Japan is suffering its worst crisis since August 1945, the end of World War II and what was, ironically, the dawning of the nuclear age.

Markets around the world sold off Tuesday, as the latest reports of an explosion at the compromised Fukushima-Daichi Power Plant set off new speculation about meltdowns, radiation leaks and the future of nuclear energy.

Still-simmering unrest in Libya and as-yet under-reported tension in Bahrain–the Saudis have been “asked” to send in military support to bolster the regime, as much if not more an indication of the invitee’s concern about its hold on power as it is about the inviter–have been reduced to background issues, as intense scrutiny focuses on what’s still the world’s No. 3 economy.

Last week we alluded to cold-hearted capitalists and their ruthless buying when others panic. This week the levels of selling have reached the indiscriminate. If you’re a serious investor it’s time to look for opportunities to step in at value-based targets in the CE Portfolio and the How They Rate table. The majority of the coverage universe had been trading above targets.

On the other side of the same token, if you already have positions in buy-rated names this is no time to double down. It’s never wise to allow one or two positions to take up a disproportionate share of your overall portfolio. In the broader context of recent market history now seems like a great time for new entrants to establish positions in stocks sold down because of fear.

Life and sports and markets go on. It’s like the Packers playing the Cowboys for the 1963 NFL championship the weekend of JFK’s assassination but on a daily basis. Of course we’ve evolved to the point where loci of extraordinary disasters or acts of terror can shut it down for a spell to clean up at get functional again, but beyond ground zero it’s more or less business as usual.

Available data, according to academics and analysts who’ve taken up the respective issues, suggest major events of this nature have negligible long-term impacts on economies and markets, although the sample group doesn’t include a three-part, earthquake/tsunami/meltdown scenario.

In the wake of the 8.9 earthquake off the Land of the Rising Sun we’re liable to be a lot closer to normal six months hence than many talking heads suggest.

Reactor Reality

It’s not pretty.

Neither, however, does even the worst case approximate the hysteria generated on television screens. It’s easy to strike chords with words like “meltdown” and “radiation.” Major media, including the specialized financial variety, in fact are framing coverage as a simple choice between two outcomes, “Three Mile Island” or “Chernobyl.”

These easy references connect with viewers but they do little to inform.

The 1979 incident at the Three Mile Island Nuclear Generating Station near Harrisburg, Pa., was a partial core meltdown caused by a faulty valve, instrument failure and human error. There was never any threat to the power system that supplied the cooling system, or, for that matter, to the ability of responders to cool the reactor.

About half the core melted, and the cladding around 90 percent of the fuel rods failed. Five feet of the core of Unit 4 were eaten as around 20 tons of uranium flowed to the bottom head of the pressure vessel to form a mass of corium. The reactor vessel, the second level of containment, held up, containing the damaged fuel with nearly all of the radioactive isotopes in the core.

The Kemeny Commission reported in October 1979 that a maximum of 13 million curies of radioactive but relatively harmless noble gases were released. Only 13 to 17 curies of cancer-causing iodine-131 were released. Total releases were a relatively small proportion of the radioactive material in the reactor.

For myriad reasons Fukushima-Daiichi has surpassed Three Mile Island in terms of scale. But is the public sensibility served by repeated invocations of Chernobyl?

The most definitive comments by a Western official have come from John Beddington, the chief scientific officer for the UK government, during a teleconference with personnel at the British Embassy in Tokyo on Wednesday. According to Bennington, even a worst-case chain of events–one that leads to a reactor explosion–would only affect a 30 kilometer radius around the plant.

The blow-off explosion at Chernobyl Unit 4–a release of energy and radioactive material under extreme pressure that followed an earlier hydrogen blast–caused radioactive material to shoot high into the atmosphere. And it exposed graphite moderator components of the reactor to air, causing them to ignite.

The resulting convection sent a plume of radioactive fallout higher and higher–up to 30,000 feet–and thus an even more extensive area, including Pripyat, Ukraine, the town nearest the Chernobyl reactor, the western Soviet Union, Eastern Europe, Western Europe and Northern Europe. It burned for 15 days afterward, until May 10, 1986.

It’s critical to keep in mind that Chernobyl Unit 4 wasn’t enclosed by any kind of hard containment vessel.

At Fukushima-Daiichi control rods were deployed correctly and did stop reactions between fuel rods. But stopping the reactions isn’t the end of the game; the fuel rods remain extremely hot post-reaction and must be cooled. That means they must be constantly submerged. Under normal circumstances the cooling process involves a constant stream of water, which becomes steam until the rods are sufficiently cooled. This steam is ordinarily pulled off to run the turbines that generate electricity, and more replacement water is pumped in.

Eventual loss of power after the earthquake and tsunami interrupted the water-steam-water cycle, resulting in an accumulation of pressure that had to be relieved. This radioactive steam has been vented, and workers have been cooling the reactors with seawater. But this water initially boiled off faster than it could be replaced. Exposure to air caused the casings of the hot fuel rods to crack, releasing radioactive elements and hydrogen, the escape of which is likely the cause of the explosions reported over the last several days. There is no confirmation that uranium fuel has melted.

Units 1 and 3 were relatively stable as of Wednesday morning in Japan.

Workers have been combating a fire in Unit 4, but the reactor was in a 105-day-long maintenance outage at the time of the earthquake and contained no fuel. As of 7:45 am Mar. 16, Japan Standard Time (JST, 4:45 pm Eastern Daylight Time Mar. 15) the fire, which wasn’t in the spent fuel pool, as was reported by several media outlets, had been extinguished.

There were reports early Wednesday morning of “loud noises” coming from Unit 2, which is the focus of greatest concern right now. These reports were shortly followed by confirmation from the Nuclear and Industrial Safety Agency (NISA). Although it didn’t say the sounds were explosions, NISA noted that “the suppression chamber may be damaged.” The suppression chamber holds water and steam released from the reactor core.

Radiation levels on the edge of the plant compound briefly spiked but quickly fell. The water level inside the Unit 2 reactor was measured at 1.7 meters below the top of the fuel rods Wednesday afternoon but was rising as workers pumped seawater into it.

Radiation in the immediate vicinity of the reactors is harmful to human health at current levels. But it’s crucial to note a few more key points. Japan suffered an earthquake and tsunami of unprecedented proportion that have caused historic damage to every part of their infrastructure and the deaths of thousands of people.

The 24-hour news cycle is riding the “nuclear accident” story, despite the fact that is was no accident, in the Three Mile Island or Chernobyl sense; it was the result of an unprecedented natural disaster, and the fact that matters haven’t gone critical radiation-wise already testifies to the advancements we’ve made in nuclear technology. In fact the efforts of plant workers will likely mean there’s very little harm to anyone but themselves.

The worst-case scenario for Fukushima-Daiichi is that all attempts at cooling the reactors fail. A buildup of pressure caused by the interaction of hot radioactive material with the containment floor would cause an explosion. But this explosion would reach a height of about 500 meters, containing any dangerous material within the already established 20 to 30 kilometer exclusion zone around the plant.

Reported levels of radiation in Tokyo are relatively trivial; levels would need to increase by hundreds of times current levels to cause problems. Acceptable levels of radiation are based on the most susceptible members of society (children and pregnant mothers). Right now levels outside the 30 kilometer exclusion zone are fine for all members of society.

The US aircraft carrier USS George Washington, stationed at Yokosuka Naval Base near Tokyo, measured “very low levels” of airborne radiation carried by northeast winds from Fukushima-Daiichi, 200 miles away. A level of around 0.5 millirems of radiation was detected at Yokosuka. That’s about 50 times levels that occur in nature, according to Masaharu Hoshi, professor of radiation physics at the Research Institute of Radiation Biology and Medicine of the University of Hiroshima.

Professor Hoshi, whose academic study focuses on exposure cases from and the histories of Chernobyl, Semipalatinsk, a nuclear test site in Kazakhstan that closed in 1991, and Hiroshima and Nagasaki, told Stars & Stripes that “the level detected…is not a level that immediately causes health hazards,” adding, “I would say not to worry. Even at Chernobyl, there were only 20 or so people who had direct effect and died of thyroid gland cancer,” he said. “The major problem is psychological, the fear of harmful effect that people might harbor.”

Canada and Japan: Markets and Economies

Ed Sollbach from Desjardins Securities analyzed North American equities’ performance following eight natural disasters over the past two decades-plus, including the magnitude 7.9 earthquake that struck Sichuan, China, in May 2008, and Hurricane Katrina, which devastated the Gulf Coast of the United States in 2005. It’s true that none of these events included a potential nuclear meltdown in their aftermath. But the fear-and-ignorance-driven early selling after them is similar to what we’re seeing now.

“The impact on the overall stock market seems to be minimal,” concluded Sollbach. “The maximum decline after one week was only 1.3 percent, and after one month only 3.2 percent. The average gain was 0.7 percent after a week and 0.7 percent after a month.”

The outcome for Japan’s economy, according to Professor Ilan Noy of the University of Hawaii, is likely to be “quite minimal” because “the Japanese government and the Japanese people have access to large amounts of human and financial resources that can be directed toward a rapid and robust reconstruction and rebuilding of the affected region.” Japanese officials are likely to boost spending, a fiscal expansion that will further increase government debt. But this debt pretty much stays in Japan. Nor is there much sign that this will create any lasting monetary problems.

The situation in Japan is not to be minimized. Its impact will be felt for decades. Having an idea of the real nature and scope of the risk and the ability to distinguish it from what’s reported for ratings purposes provides a comparative advantage to investors with cash on hand and the courage to deploy it right now.

For new money, it’s time to go against the crowd.

The Roundup

The overall impact of the Japan’s three-part disaster is uncertain, as are its ramifications for Canada. Broadly speaking, however, the Great White North should suffer no ill effects and remains well positioned, as it has been since 2005, to benefit from higher oil prices as normal economic activity resumes and the perception that its relatively strong fiscal and monetary positions make it a more attractive investment destination than Europe, the US or a newly stretched Japan.

The earthquake and its aftermath could also have positive ramifications for North American automakers and the equipment makers who supply them. Demand for oil will likely shrink in the short term simply because Japan is the No. 3 consumer in the world. Prices for crude and other commodities will also come under pressure as investors seek safety.

Over the long term Canadian resource companies stand to benefit from the reconstruction effort and the demand for raw materials it promises. Canadian bank exposure to Japan is negligible. And, though the Canadian dollar has come down from a 2011 high this week, the long-term trends supporting a strong loonie remain intact.

All the Canadian Edge Aggressive Holdings have now reported fourth-quarter and full-year results. Synopses are available in the Feb. 23 Flash Alert, the March Portfolio Update and the Mar. 10 Flash Alert. We’ll cover Ag Growth International (TSX: AFN, OTC: AGGZF) and Parkland Fuel Corp (TSX: PKI, OTC: PKIUF), which both released numbers Monday, Mar. 14, along with the two Conservative Holdings that bring up the 2010 rear: Atlantic Power Corp (TSX: ATP, NYSE: AT), which will report on Friday, and Innergex Renewable Energy (TSX: INE, OTC: INGXF), which will bring this reporting season to a merciful conclusion a week from now on Mar. 23, just in time for the second quarter, in coming days.

Aggressive Holdings

• Ag Growth International (TSX: AFN, OTC: AGGZF)–Mar. 14 (announced)
• ARC Resources Ltd (TSX: ARX, OTC: AETUF)–Feb. 10 (announced)
• Chemtrade Logistics Income Fund (TSX: CHE-U, OTC: CGIFF)–Feb. 23 (announced)
• Daylight Energy Ltd (TSX: DAY, OTC: DAYYF)–Mar. 2 (announced)
• EnerCare Inc (TSX: ECI, OTC: CSUWF)–Feb. 23 (announced)
• Enerplus Corp (TSX: ERF, NYSE: ERF)–Feb. 25 (announced)
• Newalta Corp (TSX: NAL, OTC: NWLTF)–Mar. 3 (announced)
• Parkland Fuel Corp (TSX: PKI, OTC: PKIUF)–Mar. 14 (announced)
• Penn West Petroleum Ltd (TSX: PWT, NYSE: PWE)–Feb. 18 (announced)
• Perpetual Energy (TSX: PMT, OTC: PMGYF)–Mar. 8 (announced)
• Peyto Exploration & Development Corp (TSX: PEY, OTC: PEYUF)–Mar. 9 (announced)
• PHX Energy Services Corp (TSX: PHX, OTC: PHXHF)–Mar. 3 (announced)
• Provident Energy Ltd (TSX: PVE, NYSE: PVX)–Mar. 9 (announced)
• Vermillion Energy Inc (TSX: VET, OTC: VEMTF)–Feb. 28 (announced)
• Yellow Media Inc (TSX: YLO, OTC: YLWPF)–Feb. 10 (announced)

Conservative Holdings

• AltaGas Ltd (TSX: ALA, OTC: ATGFF)–Feb. 24 (announced)
• Artis REIT (TSX: AX-U, OTC: ARESF)–Mar. 2 (announced)
• Atlantic Power Corp (TSX: ATP, NYSE: AT)–Mar. 18 (confirmed)
• Bird Construction Inc (TSX: BDT, OTC: BIRDF)–Mar. 4 (announced)
• Brookfield Renewable Power Fund (TSX: BRC-U, OTC: BRPFF)–Feb. 16 (announced)
• Canadian Apartment Properties REIT (TSX: CAR-U, OTC: CDPYF)–Feb. 22 (announced)
• Cineplex Inc (TSX: CGX, OTC: CPXGF)–Feb. 10 (announced)
• CML Healthcare Inc (TSX: CLC, OTC: CMHIF)–Mar. 4 (announced)
• Colabor Group (TSX: GCL, OTC: COLFF)–Mar. 7 (announced)
• Davis + Henderson Income Corp (TSX: DH, OTC: DHIFF)–Mar. 8 (announced)
• IBI Group Inc (TSX: IBG, OTC: IBIBF)–Mar. 21 (confirmed)
• Innergex Renewable Energy (TSX: INE, OTC: INGXF)–Mar. 23 (confirmed)
• Just Energy Group Inc (TSX: JE, OTC: JSTEF)–Feb. 10 (announced)
• Keyera Corp (TSX: KEY, OTC: KEYUF)–Feb. 17 (announced)
• Macquarie Power & Infrastructure Corp (TSX: MPT-U, OTC: MCQPF)–Mar. 10 (announced)
• Northern Property REIT (TSX: NPR-U, OTC: NPRUF)–Mar. 9 (announced)
• Pembina Pipeline Corp (TSX: PPL, OTC: PBNPF)–Mar. 3 (announced)
• RioCan REIT (TSX: REI-U, OTC: RIOCF)–Feb. 28 (announced)
• TransForce (TSX: TFI, OTC: TFIFF)–Mar. 2 (announced)