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

Paulson Carries the Olympic Torch

During last weeks US Senate Banking Committee hearings on the Bear Stearns bailout Treasury Secretary Henry Paulson had to send a deputy because he was in Beijing tutoring them on the finer points of high finance.

Paulson could probably call China his second home. He is reputably an avid bird watcher and China has some of the best displays of avian pomposity in the world. I have read estimates that he has visited China over 50 times under the guise of eco tourist, investment banker and now head of treasury.

I surmise that most of his trips these days concern how to manage the relationship between the largest economic superpower and the world’s fastest growing economic superpower. Mundane subjects like the sinking dollar, letting the Yuan float and reinforcing the message of America’s and China’s symbiotic dependency are topics of mutual concern.

You Tube Music Video: Olympic Theme

Risk: Political, Moral, Currency

April 13, 2008 Posted by | Bear Stearns, China, Paulson | , , , | Leave a comment