Risk Rap

Rapping About a World at Risk

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

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

Disaster Response Triad

The earthquake that devastated the Sichuan Province in China, the cyclone that flooded the Irrawaddy River delta in Myanmar and the hurricane that leveled the beloved American city of New Orleans is an interesting study in comparative approaches to disaster response.

All of these natural disasters were terrible human tragedies. The significant loss of life, the destruction of property and environmental damage has forever altered the way of life for millions of people. These disasters have also revealed telling insights into the values of the national governments responsible for rescue, relief and recovery efforts.

The Myanmar effort or more appropriately, non-effort to address the mass misery of its people is a stunning example of authoritarian ambivalence towards the suffering of its subjects. This abomination is more criminal then tragic and is a striking example of the lengths a despotic ruling clique will go to preserve its power through control of the means of subsistence.

Myanmar’s paranoid government uses obfuscation to conceal the impact of its governance practices on its people is damning. Clearly the world has a clear understanding that the Emperor has no cloths and hopefully it will not be long before the people of Myanmar will be able to fully execute its will and rid itself of a repressive government that’s sole purpose is the perpetuation of its oppressive rule.

The Peoples Republic of China’s response is the antitheses of Myanmar’s government’s non-response. China has quickly and efficiently mobilized its state apparatus with military precision. China’s militarization is pervasive and its army is a powerful extension of the state that touches many aspects of daily life and serves as an organizational focal point for the culture and the country’s rural political economy. Here the military is an instrument of relief not of repression as in the case of Myanmar. To be fair the economic strength of China puts it in a better position to respond and provide the relief that a disaster of this magnitude demands. The earthquake has silenced the public relations debacle of the worldwide tour of the Olympic Torch. The Olympic Torch tour has served as a focal point of protest and has eroded the stature of China’s reputation. The earthquake has helped to create some sympathy for the people of China and has shown that the rulers of the Forbidden City are very capable managers of a very formidable state apparatus.

The US Government’s rescue and response efforts following Hurricane Katrina have been scrutinized, dissected and politicized since the time of the event almost three years ago. Lots has been written and we should examine in more detail the risk management lessons from the numerous historical, political, economic and cultural dimensions of the Katrina event. The most salient feature of the US response was how FEMA and Homeland Security could organize and manage a market solution to Katrina. Wal-Mart had the trucks and the logistics, Home Depot had the generators, AT&T the phone cards, General Honore brought the honor and President Bush dispensed funds from the Federal treasury.

I suspect that the Federal Government’s initial reticence to respond to the Katrina crisis was the ideological conviction that the market will provide a solution. Bush’s circle knows that capitalism like nature abhors a vacuum. The spirit of entrepreneurialism will fill the breech that Katrina blew into the intricate levee structure of America’s most idiosyncratic city.

You Tube Video: Dr. John, Sweet Home New Orleans

Risk: Force Majeure, Government, Market, Political, Civil Stability

May 14, 2008 Posted by | China, government, infrastructure, military | , , , , , , , , , , , , , , | Leave a comment