While Marc Faber is alarmed by the display of wealth he sees in America these days, he could be witnessing such “opulence” for good reason. Robert Frank wrote in the Wall Street Journal blog The Wealth Report yesterday:
According to a new report by Boston Consulting Group out today, the number of millionaire households in the world grew by 12.2% in 2010, to 12.5 million. (BCG defines millionaires as those with $1 million or more in investible assets, excluding homes, luxury goods and ownership in one’s own company).
The U.S. continues to lead the world in millionaires, with 5.2 million millionaire households, followed by Japan with 1.5 million millionaire households, China with 1.1 million and the U.K. with 570,000. Singapore leads the world in “millionaire density,” or the percentage of millionaires, with 15.5% of its population now millionaire households.
The most important trend, however, is the global wealth distribution. According to the report, the world’s millionaires represent 0.9% of the world’s population but control 39% of the world’s wealth, up from 37% in 2009. Their wealth now totals $47.4 trillion in investible wealth, up from $41.8 trillion in 2009.
Those higher up the wealth ladder also gained. Those with $5 million or more, who represent 0.1% of the population, controlled 22% of the world’s wealth, up from 20 percent in 2009.
The reason for the growth in wealth? A recovery in stock prices, Boston Consulting Group claims. Bloomberg’s Alexis Leondis wrote last night:
“We have seen a growth from 2008 to 2010 that matches the growth from 2005 to 2007,” Peter Damisch, a partner based in the firm’s Zurich office and head of the wealth-management practice in Europe, said in a telephone interview. “But the growth from 2008 to 2010 was driven by the recovery of equity markets and much less by the generation of new wealth.”
(Editor’s note: Italics added for emphasis)
Frank, Robert. “Millionaires Control 39% of the World’s Wealth.” The Wealth Report (Wall Street Journal). 31 May 2011. (http://blogs.wsj.com/wealth/2011/05/31/millionaires-control-39-of-the-worlds-wealth/). 31 May 2011.
Leondis, Alexis. “Ranks of World’s Millionaires Increased by 12%, Boston Consulting Reports.” Bloomberg. 31 May 2011. (http://www.bloomberg.com/news/2011-05-31/world-s-wealthy-rose-by-12-on-market-gains.html). 31 May 2011.
This morning it’s being reported that a number of Asian nations are considering distancing themselves from the U.S. dollar as it concerns trade and investment. MarketWatch’s Chris Oliver wrote:
Officials from China, Japan and South Korea agreed on Wednesday to study a proposal to use their own currencies for regional trade settlement instead of the U.S. dollar, according to a Dow Jones Newswires report.
The report cited a joint communiqué issued in Hanoi.
Finance officials from the three big Asian economies said they were mindful of challenges arising from inflation, noting commodity prices were high while volatile capital inflows were also a concern.
It’s also being reported that South Korea is looking at acquiring securities that aren’t U.S. dollar-denominated. The Wall Street Journal’s In-Soo Nam wrote this morning:
South Korea is considering investing part of its foreign-exchange reserves in yuan-denominated Chinese securities to diversify its portfolio as its reserves rise to a record high, a senior Bank of Korea official said Wednesday.
“China will be a good investment destination for us in the mid- to long-term, given the country’s efforts to make the yuan a global currency,” Hong Taeg-ki, chief of the BOK’s reserve-management group, told Dow Jones Newswires.
He said South Korea’s foreign-exchange reserves need to be diversified to include yuan assets, although any significant investment in Chinese securities isn’t likely in the near future given the strict Chinese rules on investment by foreign investors…
The BOK has said it is diversifying its investments to include assets denominated in major currencies other than the U.S. dollar, including the yen, euro and the U.K. pound, to shield it from the volatility in the value of the greenback.
The South Korean official quoted in the article claimed this was not an attempt to lighten-up on dollar holdings. Nam added:
Mr. Hong said the central bank’s move to invest in yuan assets doesn’t mean an immediate change in investment strategies nor is it aimed at reducing the U.S. dollar’s position in the BOK’s foreign-exchange reserves.
Oliver, Chris. “Asian trio to study dollar alternative: report.” MarketWatch. 4 May 2011. (http://www.marketwatch.com/story/asian-trio-to-study-dollar-alternative-report-2011-05-04) 4 May 2011.
Nam, In-Soo. “South Korea Weighs Investing Reserves in Yuan Securities.” Wall Street Journal. 4 May 2011. (http://online.wsj.com/article/SB10001424052748703834804576302241461870226.html?mod=googlenews_wsj). 4 May 2011.
Last week while I was off on my “spring break,” a series of posts, entitled “The Crash Prophets,” were re-published from my old blog. In the first installment of the three-part series, dated June 14, 2007, I discussed how financial market watchers Peter Bernstein, Richard Bookstaber, Jeremy Grantham, and Gary Shilling were warning of a fast-approaching crisis. Bookstaber, a risk manager and derivatives designer at the time, is now employed by the U.S. Securities and Exchange Commission, and Bernstein, a Wall Street legend, passed away back in June 2009. Grantham and Shilling still ply their trade- and continue to warn that the U.S. economy and markets could be in for a rough ride ahead.
Jeremy Grantham is a co-founder and former chairman of Grantham, Mayo, Van Otterloo & Co. (GMO), a privately-held global investment firm with $107 billion under management as of December 31, 2010. Currently GMO’s chief investment strategist, Grantham has a special talent for correctly-calling the direction of the markets. For example:
• In 1982, said the U.S. stock market was ripe for a “major rally.” That year was the beginning of the longest bull run ever.
• In 1989, called the top of the Japanese bubble economy
• In 1991, predicted the resurgence of U.S. large cap stocks
• In 2000, correctly called the rallies in U.S. small cap and value stocks
• In January 2000, warned of an impending crash in technology stocks, which took place two months later
• Saw the 2008 global financial crisis coming. In April 2007, said we are now seeing the first worldwide bubble in history covering all asset classes.
Grantham, whose individual clients have included former U.S. Vice President Dick Cheney and former U.S. presidential candidate John Kerry, pens a quarterly investment letter on GMO website. In his January 2011 installment, the British investor warned that U.S. stocks are due for a reversal. He wrote:
• Be prepared for a strong market and continued outperformance of everything risky.
• But be aware that you are living on borrowed time as a bull; on our data, the market is worth about 910 on the S&P 500, substantially less than current levels, and most risky components are even more overpriced.
• The speed with which you should pull back from the market as it advances into dangerously overpriced territory this year is more of an art than a science, but by October 1 you should probably be thinking much more conservatively.
As I write this, the S&P 500 is at 1,320.
Grantham also talked about the problem of resource scarcity. He added:
For my money, resource problems exacerbated by weather instability will be our biggest and most complicated investment problem for years to come. How should we prepare for it? First, we should all transfer more of our intellectual resources to the problem. Yes, we have already recommended forestry, agricultural land, and “stuff in the ground.” It would be nice to back this up with more detail. To this end, we are starting to look more closely at commodity cycles, both historically and currently. We will report back from time to time.
Grantham wrapped up his quarterly letter with the following comments:
Things that Really Matter in 2011 and Beyond (in one person’s view) for Investments and Real Life
• Resources running out, putting strong but intermittent pressure on commodity prices
• Global warming causing destabilized weather patterns, adding to agricultural price pressures
• Declining American educational standards relative to competitors
• Extraordinary income disparities and a lack of progress of American hourly wages
• Everything else.
A. Gary Shilling
Gary Shilling is the founder and president of A. Gary Shilling & Co., Inc., an economic consulting company he formed in 1978. Shilling publishes the monthly newsletter INSIGHT, is a regular columnist for Forbes magazine, and his articles appear in the Wall Street Journal and the New York Times, among other publications. Shilling also makes frequent appearances on radio and TV business shows. Like Grantham, he is known for his correct calls on the financial markets. From his website:
Dr. Shilling is well known for his forecasting record. In the spring of 1969, he was among the few who correctly saw that a recession would start late in the year. In 1973, he stood almost alone in forecasting that the world was entering a massive inventory-building spree to be followed by the first major worldwide recession since the 1930s. In the late 1970s, when most thought that raging inflation would last forever, he was the first to predict that the changing political mood of the country would lead to an end of severe inflation, as well as to potentially serious financial and economic readjustment problems, and a shift in investment strategy from one favoring tangible assets to an emphasis on stocks and bonds.
The July 5, 1991 edition of The Wall Street Journal stated, “Mr. Shilling was one of the few analysts a year ago to forecast a recession. At that time, he said a recession ‘may already have started,’ a forecast that now looks prophetic.”
The January 22, 1993 edition reviewed the track records of interest rate forecasters polled semiannually by the Journal since 1981 and said, “The economist with by far…the best record in picking when to buy long-term bonds: A. Gary Shilling, who heads an economic consulting firm and manages money. During the 1980s, Mr. Shilling…saw sharply lower interest rates ahead. …investors who bet on his rate forecasts by putting their money in long-term bonds did very well.”
The July 7, 1997 edition stated that “Mr. Shilling…had the best overall forecast” of the economy, interest rates, exchange rates and inflation “among the…57 economists polled in the latest survey.”
The January 2, 2003 edition, in reviewing the forecasts of its poll taken six month earlier, stated, “In June, only one forecaster…Gary Shilling, expected the Fed to cut short-term interest rates in the second half, as it did in November….Only one forecaster, again Mr. Shilling, expected the Dow Jones Industrial Average to finish the year below 9000. Twenty-seven of the 55 saw it finishing the year above 10,000.” (It finished at 8342.)
Twice, a poll of financial institutions conducted by Institutional Investor magazine ranked Dr. Shilling as Wall Street’s top economist. Futures magazine also ranked him the country’s number one Commodity Trading Advisor. And in 2003, MoneySense ranked him as the 3rd best stock market forecaster, right behind Warren Buffett.
Chalk another one up for Shilling as he not only successfully predicted the 2008 financial crisis- but identified a primary catalyst for it. From my June 14, 2007, post:
And what will trigger the meltdown? According to Farrell, Shilling still sees the subprime debacle as the catalyst.
These days, the economist remains more concerned than ever about the U.S. economy. Shilling wrote in The Christian Science Monitor on April 5:
Despite the revival of stocks in the past two years and recent optimistic economic data, the US economy remains so fragile that it could easily be driven into another recession. All it would take would be an outside shock – even a moderate one – and there are several candidates lining up.
Normally, the United States is resilient in the face of such shocks, especially when its economy is recovering. But this is no ordinary recovery. It’s a two-tier phenomenon, with the fortunes of higher-income folks reviving swiftly while the rest of America is stuck in a slow deleveraging of household balance sheets that will take years to accomplish. This partial rebound makes the economy particularly vulnerable.
Shilling thinks that any of the following events could drag the United States back into recession:
• Global supply and demand disruption resulting from the disaster in Japan
• Pull-back in consumer spending due to higher gasoline prices related to Middle East turmoil
• Further fall in housing prices. Shilling wrote:
The third candidate is further decline in US house prices. Sales and prices remain weak, lending standards have tightened, and people are balking at buying big new assets that will be worth less in a year. Furthermore, the massive overhang of house inventories, the mortal enemy of prices, suggests another 20 percent fall in prices, resulting in a 43 percent peak-to-trough decline.
With that additional drop in prices, I estimate that about 40 percent of mortgages will be under water, up from 23 percent in the fourth quarter of 2010. The negative effects on consumer spending and the mortgage market are ominous.
• Decreased demand for commodities from hard landing in China
• “Fresh” sovereign debt crisis in Europe
Time will tell if Jeremy Grantham and Gary Shilling are correct- once again. Next week, the second installment of this three-part series of posts will visit with legendary investors Warren Buffett, Jim Rogers, and George Soros, and see what they think is in store for the United States down the road.
Grantham, Jeremy. “Pavlov’s Bulls.” GMO.com. Jan. 2011. (http://www.gmo.com/websitecontent/JGLetter_PavlovsBulls_4Q10.pdf). 15 Apr. 2011.
Shilling, A. Gary. “A fragile recovery – and five shocks that threaten it.” The Christian Science Monitor. 5 Apr. 2011. (http://www.csmonitor.com/Business/2011/0405/A-fragile-recovery-and-five-shocks-that-threaten-it). 15 Apr. 2011.
Jim Rogers hasn’t been shanghaied by the anti-hard asset crowd with the run-up in prices of many commodities. In fact, the former partner of George Soros in the Quantum Fund who predicted the beginning of the commodities boom way back in 1998 still insists there’s plenty of money to be made in hard assets. Lydia Chen of the Shanghai Daily (China) reported yesterday:
INTERNATIONAL investor Jim Rogers forecasts agriculture as an exciting area to make money in the next 30 years as inflation is bound to worsen globally.
The shrewd American investor, who is known as the king of commodities, overweighed agriculture because food prices will continue to rise around the world and not just in China, he told a press conference on Saturday in Shanghai.
Rogers said that most farmers around the world who have stayed basically poor will see a dramatic change. Investors should pay attention to agriculture, or other areas, which may benefit from high inflation, he added.
Commodities such as copper, steel and cement will also be attractive because Japan will need large amounts of these for reconstruction following the earthquake and tsunami which damaged a large part of the country.
As doubts grow over the safety of nuclear power in Japan, opportunities may also open up in the oil and natural gas industries, he suggested.
Earlier this month, Jim Rogers told hosts Matt Nesto and Jeff Macke of Yahoo! Finance’s new daily trading and investing show Breakout that while he was considering buying the U.S. dollar at that time, he predicted the greenback would decline to “multi-multi decade new lows” over the long-term. However, the chairman of Rogers Holdings doesn’t dismiss the possibility of a dollar collapse coming sooner. He said:
Somewhere along the line we’re going to have a tipping point for the dollar, then it’s all over for the dollar. Now I thought it would happen in a few years- maybe it’s going to happen in a few weeks.
Chen, Lydia. “Harvest profits in agriculture.” Shanghai Daily (China). 28 Mar. 2011. (http://www.shanghaidaily.com/article/?id=467410&type=Business). 29 Mar. 2011.
Nichols, Chris. “Breakout Exclusive: Jim Rogers May Buy U.S. Dollar as It Nears “Tipping Point” Yahoo! Finance. 17 Mar. 2011. (http://finance.yahoo.com/tech-ticker/breakout-exclusive-jim-rogers-may-buy-u.s.-dollar-as-it-nears-%22tipping-point%22-536042.html?tickers=^ixic,^gspc,^dji). 29 Mar. 2011.
Speaking of Japan’s nuclear crisis this morning, it’s being reported that Japanese-based employees of global investment banking and securities firm Goldman Sachs have been told to stay put- or else they risk losing their jobs. From CNBC.com Senior Editor John Carney on the CNBC website yesterday:
At least four Goldman Sachs executives flew into Japan last week to speak with nervous ex-pat employees about radiation fears, according to a person familiar with the situation. They also conveyed another message: don’t leave Japan and don’t leave Tokyo.
Employees at the investment bank’s Japan offices are worried about radiation levels affecting their families, the person said. Many were asking if they could temporarily relocate out of the country or perhaps move to a location in southern Japan, farther away from troubled nuclear power plants. They were told that they should not leave Tokyo, according to the person.
Several meetings were held last week between senior Goldman executives and Tokyo-based employees. At least one meeting was held in a large conference room on one of the five floors of the Mori Tower in Tokyo, which houses Goldman’s offices in Japan. Senior executives attending the meeting included Michael Evans, the firm’s head of emerging markets and Asia chairman, and Ed Forst, the co-head of Goldman’s investment management division. Lloyd Blankfein was testifying in the insider-trading case against Raj Rajaratnam last week.
“The message was clear: no one is to leave. If you do leave, you can’t come back and expect to still work for Goldman,” the person said.
Carney added that according to another person at Goldman Sachs’ Tokyo offices, most employees have opted to stay.
Carney, John. “Goldman Sachs Employees Told Not to Leave Japan.” CNBC.com. 28 Mar. 2011. (http://www.cnbc.com/id/42304574). 29 Mar. 2011.
Radiation from Japan’s damaged nuclear power plant has been detected in a growing number of states. Yet government officials keep telling the American public they shouldn’t be worried. From The Christian Science Monitor’s Mark Clayton yesterday:
Elevated yet still very low levels of radiation from the Fukushima Daiichi nuclear crisis have now been detected in the air or water in more than a dozen US states and three territories, federal and local authorities say.
Higher than usual levels of radiation were detected by 12 monitoring stations in Alaska, Alabama, California, Guam, Hawaii, Idaho, Nevada, Saipan, Northern Mariana Islands, and Washington State over the past week and sent to Environmental Protection Agency scientists for detailed laboratory analysis, the agency said in a release Monday.
Unusual, yet still very low “trace amounts” of radiation, were also reported in Massachusetts rain water and by state officials and nuclear power plant radiation sensors in Colorado, South Carolina, North Carolina, Florida, and Pennsylvania, the Associated Press and Reuters reported.
“Some of the filter results show levels slightly higher than those found by EPA monitors last week and a Department of Energy monitor the week before,” the EPA said in its statement Monday. “These types of findings are to be expected in the coming days and are still far below levels of public health concern.”
The Environmental Protection Agency also announced that it will be monitoring U.S. milk supplies for radiation more often than usual. From the UPI this morning:
A U.S. agency began checking milk supplies as radiation from Japan’s crippled nuclear power plant was detected in the air and water in more than a dozen states.
The Environmental Protection Agency said it typically monitored milk for radiation every three months but would now begin the testing “immediately.”
Clayton, Mark. “Traces of Japanese radiation detected in 13 US states.” The Christian Science Monitor. 28 Mar. 2011. (http://www.csmonitor.com/USA/2011/0328/Traces-of-Japanese-radiation-detected-in-13-US-states). 29 Mar. 2011.
“U.S. safety after Japanese nuclear crisis.” UPI.com. 29 Mar. 2011. (http://www.upi.com/Top_News/US/2011/03/29/US-safety-after-Japanese-nuclear-crisis/UPI-71571301387400/). 29 Mar. 2011.
Radiation from Japan’s damaged nuclear power plant is being reported in several West Coast states. From CNN’s Elizabeth Landau this morning:
Colorado and Oregon have joined several other Western states in reporting trace amounts of radioactive particles that have likely drifted about 5,000 miles from a quake and tsunami-damaged nuclear power plant in Japan, officials say…
Sampling from a monitor in Colorado — part of a national network of stations on the lookout for radioactivity — detected miniscule amounts of iodine-131, a radioactive form of iodine, the state’s public health and environmental department said Wednesday in a press release.
On the same day in Portland, Oregon, tiny quantities of iodine-131 were also detected by an Environmental Protection Agency air monitor, Oregon public health officials said.
Small amounts of radioactive material were detected Wednesday, too, in Hawaii — just as they had a day earlier, according to the EPA. But while they were above the historical and background norm, the levels weren’t considered harmful to human health.
Washington and California previously reported low levels of radioactive isotopes that likely came from Japan’s Fukushima Daiichi nuclear power plant, which has been releasing radioactive particles into the air since its cooling and other systems were damaged by a 9.0-magnitude earthquake and massive tsunami on March 11. Efforts continued Thursday to cool down the spent nuclear fuel rods, prevent a further meltdown of the plant’s six reactor cores and curb the release of additional radioactive material.
Federal authorities insist that Americans need not be concerned about the levels of radiation reaching the United States. From the article:
But, on a portion of its website dedicated to tracking such radiation, the Environmental Protection Agency noted Wednesday that these and other readings “show typical fluctuation in background radiation levels” and — thus far — “are far below levels of concern.”
Americans typically get exposure to radiation from natural sources such as the sun, bricks and rocks that are about 100,000 times higher than what has been detected in the United States.
There is no need for anyone as a precautionary measure to take potassium iodide, a medication that can counter the harmful effects of iodine-131, health officials say.
Landau, Elizabeth. “More U.S. states find traces of radiation from Japan.” CNN.com. 24 Mar. 2011. (http://edition.cnn.com/2011/US/03/23/colorado.oregon.radiation/). 24 Mar. 2011.
Should Americans be worried about the radiation threat from Japan’s crippled Fukushima Dai-ichi nuclear power plant?
U.S. President Barack Obama isn’t. On Tuesday, Obama told a Pittsburgh television station that he’s not worried about radiation from the damaged nuclear power plant reaching the United States. CBS affiliate KDKA-TV Channel 2 political editor Jon Delano asked the President, “Are you at all worried about radiation from Japan reaching American shores?” Obama’s reply?:
No. I’ve been assured that it… any nuclear release dissipates by the time it gets even to Hawaii, much less to the mainland of the United States.
Experts quoted in the mainstream media seem to agree with this assessment. From ABC News’ Ned Potter this morning:
To those of us here who might worry, nuclear engineers and meteorologists said the U.S., including Alaska and Hawaii, is safe.
“These releases from the plant, because they’re not elevated, because they’re not getting up high in the atmosphere, they won’t travel very far,” said Kathryn Higley, director of the department of nuclear engineering at Oregon State University. “There are so many factors in our favor. Rain will knock it down. There are 5,000 miles of ocean between us and Japan. It will be diluted, it will mix with sea spray, long before it gets remotely close to us.”
One computer model suggested the radiation won’t travel very far from Japan. Potter wrote:
But Jeff Masters, a former meteorologist at the National Weather Service who now works at Wunderground.com, ran a computer model and concluded that radiation would not get very far.
“Ground-level releases of radioactivity are typically not able to be transported long distances in significant quantities, since most of the material settles to the ground a few kilometers from the source,” he wrote.
“Given that the radioactivity has to travel 3,000 miles to reach Anchorage, Alaska, and 5,000 miles to reach California, a very large amount of dilution will occur, along with potential loss due to rain-out.
“Any radiation at current levels of emission that might reach these places may not even be detectable,” he said, “much less be a threat to human health.”
And if the worst-case scenario takes place, where radioactive particles are carried by upper-level winds to American shores? From the piece:
In that case, “we will get some fallout on the West Coast 2-3 days after its release in Japan,” said Edward Morse, a nuclear engineer at the University of California, Berkeley, in an e-mail to ABC News. “The levels will not be threatening to life and health but they will be observable.”
“If any radiation were to make it here, it would be merely background levels,”said Jere Jenkins, the director of Radiation Laboratories at Purdue University in West Lafayette, Ind. “Nothing for people on the West Coast or people in the United States to be concerned about.”
Higley said she has been spending a lot of time over the last few days urging calm.
“We have monitoring capability here in the U.S. that is extraordinarily sensitive. We can detect radiation that is like a hundred-thousandth of what you get from a regular X-ray, and we don’t expect to see even that.
“For the stuff to travel, it has to be picked up by the wind,” she said, “higher-level winds that have global distribution. And that’s just not happening. This is a little like a campfire — the smoke is all near the ground.”
Despite these assurances, some are still concerned about the threat. Jim Meyers and Ashley Martella wrote Tuesday on the news site Newsmax.com:
If a radiation cloud from Japan’s damaged nuclear reactors eventually reaches the western United States, it could pose a threat to American crops and the people who eat them, nationally known neurosurgeon Russell Blaylock, M.D., tells Newsmax.
Dr. Blaylock also says the radiation could pose a cancer risk, and explains steps to take to protect against the damaging effects of radiation exposure.
Blaylock is a health practitioner, lecturer, and editor of Newsmax.com’s “Blaylock Wellness Report.” His books include “Nuclear Sunrise,” which examines the threat nuclear radiation poses…
Prevailing winds in the area of the stricken Japanese reactors have been heading east into the Pacific, toward the Western Hemisphere. Dr. Blaylock was asked about the threat to Americans if radiation from the reactors eventually does reach Hawaii or the West Coast of America.
“Most of the health risks are not going to be due to acute radiation poisoning,” he tells Newsmax. “It’s going to be a risk of increased cancer.
“When we look at Chernobyl, most of West Germany was heavily contaminated. Norway, Sweden. Hungary was terribly contaminated. The radiation was taken up into the plants. The food was radioactive. They took the milk and turned it into cheese. The cheese was radioactive.
“That’s the big danger, the crops in this country being contaminated, the milk in particular, with Strontium 90. That radiation is incorporated into the bones and stays for a lifetime.”
Last night, the New York Times’ William J. Broad reported on a U.N. forecast projecting the radiation plume could reach Southern California by Friday. Broad wrote:
A United Nations forecast of the possible movement of the radioactive plume coming from crippled Japanese reactors shows it churning across the Pacific, and touching the Aleutian Islands on Thursday before hitting Southern California late Friday.
Health and nuclear experts emphasize that radiation in the plume will be diluted as it travels and, at worst, would have extremely minor health consequences in the United States, even if hints of it are ultimately detectable. In a similar way, radiation from the Chernobyl disaster in 1986 spread around the globe and reached the West Coast of the United States in 10 days, its levels measurable but minuscule.
The projection, by the Comprehensive Test Ban Treaty Organization, an arm of the United Nations in Vienna, gives no information about actual radiation levels but only shows how a radioactive plume would probably move and disperse.
The forecast, calculated Tuesday, is based on patterns of Pacific winds at that time and the predicted path is likely to change as weather patterns shift.
On Sunday, the United States Nuclear Regulatory Commission said it expected that no “harmful levels of radioactivity” would travel from Japan to the United States “given the thousands of miles between the two countries.”
You can view an interactive map of the Comprehensive Test Ban Treaty Organization’s forecast on the New York Times website here.
“Obama: Radiation from Japan won’t reach Hawaii.” CBS News. 15 Mar. 2011. (http://www.cbsnews.com/video/watch/?id=7359774n). 17. Mar. 2011.
Potter, Ned. “Japan’s Nuclear Crisis: United States Safe From Radiation, Say Engineers.” ABC News. 17 Mar. 2011. (http://abcnews.go.com/Technology/japan-nuclear-plant-radiation-united-states-risk-engineers/story?id=13150089&page=1). 17 Mar. 2011.
Martella, Ashley and Meyers, Jim. “Dr. Blaylock: Japanese Radiation Could Pose Risk to US.” Newsmax.com. 15 Mar. 2011. (http://www.newsmax.com/Headline/blaylock-radiation-us-japan/2011/03/15/id/389474). 17 Mar. 2011.
Broad, William J. “Scientists Project Path of Radiation Plume.” New York Times. 16 Mar. 2011. (http://www.nytimes.com/2011/03/17/science/17plume.html?hp). 17 Mar. 2011.
The United States has experienced an average of 50 natural disasters each year in the last decade, more than 560 total, according to the Federal Emergency Management Agency (FEMA). The agency documented eight natural disasters this year already, mostly severe winter storms and flooding.
-ABC News, March 12, 2011
In the aftermath of Japan’s deadly earthquake and tsunami, I’ve learned a great deal more about that nation’s approach to emergency preparedness. Japanese society grasps the importance of being prepared for a disaster. From the Los Angeles Times’ Kenji Hall and Mitchell Landsberg on March 12:
No country may be better prepared for a major earthquake than Japan. Seismic standards for construction are among the strictest in the world. From a young age, Japanese learn to dive under desks to protect themselves in a quake. The nation has a state-of-the-art tsunami warning system.
That preparation undoubtedly saved many lives Friday.
Hall and Landsberg went into detail about the Japanese people’s commitment to emergency preparedness. They noted:
Every year, Japan observes Disaster Prevention Day to commemorate the Great Kanto Earthquake of 1923, which killed more than 100,000 people in and around Tokyo. That disaster, along with the 1995 quake in Kobe, which killed more than 6,000 people, are as drilled into Japanese memory as World War II , and discussed far more openly.
In August, the annual drill was built around a scenario in which a major earthquake kills 25,000 people and destroys 550,000 buildings, an assessment based on a 2003 projection by the Central Disaster Prevention Council….
The preparations have become part of the culture. Most schools and offices keep helmets handy, as well as first aid kits. Disaster training begins early and can include sessions in earthquake simulators that mimic the effect of a major quake on a building.
Disaster supplies such as reflector blankets, collapsible water containers and hand-cranked cellphones are easily found in convenience and department stores. Neighborhoods are organized with water storage facilities. Parks, shrines and temples are designated as congregation points in case of disaster.
While Hall and Landsberg noted that not all of these preparations came into play last Friday, it’s a far cry from the situation in the United States. ABC News’ Lara Salahi wrote yesterday:
While there are national and local emergency plans in place, making the big picture response look satisfactory, experts say it’s likely that most Americans themselves are not prepared to handle emergencies…
“It’s really in the personal preparedness phase rather than the response phase that we need to be paying more attention,” said Jonathon Links, director of the Johns Hopkins Center for Public Health Preparedness in Baltimore.
In fact, according to Links, most cities and towns across the United States have experienced some type of natural disaster. Yet, it is estimated that only about 10 percent of households are prepared to handle emergencies.
10 percent? Yikes. I guess I shouldn’t be so shocked. The research shows many Americans living in the Gulf area and East Coast routinely shrug off preparations come each hurricane season.
Salahi discussed why 90 percent of households aren’t prepared to deal with emergencies and disasters. She added:
But the hard part, says Links, is getting folks to buy in to preparedness. For years, health communicators have worked to develop campaigns to motivate citizens to set up a personal plan should there ever be a disaster. But many consumers don’t listen, he said, until an actual disaster occurs.
One of the major reasons is that many don’t believe what has been happening abroad can happen at home, he said.
“The essence of the model is you have to convince people that there’s a threat, and that there’s something they can do about it,” Links said.
And while it seems difficult to motivate many to physically prepare for emergencies, mental preparation may prove even more difficult.
“When people hear fearful messages of what might happen, they’re more likely to tune it out,” Links said.
Know anyone like that? I sure do. Don’t be that 90 percent of American households that are incapable of dealing with major crises . Strive to be more like the Japanese when it comes to being prepared for emergencies and disasters.
Hall, Kenji and Landsberg, Mitchell. “Japan quake preparedness no match for 8.9.” Los Angeles Times. 12 Mar. 2011. (http://www.latimes.com/news/nationworld/world/la-fg-japan-quake-ready-20110312,0,1093503.story). 15 Mar. 2011.
Salahi, Lara. “Disaster Preparedness: Could the U.S. Hold Water?” ABC News. 12 Mar. 2011. (http://abcnews.go.com/Health/Wellness/disaster-preparedness-us-hold-water/story?id=13135457&page=1). 15 Mar. 2011.
Anyone notice how there has been ABSOLUTELY NO REPORTS of looting or rioting on the streets in Japan like there certainly would be here in the good old overly liberal U S of A?
-Comment on unofficial Chicago Police Department blog Second City Cop
Japan is a mess. It’s suffered the world’s seventh most powerful earthquake (8.9 magnitude), a tsunami with a 23-foot wall of water, at least 10,000 fatalities, a nuclear power plant crisis requiring the evacuation of more than 180,000 nearby residents, and property and other losses amounting to as high as $35 billion according to one early estimate. Furthermore, millions of Japanese residents are struggling with dwindling supplies of food, water, and other necessities in the aftermath of the disaster. From the Associated Press’ Jay Alabaster yesterday:
Millions of Japanese were without drinking water or electricity Sunday, surviving on instant noodles and rice balls, two days after a powerful earthquake and tsunami hammered the northeastern coast, killing at least 1,000 people…
Thousands of hungry survivors huddled in darkened emergency centers that were cut off from rescuers and aid. At least 1.4 million households had gone without water since the quake struck and some 2.5 million households were without electricity.
Large areas of the countryside were surrounded by water and unreachable. Fuel stations were closed and people were running out of gasoline for their cars.
Public broadcaster NHK said around 380,000 people have been evacuated to emergency shelters, many of them without power.
Despite all the misery, I can’t seem to find any reports of rioting or looting in Japan. First-hand accounts coming from ground-zero confirm the lack of unrest. From the London Evening Standard’s (UK) David Cohen this morning, reporting from the town of Hachinohe and Japan’s “coast of death”:
It is striking that there are no children crying and how orderly everything appears to be. Overall, there is an air of subdued calm and of people grimly adjusting to the new reality that their peaceful fishing town will never be the same again. When I ask how people are coping, the school’s headmaster , Mitsuhiko Shobuke, said: “Japanese people are enduring. It is not in our culture to express our sorrow or anger. We grin and bear it. There has been no looting and no riots here because in our culture we value order and dignity and we help each other. I am proud of how our people have behaved.”
About.com guide Linda Lowen, a Japanese-American, shed some light as to why there’s a lack of crime and civil unrest in post-disaster Japan. She wrote this morning:
Much is being made of the stoicism of the Japanese. The voiceovers of interpreters are slow, halting, unemotional as they translate clips from Japan’s public broadcasting network NHK. The NHK reports of survivors’ stories feel very neutral and detached compared to CNN’s viewer-generated i-Reports from Americans in Japan which frequently contain bleeped-out curse words. If the Japanese indicate distress, it’s mostly through wordless cries of “aaaah.” No repetitive swearing or excitement bordering on schadenfreude as was exemplified by one video taken by an American college student studying in Japan; he ran towards an oil refinery explosion with a video camera and emailed his clip to CNN which provided him his 15 minutes of fame.
This isn’t the sort of thing the majority of Japanese citizens would do. And anyone who’s spent time among the Japanese people can understand why.
We see subdued women and men on-camera talk about being swept away in the tsunami, husbands and wives and children torn from their grasp by the floodwaters, yet there’s no wild sobbing, no falling apart, no letting go. American reporters have been speculating as to when the Japanese will finally break and openly grieve, but I wouldn’t hold my breath. This is how the Japanese survive.
As much as I hate to admit it, I doubt many Americans, in the event of a similar disaster, would react in the same manner as the Japanese. Consider this. It’s been my experience that Americans are generally friendly and quick to help out family, friends- and even strangers. From USA TODAY contributor Alcestis “Cooky” Oberg back on November 23, 2010:
89% of U.S. households donate. America is the most generous nation on the planet, making up nearly half of the world’s total giving. The average American is 14 times more generous than the average European, because Americans see philanthropy as their individual responsibility, not as a governmental activity, as most Europeans do.
However, one only has to remember the civil unrest and violence that occurred during the 1992 Los Angeles riots and in New Orleans post-Hurricane Katrina to realize that a thin veneer of civilization exists in the United States.
“Crazy L.A. Gun Fight Erupts During Riot”
YouTube Video Link
(Editor’s note: Not affiliated with/supporter of AngryAnarchist.com)
It’s not a matter of if- but when- the United States suffers its next major disaster. And unfortunately, such events have been known to bring out the worst in a number of Americans.
When the crisis comes, will you behave like the Japanese- or take to the streets?
My advice is, put some time and effort into gathering some supplies now as part of a larger emergency preparedness kit to hopefully lessen your dependence on outside help and resources when a major disaster strikes- and avoid having to loot and/or riot. You’ll be glad you did some day.
Second City Cop. “Sneed Smoking Crack.” [Weblog Entry.] Second City Cop. 11 Mar. 2011. (http://secondcitycop.blogspot.com/2011/03/sneed-smoking-crack.html). 14 Mar. 2011.
Alabaster, Jay. “Millions without food, water after Japan quake.” Associated Press. 13 Mar. 2011. (http://www.suntimes.com/4292611-417/millions-without-food-water-after-japan-quake.html). 14 Mar. 2011.
Cohen, David. “Japan disaster: We are all terrified. There is no road map and we have no idea where we go from here.” London Evening Standard (UK). 14 Mar. 2011. (http://www.thisislondon.co.uk/standard/article-23931825-japan-disaster-we-are-all-terrified-there-is-no-road-map-and-we-have-no-idea-where-we-go-from-here.do). 14 Mar. 2011.
Lowen, Linda. “Understanding Japanese Stoicism in the Face of Japan’s Devastating Earthquake and Tsunami.” About.com. 14 Mar. 2011. (http://womensissues.about.com/b/2011/03/14/understanding-japanese-stoicism-in-the-face-of-japans-devastating-earthquake-and-tsunami.htm). 14 Mar. 2011.
Oberg. Alcestis “Cooky.” “Thanks to the givers among us.” USA TODAY. 23 Nov. 2010. (http://www.usatoday.com/news/opinion/forum/2010-11-24-column24_ST_N.htm). 14 Mar. 2011.
I found out about the 8.9 magnitude earthquake and tsunami in Japan when I got up early to give my girlfriend a ride to the train station. She heard about the event on the local news while getting ready for work, and mentioned it to me knowing it would be something I’d be interested in. After bringing her to the station, I got home in time to witness the tsunami reach the Hawaiian Islands and keep heading east towards the West Coast.
Needless to say, my heart and prayers go out to the victims of this terrible natural disaster.
Some early observations about the world’s seventh most powerful earthquake:
Reports are coming in of basic commodities (food, water) being at a premium. The Associated Press says more than 1 million households across Japan, mostly in the northeast, don’t have access to water. Hundreds of people have been observed lining up outside of supermarkets and vehicles are packing in gas stations in towns and cities along the 1,300-mile-long eastern coastline hit by the tsunami.
In Tokyo, disruptions to its transport system stranded commuters and made getting home- and a meal- a challenge. From Bloomberg’s Bret Okeson tonight:
Tokyo’s transport system returned to normal after Japan’s worst earthquake in a century halted subways and commuter lines yesterday, forcing people to walk for hours to their suburban homes or find makeshift beds at their desks, building lobbies or train stations.
The 8.9-magnitude quake yesterday crippled the world’s busiest subway network. More than 8 million passengers use the system on a normal weekday, and the shutdown highlighted the city’s daily dependence on its transportation infrastructure.
The sidewalk that encircles the Imperial Palace was packed with businessmen at 9:30 last night instead of the usual joggers. Walking was still faster than driving as cars in the city’s center stood bumper to bumper, inching along.
The shelves of convenience stores, normally full with ready-to-eat rice balls and sandwiches, were stripped bare by hungry office workers.
I can’t stress how important it is to have an emergency supply of food and water at home. These should be part of your emergency preparedness kit- which I just talked about on Wednesday. Start putting a kit together now- before you too find yourself lining up at a grocery store after the disaster.
In addition, commuters should carry a smaller supply of emergency food and water, in addition to other items that could be useful in a crisis, in a bag that goes with them to and from work. Already use a bag? Drop these items in there. Don’t want to carry a bag, or afraid of being made fun of for having a “murse?” It’s up to you to decide what’s more important- having the means to successfully weather an emergency/disaster, or not having to deal with a little bit of inconvenience or ridicule.
More next week.
“Hundreds Killed by Massive Tsunami After 8.9-Magnitude Quake Rocks Japan.” Associated Press. 11 Mar. 2011. (http://www.foxnews.com/world/2011/03/11/thousands-roam-tokyo-streets-massive-tsunami-devastates-region/). 11 Mar. 2011.
Okeson, Bret. “Tokyo Transport System Returns to Normal After Disruption From Earthquake.” Bloomberg. 11 Mar. 2011. (http://www.bloomberg.com/news/2011-03-12/tokyo-transport-system-returns-to-normal-after-disruption-from-earthquake.html) 11 Mar. 2011.
“China’s GDP to overtake U.S. by early 2020s, says analyst”
-MarketWatch, April 23, 2009
“China Overtakes Japan as World’s Second-Biggest Economy”
-Bloomberg, August 16, 2010
“China Could Surpass U.S. in 2012”
-Real Time Economics blog, Wall Street Journal, November 10, 2010
China’s presence on the global stage continues to grow in stature. From the Associated Press’ Tomoko Hosaka this morning:
Japan confirmed Monday that China’s economy surpassed its own as the world’s second largest in 2010 and said a late-year downturn was its first quarterly contraction in more than a year.
Japan’s economy expanded 3.9 percent in the calendar year — its first annual growth in three years. But it wasn’t enough to hold off a surging China. Japan’s nominal GDP last year came to $5.4742 trillion, less than China’s total of $5.8786 trillion, the Cabinet Office said.
China was acknowledged last year as having surpassed Japan as the world’s No. 2 economy after the U.S. — a title it had held since 1968. But full-year Japanese data confirming it were not available until Monday. The historic shift underscores a stark change in fortunes for the two countries: China is growing rapidly and driving the global economy, while Japan never fully bounced back from the stagnation that followed the bursting of its property bubble.
Reflecting China’s rise, it is now the world’s biggest auto market and the largest energy consumer. Experts say it could overtake the U.S. as the No. 1 economy sometime between 2020 and 2030 if its current blistering growth rates are sustained.
In the 1980s, it was Japan’s economic ascension that provoked both admiration and fear, as China’s does now. The boom unraveled after real estate prices crashed, leading to the so-called “lost decade” of the 1990s.
Japan’s infamous “Lost Decade.” Something, I fear, might be in store for the United States.
Hosaka, Tomoko A. “” Associated Press. 14 Feb. 2011. (http://news.yahoo.com/s/ap/20110214/ap_on_bi_ge/as_japan_economy). 14 Feb. 2011.
The International Monetary Fund has told some of the world’s largest economies to implement deficit cutting plans or risk a repeat of the sovereign debt crisis that has engulfed Greece and Ireland.
The warning by the Washington-based body today came as ratings agency Standard & Poor’s cut Japan’s long-term sovereign debt rating for the first time since 2002, saying Tokyo lacked a plan to deal with its debt.
The IMF said Japan, America, Brazil and many other indebted countries should agree targets for bringing borrowing under control. In an updated analysis on global debt and deficits, it said the pace of deficit reduction across the advanced economies was likely to slow this year, mainly because the US and Japan are preparing to increase their borrowing.
-The Guardian (UK), January 27
Despite all the efforts of governments and central banks around the world, the debt crisis is alive and well. As is the banking crisis. While going through my e-mails this morning I happened to come across the following from Martin Weiss, chairman of The Weiss Group (which includes Weiss Research and Weiss Ratings) and author of The Ultimate Depression Survival Guide: Protect Your Savings, Boost Your Income, and Grow Wealthy Even in the Worst of Times. In yesterday’s issue of his Money and Markets letter Dr. Weiss wrote:
Indeed, just when Wall Street and Washington seemed to have most investors convinced that “the debt crisis is history,” a whole new series of shocks have rocked the world:
Egypt and Tunisia — supposedly models of economic stability and growth — are now prime candidates for financial defaults.
In response, Moody’s, Fitch, and S&P have hastily issued sovereign debt downgrades on both countries.
But no one — either in the U.S. or in the region — has a clue regarding the end game in the Arab world. Nearly all analysts have continually underestimated how far the upheaval can spread … how quickly governments can fall … how directly oil supplies can be crimped … and how broadly the crisis can impact the global economy.
Greece and Ireland — thought to be “saved” by the European Union and the International Monetary Fund (IMF) — are likely to ultimately default on their debts anyhow, according to a majority of economists surveyed by Bloomberg last week. Meanwhile, Portugal, Spain, Belgium, Italy, and other weak links in Europe are still reeling toward disasters of their own.
Several U.S. states are on the brink of financial ruin, facing $175 billion in deficits … $2.5 trillion in obligations to underfunded pension funds … and overall conditions so severe that Congress is quietly preparing new legislation to let them go bankrupt — possibly the only way out of their mess, according to the New York Times.
Hundreds of cities and towns are in worse shape, with one already- bankrupt city proposing that creditors get paid a meager five cents on the dollar.
And perhaps most ominous of all …
The IMF has just warned that the governments of the United States and Japan — the two single largest debtors on Earth — are risking a repeat of the sovereign debt crisis which engulfed Greece and Ireland.
Its reasoning: Despite endless budget debates, deficit commissions, and empty promises of “firm action,” neither country has lifted a finger to stop their debt explosions. This year …
• The U.S. is running its largest deficit of all time — nearly $1.5 trillion, according to the U.S. Congressional Budget Office, while …
• Japan has let its government debt burden soar past 200 percent of GDP, permanently crippling its economy.
Clearly, the debt crisis is not over. And obviously, we are not facing just one or two isolated brushfires. There are simply too many explosions in too many different regions and sectors to ignore.
What About the Banking Crisis?
Banking troubles may not be the lead headlines right now, but that doesn’t mean U.S. banks are out of the woods.
Quite the contrary, Weiss Ratings bank analyst Gene Kirsch tells us that:
• A total of 2,667 U.S. banks and thrifts now merit a Weiss rating of D+ (weak) or lower. And according to an evaluation of our rating scale by the Government Accountability Office (GAO), any Weiss rating in that category implies the institutions could be “vulnerable” to future financial difficulties or failures — not the best place for your money, despite FDIC insurance.
• In contrast, only 899 banks and thrifts merit a Weiss rating of B+ or better, which we consider strong.
Worse, on a state-by-state basis, the vulnerabilities in the banking industry are even more apparent! Gene scrutinized the banking environment in each of the 50 states plus the District of Columbia, and he found that:
1. Seven states are suffering a shockingly high rate of bank failures — 4 percent in California; 5 to 6 percent in Washington, Oregon, Georgia and Florida; over 8 percent in Arizona; and a whopping 11 percent in Nevada!
2. In 12 states, more than HALF of the banks domiciled there have a Weiss rating of D+ or lower, as follows:
3. As you can see in the table above, the banking environment in Florida and Arizona is the worst of all: If you walk into a bank or thrift domiciled in either state, the chances are better than 7 out of 10 that you’ll be dealing with an institution that’s vulnerable.
How do we know?
Our Weiss ratings are based on the data the banks themselves submit to the authorities every quarter. We weigh each bank’s capital, earnings, asset quality, and liquidity. We check their vulnerability to mortgage defaults, rising interest rates, and any major crisis we believe could impact your safety.
Since 1990, we have issued grades on a total of 1,533 banks that subsequently failed and …
• For 90 percent of those banks, we issued a clear warning to the public ONE FULL YEAR ahead of time (defined by the GAO in its study of our ratings as a Weiss rating of D+ or lower).
• On nearly all of the rest, we issued a warning or a caution flag at least a few months before the failure.
Now, in more recent times, the problems in the banking industry have gotten a lot worse. Not only have we seen more bank failures, but we also have had more BIG bank failures.
In fact, just in the last two years, 49 relatively big banks and thrifts (with $1 billion or more in assets) have failed — and Weiss Ratings has issued an advance warning on every single one.
So when we say that at least seven out of 10 banks domiciled in Florida and Arizona are vulnerable, we’re not exaggerating.
It doesn’t mean all of them will fail; many should be able to avoid failure. What it does mean is that nearly all of these banks are probably at risk.
You Ask: “If My Bank Fails, Won’t the FDIC Cover My Account up to $250,000?”
Yes. But never forget:
• The FDIC does not cover investments you may have in bank-holding companies — such as common or preferred shares, bonds, or debentures.
• The FDIC does not guarantee continuation of your interest rate, lines of credit, or other business you may have with your bank.
• And ultimately, given the state of the nation’s finances overall, don’t be surprised if future FDIC’s coverage of failed banks involves serious delays and inconveniences.
Most important, never forget that you DO have choices. As Gene points out, there ARE 899 U.S. banks and thrifts that are financially strong — with or without the FDIC.
Plus, there are also states in which vulnerable banks are rare and bank failures even rarer — such as Iowa, Nebraska, South Dakota, West Virginia, and even Texas…
Good luck and God bless!
This investment news is brought to you by Money and Markets. Money and Markets is a free daily investment newsletter from Martin D. Weiss and Weiss Research analysts offering the latest investing news and financial insights for the stock market, including tips and advice on investing in gold, energy and oil. Dr. Weiss is a leader in the fields of investing, interest rates, financial safety and economic forecasting. To view archives or subscribe, visit http://www.moneyandmarkets.com.
Couldn’t have said it any better myself.
Weiss, Martin. “Shocking New Failures Possible in the U.S. and Overseas.” Money and Markets. 31 Jan. 2011. (http://www.moneyandmarkets.com/shocking-new-failures-possible-in-the-u-s-and-overseas-2-42535). 1 Feb. 2011.
Christopher E. Hill, Editor
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