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The government is planning to invoke legal curbs on power consumption by large-lot users in Tokyo and its vicinity this summer as Tokyo Electric Power Co.'s supply capacity is expected to slip far below demand due to damage as a result of the March 11 earthquake and tsunami, government sources said Tuesday.

The government is expected to finalize the plan by the end of this week and work with industry groups to arrange a reduction of power consumption by 25 percent from peak demand hours last summer to avoid massive blackouts, the sources said.

While talks on the reduction will proceed with an eye on efforts to restore Tokyo Electric's power generation capacity lost after the disaster crippled its Fukushima Daiichi nuclear power plant, it would be the first time for Japan to invoke such compulsory power consumption restrictions since the oil crisis in 1974.

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The index for Japanese companies' business confidence in March posted the second-sharpest-ever month-on-month drop following a catastrophic earthquake and tsunami, a post-disaster survey by a credit research institute said Tuesday.

Teikoku Databank, which began compiling relevant data in May 2002, said the index in its March 23-31 survey came to 31.6, down 3.8 points, a sharp decline following its 4.1-point fall in December 2008 that followed the collapse of Lehman Brothers Holdings Inc.

The institute collated the March reading of the diffusion index on the basis of its survey of 10,747 companies nationwide.

All of the diffusion indexes for each of Japan's 10 areas fell, with that for the Tohoku northeastern Japanese district shrinking 7.7 points to 24.0, that for the northern part of the Kanto area falling 5.7 points to 28.7 and that for the southern Kanto area dipping 5.6 points to 31.5. All three margins of fall represented a record fall.

The northern Kanto area covers Ibaraki, Tochigi, Gunma, Yamanashi and Nagano prefectures while the southern Kanto area covers Tokyo as well as Saitama, Chiba and Kanagawa prefectures.

By industrial sector, companies in the retail and services sectors showed especially conspicuous deterioration in their confidence, corroborating fears that the quake would undermine people's desire to buy goods and services.

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The government will not issue any new bonds to create the first in a series of extra budgets to finance reconstruction work after the March 11 earthquake and ensuing tsunami, Finance Minister Yoshihiko Noda said Tuesday.

Jun Azumi, Diet affairs chief of Prime Minister Naoto Kan's Democratic Party of Japan, separately said the ruling party will seek to get a supplementary budget for fiscal 2011 enacted in early May.

Kan has said his government aims to submit a draft of the budget to parliament within this month.

''We will cover it on our own,'' Noda said at a press conference, denying any new government bond issuance and suggesting the government would instead secure necessary funds by cutting some policy expenditures in the initial budget for the year through next March.

Some ministers and lawmakers have said Japan needs to create two or three extra budgets for rebuilding effort, which could possibly total more than 10 trillion yen (some $118 billion).

It has fueled market expectations that the government would have to issue additional deficit-covering bonds, possibly forcing the Bank of Japan to underwrite part of them, a move basically banned by law.

There is caution within the government about recklessly issuing bonds even for the purpose of covering emergency public expenditures as Tokyo has been on the road to rehabilitating its fiscal health, the worst among major developed countries, with gross public-sector debt approaching 200 percent of gross domestic product.

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The government plans to craft an extra budget of more than 3 trillion yen by mid-April, without relying on bond issuance, to finance measures to help reconstruct Japan following last month's deadly earthquake and tsunami, a blueprint for the budget showed Tuesday.

Around 2.5 trillion yen for the first extra budget for fiscal 2011 will come from funds initially secured to enable the government to maintain the level of the state's contribution to basic pensions at 50 percent, according to the blueprint, a copy of which was obtained by Kyodo News.

The rest will be generated by scrapping some of the Democratic Party of Japan-led government's key policies under the initial budget for the year starting April, such as increasing monthly child allowances and introducing more toll-free highways, the draft said.

The government had considered drawing up a first extra budget of not more than 3 trillion yen, but it is now seeking to spend slightly over 3 trillion yen, it showed.

However, the government will face a difficult process in working out the current plan, partly because some DPJ lawmakers remain opposed to scrapping some of the major policies.

The extra budget will mainly finance the costs of clearing rubble and building temporary housing, restoring public facilities and infrastructure, and creating jobs, the paper showed.

The government will try to submit the first supplementary budget to the Diet before the so-called Golden Week holidays begin April 29.

The emergency spending will most likely be followed by second and third batches, and total expenditures could top 10 trillion yen, according to DPJ lawmakers.

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Nice video. "Months, not weeks" to restart the plant (makes professional video tape.)

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STOCKHOLM—Mobile-handset maker Sony Ericsson Friday said it has delayed the broader launch of its Xperia Neo phone until early in the third quarter due to supply chain disruptions resulting from the earthquake in Japan.

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The company added that it has communicated to its operator customers and distributors that some volumes of its Xperia Arc, Xperia Play and Xperia Neo phones have also been affected by supply-chain disruptions.

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Sony is mulling a complete two-week shutdown of some of its Japan facilities in order to conserve energy amidst power shortages in the country caused by the March 11 earthquake.

After the earthquake and ensuing tsunamis damaged nuclear power plants in Japan, government officials are set to request that large firms cut their energy consumption by a quarter. Tokyo Power Electric fears that there will be about a 20 percent power shortage this summer, a 20,500 megawatt deficit, during the peak consumption months.
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The proposal would apply to 16,000 employees in nine Sony offices in Tokyo and Kanagawa prefecture, but would not include factories, marketing units, and subsidaries. It's not finalized yet; Sony is awaiting approval from labor unions, and certain details are still being ironed out, Minami said.

The aftermath of the earthquake has already disrupted the operations of several tech firms with branches in Japan. Nokia, Research in Motion, and Sony Ericsson have shut down factories, Reuters notes. Toyota has paused production at a majority of its Japan factories and has slowed activity in both North America and Europe. Production has also been halted at both Nissan and Honda plants in the country.

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Lately we have heard of occasional documented cases of ear canal bleeding exhibited by people who have been listening too long to morons on TV (and in print) saying that the Japanese economic slow down and supply chain collapse won't have an impact on the US Economy, and will, in fact, be beneficial (it's not pronounced Döuche Bengk). To our immense satisfaction we have confirmed this latest outbreak of bacillus idioticus is localized (to below Canal street), is so far not airborne, and is merely contained to the water supply on Wall Street. In a note just released by a far more credible source of analytic information than anything coming out from Wall Street in the past 3 years: Stone McCarthy, we discover just why the cut to Q1 GDP is about to be magnified for Q2 (and quite possibly for the rest of the year). From SMRA: "According to Automotive News, Japan's big seven automakers have lost more than half a million units of domestic production. The most affected automaker is Toyota, which lost 260,000 units since the March 11 earthquake. How about the U.S.? Will U.S. economic output be affected by the supply disruptions to the Japanese auto manufacturers? The answer is unequivocally yes and the economic impact will be quite severe in April and for Q2 as a whole." There, it wasn't that difficult to admit the truth now, was it.