned apparel chains because of their debt load. In that category, Gymboree may be in the worst shape. The company is hoping for a $1 billion debt restructuring, and as part of that plan, its CEO is preparing to step down. Discount footwear chain Payless has a smaller debt load but also has smaller margins and may close 20 percent of its 4,500 stores if it can reach a deal on its debt. In the private equity apparel category, J. Crew, Rue 21, True Religion, and Claire’s are mentioned as retailers whose debt load is probably too high to pay off over time. The largest debt crisis in retail could be Toys “R” Us and Babies “R” Us. These chains have already extended most debt payments due this year and next, but have only months remaining to restructure the rest. A lackluster fourth quarter and a security breach at loyalty program Rewards “R” Us during that period won’t help.

Retailers that are doing well in financial terms may still be closing stores. The latest large store-closing announcement came from BCBG, with plans to close 120 stores, mostly in malls. As clothing becomes more durable, it’s expected that consumers will continue to scale back their clothing purchases.

A Strange Winter in the Arctic

The Arctic Ocean has been a strange place this winter, with the trend of record low ice continuing from 2016. Arctic ice extent has never been below 14 million km² in February or March in the satellite record as analyzed by NSIDC aside from the first few days of February 2006 and 2016, but extent in the first 11 days of February 2017 has inched up to 13.9 only to fall back again. Other measures — area, thickness, and volume — also show record lows for this time of year. The broad area of thick ice north of Canada hasn’t materialized this winter, and instead, 90 percent of the thick ice is poised to flow out into the Atlantic over the next several months. Satellite and airplane photographs show ice that is softer and more broken up than you would expect in any season outside of August and September. A Russian convoy crossed the Arctic Ocean around the end of December with with supplies, the first wintertime cargo trip across the Arctic ice in the post-Soviet era. No one is saying the trip was easy, but with thin and fragile ice it wasn’t accompanied by the sense of peril that followed icebreakers around in prior decades. The broken ice is flowing freely through Nares Strait, the narrow strait at the northwest corner of Greenland, which normally would clog up from November through April. Open water has been spotted not just on the north coast of Alaska but even on the north coast of Greenland. There have been episodes of warm air crossing the Arctic Ocean to feed unseasonable warmth into eastern Canada and western Russia. Last week North Pole temperatures crept up to the freezing mark and possibly over, the result of a warm atmospheric river that originated in the Caribbean Sea. At points the normal winter cold has escaped from not only the Arctic Ocean but also Siberia, so that the Northern Hemisphere’s cold spots were found in places as unlikely as southwest Asia and the U.S. Rocky Mountains.

Mild winter conditions in the Arctic Ocean in the last few years have not mattered to the sea ice because normal winter weather always returned eventually, giving ice inside the Arctic Circle enough cold air to regenerate. The rule of thumb was that if fall weather gave way to winter before the last week of January, you would be assured of thick ice by April. This year for the first time that rule has been broken. Winter cold is already three months late, there is no sign of a cold snap on the way, and Siberia, which has come to the Arctic’s rescue in winters past, is not currently cold enough to cool off an ocean. We are now assured that the melting season will start with ice that is thinner than normal.

We don’t know exactly what this means for the coming summer in the Arctic Ocean because we’ve never seen this situation before. If we start the melting season with 10 percent less ice than ever before, does that mean the whole Arctic Ocean could melt out before the summer is over? It sounds unlikely, but we can only guess.