Residents of Oklahoma and Arkansas were met with the wrath of Mother Nature late yesterday as tornadoes ripped through the two states, killing at least five and causing massive damage.
“We have two fatalities and 15 people taken to the hospital with injuries,” said Capt. Jeff Sewell with the Oklahoma Highway Patrol. “There’s a tremendous amount of property damage,” he said. “Cars have been blown together. A lot of electric wires are down all over the place. Several houses were totally destroyed.”
Another three fatalities occurred in Arkansas and are being blamed on falling trees. The massive storm is not stopping there; Mississippi, Alabama and Tennessee are bracing for severe weather today, while Georgia and the Carolinas will likely see strong storms later this evening and into Saturday.
Severe thunderstorms cause significant destruction and large insured losses, as we can see from this excerpt of the Insurance Information Institute’s website:
As stated on the RIMS homepage, the Risk and Insurance Management Society’s president, Scott B. Clark, is urging members to give to Japan as the country works to slowly bring itself back to pre-earthquake and tsunami status. Clark was in Japan when the quake hit and felt first-hand the power of mother nature over seemingly helpless humans.
When the earthquake hit, I was in Tokyo, having just arrived to attend the Japan Chapter of RIMS’ annual meeting. My partner, Peter, and I were with Yoshi Hamaji, president of the Japan Chapter, when the quake struck and at the time, we didn’t realize the extent of the tragedy. As we were able to receive news updates and the true extent of the devastation became clear, it was difficult for us, as for the rest of the world, to comprehend.
Experiencing such a tragic event would touch anyone on a personal level, as it has Clark. Feeling the need to do something about it, he has asked each RIMS chapter to match his chapter’s (RIMS Greater Miami) donation of $1,000 to the American Red Cross’ relief efforts in Japan.
Simon Johnson is the former IMF chief economist and current professor at MIT’s Sloan School of Management. And to say he is skeptical about the friendly relationship between government and Wall Street — particularly Goldman Sachs — would be putting it way too lightly.
He seems to be looking around at the industry “overhaul” that has occurred since the banks tanked the economy and wondering why everything is exactly the same as it was before. Very little has changed, he asserts, and he still thinks that at least one major firm remains entirely too big too fail regardless of how much Congress members want to walk around patting themselves on the back for passing Dodd-Frank last summer.
At the Institute for New Economic Thinking conference in Bretton Woods, he asked the following. (His transcribed comments here come from the video below.)
“Who in the room thinks that if Goldman Sachs were to hit a rock, a hypothetical rock — I’m not saying they have, I’m not saying they will. If they were to hit a rock today, Saturday, who here thinks they’ll be allowed to fail like Lehman Brothers did unimpeded by any kind of government bailout starting Monday morning? Can Goldman Sachs fail?”
After this, he pauses and looks around the room from his podium. You can’t see the crowd on the video but it becomes apparent that no one spoke up or raised their hand.
“I’ve asked this question around the country [and] only one person has ever raised his hand. It was in New York. He had a big short position in Goldman stock. That’s New York. But seriously, it can’t happen. Goldman Sachs is a $900 billion bank, total balance sheet. You might want to say it’s too big to fail. You might want to use the language of [Bank of England governor] Mervyn King and say it’s ‘too important to fail.’ You wouldn’t allow it to fail. I wouldn’t allow it to fail if it was my decision. You wouldn’t either. It’s too scary today given the nature of the global economy. And from that scariness comes power — comes an enormous amount of power.”
He then asks the audience what happened to the plans to reform this? Why is “too big too fail” still allowed to persist? Why is, as he claims, “it going the other way … too big to fail firms have gotten bigger”?
In his explanation is a lot of truth and straight talk about what he believes has been a failure to reform. Watch the video below in its entirety to hear all his insight. It’s 10 minutes long but you can make the time. (via The Economist)
In somewhat related news, New York magazine has put together a multi-part feature on “The Mind of Wall Street.” At it’s core, the piece asks if, when it comes to post-financial crisis reform, Wall Street won then why is it so worried.
Combined, both go a long way to explaining the current climate in the financial sector.
It may turn out to be a rough hurricane season ahead if forecasts from the team at Colorado State University prove true. The somewhat famous team (at least in these circles) of Dr. William Gray and Phil Klotzbach, predicted back in December that there would be 17 named storms. Late last week, that prediction was adjusted as the CSU team issued their latest hurricane predictions: 16 named storms, nine hurricanes and five major hurricanes with sustained winds of 111 mph or greater.
“We expect that anomalously warm tropical Atlantic sea surface temperatures combined with neutral tropical Pacific sea surface temperatures will contribute to an active season,” said Phil Klotzbach of the CSU Tropical Meteorology Project. “We have reduced our forecast slightly from early December due to a combination of recent ocean warming in the eastern and central tropical Pacific and recent cooling in the tropical Atlantic.”
Though forecasts were adjusted downward slightly, Dr. Gray issued a warning:
“We remain – since 1995 – in a favorable multi-decadal period for enhanced Atlantic Basin hurricane activity, which is expected to continue for the next 10-15 years or so,” said Gray. “Except for the very destructive hurricane seasons of 2004-2005, United States coastal residents have experienced no other major landfalling hurricanes since 1999. This recent 9 of 11-year period without any major landfall events should not be expected to continue.”
The team’s probabilities for a major hurricane making landfall on U.S. soil breaks down as follows:
72% chance that at least one major hurricane will make landfall on the U.S. coastline in 2011 (the long-term average probability is 52%)
A 48% chance that a major hurricane will make landfall on the U.S. East Coast, including the Florida Peninsula (the long-term average is 31%)
A 47% chance that a major hurricane will make landfall on the Gulf Coast from the Florida Panhandle west to Brownsville (the long-term average is 30%)
61% chance of a major hurricane tracking into the Caribbean (the long-term average is 42%)
Check out the May issue of Risk Management (available online May 1) for an article on the 2011 hurricane season and the science behind hurricane names.
