The
big story this weekend, and possibly all next week, is going to be hurricane
Irma, and exactly how much damage it does to Florida and other parts of the US
southeast. The related story will be of the rescue effort in the northern
Caribbean, and just how quickly meaningful help can arrive from Britain, France
and Holland. Our thoughts and prayers are for all affected or about to be
affected.
Below,
Florida waits for hurricane Irma.
NOAA National Hurricane Center.
Irma Zeroes in on Florida With $200 Billion Damage Bill Forecast
By Brian K SullivanWith top winds of 155 miles (249 kilometers) an hour, the life-threatening storm grew in size, meaning most of Florida will face hurricane-force winds as it cuts a path through the peninsula into Georgia. Now a Category 4 system, Irma is forecast to regain power through Sunday when it may reach Category 5 again, the U.S. National Hurricane Center said late Friday. It has already left at least 21 people dead, thousands homeless across the Caribbean and threatens to rack up as much as $200 billion in damages.
“Much of Florida, especially the southern half, is in for a really long and horrible day on Sunday,” said Todd Crawford, lead meteorologist at The Weather Company in Andover, Massachusetts. Another example of “the power of nature on a heavily populated part of the U.S. coastline is imminent, and the costs will be great.”
Mandatory evacuations were issued across Florida, with around 650,000 people fleeing Miami-Dade as part of the largest evacuation the county’s ever attempted. President Donald Trump’s Mar-a-Lago estate was evacuated, along with the rest of Palm Beach.
“Prepare for the worst possible,” Trump said Friday as he boarded Marine One, bound for Camp David.
Irma is one of three hurricanes churning in the
Atlantic Basin. Jose, the third major one of the 2017 season with top
winds of 150 miles per hour, is forecast to turn northeast and miss the U.S. In
the Gulf of Mexico, Katia was expected to come ashore in Mexico by early
Saturday, delivering a dangerous storm surge. The country was just struck by a powerful earthquake on Friday,
shaking buildings in the capital and triggering a tsunami warning.
Irma’s hurricane-force winds now extend for 140 miles,
creating a danger zone that would reach from West Palm Beach on the
Atlantic coast to Fort Myers on the Gulf of Mexico. That’s an “insurance
industry nightmare” as every county in the state could see damaged roofs and
power outages so vast it overwhelms repair efforts, said Chuck Watson, a
Savannah, Georgia-based disaster modeler with Enki Research.
----“Wind damage is totally going to throw a wrench into the insurance industry,” Watson said. “You are talking about companies failing.”
About 9
million of Florida’s 20.6 million people may lose power, according to the
state’s largest utility Florida Power & Light Co. Irma may also curb
natural gas demand in one of the largest U.S. markets and threaten $1.2 billion
worth of crops.
Officials
were taking steps to ensure adequate supplies of gasoline after residents
filled up cars, boats and back-up generators ahead of the storm. “We’re
bringing in as much supply of refined fuel as possible,” White House
Homeland Security Adviser Tom Bossert said Friday.
More
Hurricane Irma’s Chemical Fallout Could Be Worse than Harvey’s
By Jack Kaskey, Ryan Collins, and Bryan Gruley
Port
Tampa Bay alone handles ammonia, unleaded gasoline, sulfuric acid and ethanol.
The port was operating Thursday, but will halt shipping if the Coast Guard
forecasts gale-force winds of at least 39 miles per hour hitting within the 24
hours to come.
Jennifer
Rubiello, state director for Environment Florida, said in an email that
industrial sites are poorly regulated and "even well-regulated sites can
and do fail." She said she couldn’t pinpoint Florida’s riskiest because
operators aren’t required to disclose emergency plans.
More
No, The Economic Impact of Harvey Is NOT Positive
2017-09-03 07:00 by Karl Denninger
I keep
hearing this crap all over the so-called business media today.
Look
folks, here's the reality on losses of this sort:
1. Homeowners and renters insurance
does not cover flooding. If you want (or need) it you
need to buy FEMA-backed flood insurance. If you're not in a
rated hazard zone it's reasonably cheap, but most people don't buy
it unless they are in a rated zone because the government has
decided to force-subsidize people in rated zones by jacking premiums on those
who are not. This has dramatically dropped the "take
rate" for those who buy it voluntarily, exactly as one
would expect. Note that flood insurance has gotten much more
expensive since the last round of Florida hurricanes, plus Katrina.
If you are in a rated zone you can't get a mortgage without
it, but for everyone else you can and take your chances. I've seen
estimates that only 20% or so of household properties have flood insurance in
the Houston area and that plenty of places well outside of
known flood plains have in fact flooded, but the bottom line is that Houston
was built on low-lying, and often reclaimed coastal swamp. In
addition FEMA coverage has modest limits; you're capped off at
$250,000 and $100,000 for contents. And if that's not enough if you take
more than a certain percentage of value damage you're required to rebuild to
enhanced codes to reduce the risk of a second incident and after
a second incident you can't buy it at all. That
is, if you're living in a McMansion you are going to eat a good part of it,
especially if you have expensive possessions, irrespective of having the
coverage. Worse, if you get pounded and have to rebuild with elevation
improvement or similar in order to continue coverage -- which you will
have to do if your property is financed -- you are very likely
to wind up eating a large part of the bill yourself.
2. Commercial properties
can't get FEMA insurance that's anywhere near adequate (if they can get it at
all) but can buy it privately, and some do. But not many, especially
small businesses, do because it's quite expensive.
3. Cars are
covered if they have comprehensive coverage. If not,
then nope. Again, if financed then it's covered because the finance
company will insist on it. However, note that you may still be upside
down on the loan after the insurance company pays, especially on newer
notes that were written for 6, 7, 8 or even 9 years.
If you
have an insured loss then the economic impact to you is
not very high, and you will spend the settlement to fix/replace/whatever the
property, so that will be additive to GDP.
But if
you have uninsured losses, and a hell of a lot of the losses will be
uninsured, then your capital investment has been destroyed and so has the
ability to use it as collateral to borrow for future expenditures that would
add to GDP, and in addition that leverage is no longer available to you.
And by the way, if the Government "steps in" and hands out
money (which they probably will) that's negative too to the
economy as a whole because it's deficit spending which destroys the
purchasing power of everyone's money, so instead of a positive impact
from that it's a negative impact -- although it won't be reported
that way.
What's
worse is that many uninsured losses are greater than the actual loss of
value because you have to pay to clean it up!
So no,
folks, this is not "good news" from a GDP perspective -- at least not
in real terms.
Not at
all.
Where's the money in Hurricane Harvey's wake?
Published September 7th, 2017
When
Hurricane Harvey hit Houston last week, he posed an interesting question for
the water industry: what kind of opportunity is there in these extreme weather
events? I have been hearing a lot of answers over the past week, but there are
two big obstacles to stormwater management becoming a strong growth market.
First,
there is no business model for funding flood-related infrastructure. Whether
you want to build new flood channels, create more permeable urban surfaces,
strengthen levées, or introduce smart systems for managing flood water, the
money has to come from taxation. This is very difficult to raise before the
event. In theory, insurance companies should see the advantage of funding
stormwater management, but in practice they don’t want to open up their risk
modelling to third-party scrutiny, so they are not open to discussions on the
subject (although once a city has invested, they might reduce the premiums
payable).
Second,
it is virtually impossible to design an appropriate flood control system. The
temptation is towards massive over-engineering – particularly when you see
cities like Houston saturated by three 500-year floods in a decade – but funds
are limited. This means that engineers find themselves either designing
something that proves inadequate, or which is never used and looks like an
expensive white elephant. There is no way to be right.
The
reality is that most before-the-event flood protection does not come through
public infrastructure. It comes through the building code. The exception is
where flood mitigation can be tied to other environmental objectives. For
example, green infrastructure in cities like Singapore and Melbourne serves to
mitigate the impact of heavy rain, while at the same time improving the
liveability of the city. You could say the same thing about creative
alternatives to combined sewer overflow corrections in the US. It is only
because these flood mitigation measures are connected to the environmental
regulation of wastewater systems that they go ahead.
These are
all rich world solutions, however. In emerging markets, where building codes
are rarely enforced, and funding for public infrastructure is even tighter,
after-the-event action seems to be the way.
In
Stockholm last week, I bumped into World Bank economist Richard Damania. He has
been working on a yet-to-be-published paper investigating the long-term
economic impact of droughts and floods. The research suggests that the impact
of droughts is generally worse and more long-term than the impact of floods.
This, he thinks, is because floods are immediate and visible. They attract more
media coverage and political attention, and in turn this leads to more focused
efforts at reconstruction. Furthermore, there is some evidence that in the
longer term, cities which have experienced floods (such as those impacted by
the 2004 Indian Ocean tsunami) may in economic terms overtake comparable cities
which have not been similarly affected.
The same
is not true of droughts. These tend to enjoy a much lower profile (a
flood-related death attracts six times the media coverage of a drought-related
death), and they barely attract any investment in recovery, despite having a
devastating impact on people’s life chances. Often, drought will lead to
malnutrition, and if that occurs in the first 1,000 days, the effects can be
long-term and irreversible.
More
In non-hurricane
Brexit news, those rent-seeking, crazed, leveraged gambling, London banksters,
seem all too loath to leave the bright lights and watering holes of London. So
far none have yet slithered off to the joys of dour Frankfurt, dangerous
Paris, wild Amsterdam, dubious Dublin, nor the old age home, Siberia of Luxembourg.
Kevin Libin: Sorry to disappoint, but banks won't be fleeing London over Brexit
Maybe waves of refugees are still to come, but there is no evidence yet of banks seriously altering their London footprint post-Brexit
September 8, 2017 7:02 AM EDT
When
accounting giant KPMG announced last week that it wanted to sell its office
tower in London’s Canary Wharf, it sure looked like another sign that financial
companies are storming Britain’s exits in the wake of Brexit. Except, like all
the other signs of the U.K.’s supposedly unfolding comeuppance for daring to
quit the EU, the KPMG sale reveals the opposite.
Really,
prices for London office buildings have reached scorching levels, and KPMG is
planning to stay put at 15 Canada Square in a sale-and-leaseback deal that
would see it pocket the 400-million pounds the building is selling for — a 250-per-cent
gain over what KPMG paid 10 years ago, and still more than double, accounting
for the depressed pound.
Global
property investors evidently missed the news that London’s 300-year reign as a
dominant global banking centre has been terminated. Because, with the Brexit
decision potentially ending the “passport” system that allows U.K. banks to do
business anywhere in the EU free of regulatory duplication, jobs are fleeing to
Dublin, Frankfurt and Paris by the … hundreds.
And the other weekend, the Financial Post front-page
story, “Heading for the Brexit,” tied those modest Dublin numbers into reports
from Germany that “The Deutsche Bundesbank is in talks with 20 major banks that
are eyeing Frankfurt as their new EU hub.” An “EU hub” is evidently a snazzier-sounding
name for a branch office, like those in Dublin, consisting of 10 to 500 staff.
Maybe
waves of refugees are still to come, but even the most determined scrounging
finds no evidence of banks seriously altering their London footprint post-Brexit.
HSBC, UBS, Goldman Sachs and Morgan Stanley have each mused about shifting
maybe 1,000 positions, give or take, into EU territory. Barclays is putting 150
folks in Dublin. On the other hand, Deutsche Bank just signed a 25-year deal
for a brand-new London headquarters. Garth Ritchie, the bank’s U.K. head, said
the deal “underlines the bank’s commitment to the City of London and the
importance it attaches to being an employer of choice in the capital.”
Ritchie’s
reference to human capital is why he’s running a bank, and those predicting a
mass financial exodus aren’t. European banks prize their access to London’s
incomparably deep capital pools every bit as much as U.K. banks enjoy living
without redundant regulations. But even the loss of all passporting, if it
occurs, would stick banks with an added cost of between three and eight per
cent, according to the Boston Consulting Group. The single-digit increase would
change almost nothing in the calculation that draws banks to London, where
salaries and rents are already uncommonly high.
The European Parliament acknowledged in its own
briefing in December, “The place of London as a major financial centre largely
predates the single market and relies on a dynamic business environment, the
predictability of the British legal system, the worldwide use of English as
language for business, and the attractiveness of a cosmopolitan city.”
----London’s municipal government has commissioned reports in recent years assessing its competitive position as a global financial centre. It found that what appealed most, by far, to banking decision-makers was the availability of skilled personnel (as Deutsche Bank’s Ritchie alluded to) and an accommodating regulatory environment. On those two most-vital considerations, not surprisingly, Paris and Frankfurt don’t rank even close. Executives also ranked highly London’s access to international customers, its banking infrastructure — unmatched anywhere except New York — and a predictable and fair application of the rule of law. The extra productivity that comes from operating in London’s deep pool of human and venture capital makes banking more efficient than other regional financial centres. Morgan Stanley data find costs at German banks are 2,400 basis points higher, and at French banks, 1,500 basis points higher.
As
importantly, London’s bankers really, really like London, with its swinging
nightlife, posh private schools for the kids and unusually high tolerance for
capitalism. As one senior banker recently summed it up to the Evening Standard,
“Paris appeals, but what about the labour laws?” he said. “And if we take
advantage of the tax-free deals that are on offer, they’ll be burning piles of
tyres in La Défense.” If you were a London banker considering Europe’s other
options, you’d want to stay put, too.
We
close with the observation, of yet another large earthquake, Mexico 8.1 , following the full moon on Wednesday September
6th.
Scientists Discover Connection Between Full Moon and Earthquakes
Kate Samuelson Sep 13, 2016
Researchers led by Satoshi Ide, Suguru Yabe
and Yoshiyuki Tanaka, all from the University of Tokyo, found that tides—which
arise from the gravitational interaction between the Earth and the Moon—can
cause changes that may trigger earthquakes.
More
Mexico's strongest earthquake in a century leaves dozens dead
Updated 0639 GMT (1439 HKT) September 9, 2017
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