Risk Rap

Rapping About a World at Risk

Brother Sun, Sister Moon

I live in the burbs of Northern New Jersey. My home is nestled in the bucolic hills of the Ramapough’s. Its very woodsy and the animal population is diverse and pretty prolific considering the fact that the George Washington bridge is only 20 miles to the east.

One of the unfortunate consequences of having a large and thriving animal population is the ugly carnage of road kill that litters community streets and highways. The decaying carcasses of deers, squirrels, woodchucks, chipmunks, Canadian geese, cats, dogs, skunks, opossums, raccoons, foxes, coyotes, snakes, rabbits, turtles, assorted birds and an occasional bear are common sights one expects to encounter each time you take the car out for a spin. Needless to say, driving in my neighborhood is difficult and dangerous. Particularly for the scurrying critters that mindlessly dart into the road and are crushed under the tires of unmindful drivers.

I raise this observation this morning in reverence for the ministry of St. Francis of Assisi. St. Francis has long been associated with a love and respect for animals and a deep reverence for our environment. In today’s homily, my Episcopal priest offered that St. Francis was asking us to find more balance and more harmony in our relationship with the natural world. The rising death toll of poor creatures that litter our roads are symptoms of a radical imbalance due to habitat destruction and a broken food chain that is horrifically corrected under the unforgiving wheels of rampaging Hummers. As sentient mindful beings who are called by God to be stewards of our planet home; we can find better corrective measures to address this radical imbalance that tilts our earth away from realizing this divine call.

This election has highlighted our need to pay more attention to a changing global climate and the need to become better stewards of our environment and to equitably share the rich bounty mother earth offers all its citizens.

St. Francis reminds us to seek more balance in our lives and in our relations with others and nature. Its a worthy reminder to consider when we vote, when we drive and as we walk along the pathways of our daily life.

May the Lord’s Peace be upon you and all God’s creation this day and always.

Prayer of St. Francis, “Lord make us instruments of your peace.”

Canticle of St. Francis Canticle of Brother Sun, Sister Moon.

Film Clip: Franco Zeffirelli’s Brother Sun, Sister Moon song by Donovan.

Music: The Muppet Show, Rodger Moore Talk to the Animals

Risk: balance, proportion, stewardship, unity

October 5, 2008 Posted by | environment, faith, soundtrack | , , , , , , , , , | Leave a comment

A New American Diaspora

Ever since our ancient ancestors first walked out of the Great Rift Valley to populate other regions of the globe our species has been on the move. Critical turning points in world history have always been marked with dramatic shifts in population and settlement of people. The Phonetians, Greeks, Polynesians, Vikings, Crusaders, Mongols, Hebrews and the Pre-Columbian Asians who crossed the Baring Strait land bridge are storied migrations, explorations and conquests that shaped civilization and continue to inform our understanding of world history.

American history is full of examples of dramatic population shifts. The arrival of European settlers, the introduction of African’s through the slave trade, the westward expansion of America, the Trail of Tears of Native American resettlements onto reservations, the arrival of Chinese laborers in San Francisco, the second wave of Ellis Island European immigrants, the migration of African Americans to northern cities at the beginning of the 20th century, the Dust Bowl migrations of Midwest farmers and the most recent immigration of Hispanics, Caribbean, Middle and Far Eastern people are dramatic examples from our country’s short history of major population shifts.

Global climate change and the economic impact of high energy prices are causing dramatic shifts and migrations of people throughout the world. The United States will not be immune from its affects. Hurricane Katrina depopulated the City of New Orleans and is altering our propensity to build houses on barrier islands. The floods along the Mississippi River Valley, drought in the Southwestern states and the devastating wildfires in California and other western states are climate influenced events that are forcing populations to resettle to more eco-friendly locations. History may be rereading and we may be witnessing a reenactment of John Steinbeck’s great historical fiction masterwork, The Grapes of Wrath .

The permanent rise in energy prices will reverse the urban exodus of the middle class to suburbia. As the car culture took hold of post war America, cheap gas, and vast highway systems encouraged the development of suburbs. Now that gas prices are skyrocketing and mass transit infrastructure continues to be neglected the middle class will migrate back to the city to live in close proximity to resources, jobs and services. Urban exclusivity will be protected by congestion pricing programs, the absence of affordable housing and high cost of services. This will create a dramatic demographic shift in the America as lower income people are forced out of the city creating a growing population of rural poor. Social service reservations may need to be created to assure subsistence for the rural poor.

The stated intention of airlines to restrict and eliminate service to second tier cities will tend to isolate these communities and create high concentrations of the economically disadvantaged. This will create tremendous strain on local city and state government’s ability to provide basic services to the new classes of disenfranchised people. High energy prices and the changing American topology due to climate change pose a multitude of risks to the fiscal viability of local governments.

Let’s close with Bruce Springsteen’s Ghost of Tom Joad.

Risk: demographic, tax base, urban, rural, climate change, population,

July 9, 2008 Posted by | bankruptsy, credit crisis, environment, folk, homelessness, social unrest | , , , , , , , , , , , , | Leave a comment

Blame it on the Muskrat Ramble

CNN was showing dramatic footage of another levee failure along the Mississippi River. The town of Winfield Missouri lost its battle to keep its town flood free due to the subversive activity of muskrats.

According to the Army Corps of Engineers, the pesky muskrats used a burrow and bore strategy to undermine the structural integrity of the levees protecting the town. The muskrats dug deep holes into the levees in search of food and safety that ultimately defeated the heroic actions and laborious efforts of townsfolk desperately fighting to defend their community from the ravages of the flood.

It appears that the muskrats used a maneuver that was similar to the unsuccessful strategy employed by the Union Army in the Siege of Petersburg’s Battle of the Crater. Unfortunately the muskrat’s natural burrowing instincts got the upper hand on the best efforts of human engineers.

When the muskrat’s holes appeared, citizens covered them with sandbags but it only seemed to postpone the inevitable and unfortunate breach of the town’s defenses. The levee failure flooded approximately 1,000 acres of land in this community of 720.

The rascally rodent may have won the battle of Winfield Levee; but this skirmish will serve as a reminder that our country needs to marshal its forces and make substantial investments in national infrastructure. This is a war we cannot afford to lose. We must redirect our national priorities to defend and protect our beloved country.

The Captain and Tennille know something about muskrats.

So too does the great Louis Armstrong.

Risk: infrastructure, flood, opportunity cost, national priorities, agriculture

June 28, 2008 Posted by | environment, infrastructure, jazz, pop, risk management | , , , , , | Leave a comment

Eco and Econ Hardship of the Iowa Floods

Just when the price of corn was hitting $7 a bushel, Iowa’s farmers were counting on making a killing this year. The rise in the price of agricultural products due to increased global demand was one of this years few favorable economic developments that farmers were looking to capitalize on. Unfortunately Mother Nature threw them an awful curve ball and wiped out many farms that abutted the angry rivers of the Midwest. The loss of 10% of the states corn yields, has also hurt soybeans and other crops. Though it will certainly drive prices even higher, for the farmers whose fields are underwater , this year will bring financial hardship not abundance as some have thought only a week or two ago.

Longer term the floods destruction may also significantly damage soil and water quality due to the spread of toxins, hazardous waste, dead farm animals and other industrial pollutants rippling through the farmlands as the flood spreads. If 10% of the areas farmland is affected this will command a premium on agricultural futures for years to come.

Eventually, the flood waters will drain off from the once rich arable soil, carrying with it all the fertilizers, petroleum by products and other effluents into the Mississippi River. As it passes New Orleans it won’t be far from its final destination where it can cause considerable damage to the waters of The Gulf of Mexico and its struggling aquaculture and fishing industries.

The Army Corps of Engineers has issued 13 million sandbags. Those sandbags will have to be hand filled. The amount of labor, energy and resources expended to fill those bags in a valiant struggle to buttress failing levee systems is a testament to the American spirit to endure.

As we tally the awful cost of this catastrophic event lets be mindful that investment in our infrastructure is a critical issue that is central to our national defense. I can’t help but think what a wise decision a $2 billion investment in levees would have returned to this country in saved expense and opportunity cost. The old adage that an ounce of prevention is worth a pound of cure is sure sage advice that unfortunately we always seem to dismiss as a meaningless cliche.

We’ll close this post with a favorite from the old Granges of the Midwest.

Let’s listen to Woody Guthrie sing “This land is Your Land.”

Risk: infrastructure, agriculture, aquaculture, water, Mississippi River, Gulf of Mexico, inflation, arable land, crop yields

June 18, 2008 Posted by | environment, folk, homelessness, infrastructure, risk management | , , , , , , , , , | Leave a comment

Tallying the Cost of the Iowa Flood

Thomas Hart Benton

As the flood waters in Iowa drain southward to its destination in the Mississippi River, new sites and new cities are threatened by levee systems that cannot cope with the extraordinary scope and power of nature’s wrath.

Insurance companies will give estimates about the extent of the dollar damage the flood has claimed. The number I have seen for Cedar Rapids is $700 million. I don’t know how they derive that number. I believe it to be replacement value of insured property and assets of insurance in force. That’s a big number but it does not account for uninsured property, loss of potential income from jobs and small business revenue, loss of municipal tax revenue and the intangible but very real cost of lost opportunities due to the allocation of time and treasure to rebuild and repair damaged and lost assets.

CNN this morning was reporting that The University of Iowa assembled a rescue party to recover $400 million worth of art from its famous museum located in one of its flood ravaged buildings. For all intents and purposes the Hawkeyes campus is shut down and some believe that a number of buildings cannot be salvaged. How do you put a price on learning? How will this effect the decision of prospective students to choose the University of Iowa for their college education? What impacts will this have on the precarious economics of state funded college institutions?

Though we can easily see how Iowa is burdened with the extraordinary financial cost of this terrible event, all Americans will be impacted as a result of this flood. For example, railroads have scaled back schedules due to flooded lines. This will impact commerce of businesses waiting for deliveries and sellers looking to complete the book to bill cycle.

Something that will become more apparent as the summer progresses is the toll the flood will have on rising corn prices. Due to crop destruction it is estimated that the price of corn will rise by 9%. This is a cost that all American’s will unfortunately share equally and will only exacerbate the problem of rising inflation.

When the levee breaks you got no place to stay and escape the harm of this costly flood.

Risk: agricultural futures, municipal finance, transportation, infrastructure, University of Iowa, inflation, opportunity cost, fine art

June 16, 2008 Posted by | commodities, community, economics, environment, folk, infrastructure | , , , , , , , , , , , | Leave a comment

Tommy Bartlett Thrill Show

The Midwestern region of the United States has been devastated by rain, floods and tornadoes. This year is on a pace to set the record for most tornadoes in a season. The incessant rains that continue to fall have led to devastating floods of communities in Minnesota and Iowa. The unusual spike in increased precipitation could also threaten corn crops and other agriculture due to too much rain. The rain is posing significant risk to the regions economy.

Nowhere has the impact of geo-risk been as starkly demonstrated as in the disappearance of Lake Delton. Built in the 1930’s Lake Delton is a key anchor attraction for the regions important leisure and tourist industry. Long a favorite getaway destination and vacation spot for heat challenged residents of Chicagoland, many will now be forced to find another site to escape those hot city nights. Lake Delton escaped into the Wisconsin River after its dam broke due to heavy rains. Talk about unforeseen risk events. This has to rank with having your place of business destroyed by the falling Skylab. In statistical probability nomenclature the disappearance of Lake Delton is a “fat tail event.”

Lake Delton is an anchor attraction of the Wisconsin Dells. Occupancy rates will surely suffer at the 20+ resorts located in the area. The disappearance of the lake will strike a severe blow to the critical tourism revenue so important to the local economy. The Tommy Bartlett Thrill Show (The Greatest Show on H2O) is one of the first casualties of this extreme risk event. He’ll have to ground his aquatic hi-jinks and bring in landlubbing jugglers and unicyclists due to the absence of water in the lake. It’s a courageous recovery strategy and we hope that the area will attract enough crowds to make it profitable for Tommy Bartlett’s 55th year of providing family entertainment for Lake Delton visitors.

I would bet that few business depending on Lake Delton for sustenance may not have included the possibility of the lake’s disappearance in its annual risk assessment revue. This is ironic and dangerous because the lake is the primary business driver for the areas small businesses. All local businesses must consider the availability of clean and accessible water when conducting it’s annual risk assessment and opportunity discovery revue.

It seems that whenever you take something for granted your begging to be clobbered by some extreme event that comes at you from left field.

Another consideration is “what could these businesses have done to protect themselves from this risk event?The obvious answer is risk transfer by purchasing insurance. It would be interesting to see what companies had business continuity and interruption policies that covered this type of event.

This is a good lesson in product market risk concentration. The products and services of area businesses are almost entirely tied to its proximity to the lake. If that single factor fails or as in the case of Lake Delton disappears your business fails. That is too much risk concentration in a single factor and it can be tempered by developing products and services that are not tied to the lake.

The larger lesson from this type of event is that small businesses need to take an activist role to lobby local and federal representatives to make sure that the lakes, dams and water quality is protected and properly maintained. This is an infrastructure issue that goes to the heart of the debate about national policy and program priorities that need attention and funding. Infrastructure is an issue that has a dramatic effect on small brick and mortar businesses. If a bridge, road, street, electricity or telephone service is interrupted it can put a small business out of business. Small businesses need to assess these risk factors in its business plan and outline contingencies to manage these risk events should they occur.

Infrastructure programs is a growing problem and will continue to grow as state and local governments scale back on maintenance and improvement projects due to budgetary constraints and the inability to raise taxes. Unfortunately the nation’s infrastructure needs immediate massive help. The Tommy Bartlett Thrill Show won’t be surfing its way through the velvet waters of Lake Delton this summer. Let’s hope they’ll be back thrilling overheated Bear fans next summer.

You Tube Video: Beach Boys, Surfin USA

Risk: geo-risk, environment, infrastructure, tourism, agriculture, futures, small business

June 12, 2008 Posted by | commerce, environment, infrastructure, pop | , , , , , , , | Leave a comment

Fallout from China’s Quake

The fallout from the earthquake that hit China could have severe global ramifications as the extent of the damage is becoming more apparent.

As of this writing, 19,000 people have been reported dead. Hundreds of thousands of people have been left homeless by the disaster and are living mostly on the streets. Numerous cities have been completely leveled. Many more are in urgent need of medical attention. The nation is experiencing a traumatic emotional shift from the building euphoria from the hosting of the Olympic Games to the national nightmare of this deadly quake.

The earthquake has also opened the door to a potentially larger catastrophe. The New York Times reports that the Red Army has been deployed to examine and buttress a number of dams that may have been damaged as a result of the quake. Further, the Times also reported that it believes the area has a number of nuclear fuel processing facilities. If true this heightens and changes the severity of the events geo risk profile. The consequences of the failure of either or both of these energy producing infrastructures is unimaginable.

The economic fortunes of the United States may also be directly affected by the China quake. The quake may spike inflation in China making its exports more costly for US consumers. Though there has been no indication that China’s manufacturing capacity was broadly affected by the quake, capacity may be required to address domestic consumption.

China may also need to repatriate some of the investment assets of its Sovereign Wealth Funds. China’s SWF is a large investor in US securities and some of that investment may be redirected for domestic purposes.

This power of this quake will move the earth under many peoples feet. We wish China and her people our prayers for a speedy and full recovery.

You Tube Video: Carol King, I Feel The Earth Move

Risk: Geo, China, Capital Markets, United States, Inflation, Credit, Nuclear

May 16, 2008 Posted by | China, commerce, community, environment, nuclear, pop | , , , , , , | Leave a comment