No. of Recommendations: 10

An earthquake deep underwater creates a tidal wave of unknown proportion. According to Thai press, officials discounted the risk of the Tsunami because a previous 8.9 earthquake caused a tiny tsunami which was not worth evacuating for. That incident, combined with fear of hurting tourism, caused the officials to discount the risk of the 9.1 earthquake which did indeed cause a wall of water to advance on the land killing tens of thousands.

What was the notion of risk undertaken by the Thai officials?

Some individuals made a terrifically bad decision. This is a greater disaster than the officials in Texas discounting the tidal surge which similarly inundated a populated area and killed everyone in the vicinity. Tsunamis kill more people in the world than earthquakes, yet there is less knowledge or preparation for them. People making decisions about evacuations need to make risk decisions. If they fail to make them properly, a lot of people die. Are the leaders of the world (or the emergency warning) prepared to make such risk decisions properly? Clearly not.

Strangely, such decisions are related to investing. The stakes are much smaller in stock investing. Even if you leverage margin you may find yourself broke and in debt, but never dead. In the choice of a warning to a potential disaster you are facing a devastating loss of life. There have been Tsunami warnings issued which were false alarms. People have been pissed, and tourism hurt. People evacuated for no reason. But it is not often such false alarms have occurred. What would it have hurt to issued a false alarm? A few million in sales? Sadly, the Thai officials were afraid of losing money- afraid of hurting tourism, afraid of being sued by lawyers representing the tourist industry. Money, money, money. Fear of money costing lives. Are the dead going to sue now, rising from their graves to claim the money the government had been afraid of losing? The officials made an investment decision, and that decision has turned out to be tragic beyond belief.


It seems that before human habitation of Hawaii there were actually tidal waves which reached as high as 1,000 feet. This was due to huge land slides off the larger islands, inundating nearby islands in a wash of debris and water which scoured the hills, leaving marks for seismologists to discover. Already, the big island shows a huge crack cleaving the island in two, implying it will happen again at some time. perhaps not in our lives. But a 1,000 foot wall of water is going to do serious damage to the inhabitants, whoever they may be, wiping any moving living things off the face of the land. Should humanity be living on islands with such geologically active risk? Who makes these risk decisions?

If you go to the city of pompeii, you will see the charred and horrified casts of humans who were overtaken by the ash from the nearby volcano. If you climb up a short hill, you find yourself looking out over a vibrant city of millions sitting beneath this live volcano. What are they thinking? Are they too soon to be entombed in a wall of molten ash? Should humanity be living in the shadow of such disasters which are certain to happen again? Who is making these risk decisions?

All of these people are making investment choices. They are investing their lives, their livelihoods, in areas of disaster. Disasters strike in areas where they are forordained. The earth is geologically active, and unless it is going to all slide into the ocean it is going to remain so. Humans have to contend with these forces, which although taking place across millenium, are much larger and more powerful than anything humanity attempts. We invest across this risk, investing lives and money.


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No. of Recommendations: 11
there are two things that used to drive me nuts...

one is Yellowstone. I was out there a few years ago and could see the evidence that Yellowstone Lake is tilting... you can actually see trees standing in 3-4 feet of water that were on dry land 25 years ago. It's because of a massive volcano underneath. It's called a "super volcano"
http://www.unmuseum.org/supervol.htm
http://volcanoes.usgs.gov/yvo/history.html

then, speaking of mega-tsunami, there's the risk from the canary islands... specifically the Vieja volcano on the island of La Palma, to the east coast of the US...
http://www.bbc.co.uk/science/horizon/2000/mega_tsunami_qanda.shtml

that, of course, leads to thoughts about risk and uncertainty
JM Keyes made a famous statement about risk many years ago...
"By `uncertain' knowledge, let me explain, I do not mean merely to distinguish what is known for certain from what is only probable. The game of roulette is not subject, in this sense, to uncertainty...The sense in which I am using the term is that in which the prospect of a European war is uncertain, or the price of copper and the rate of interest twenty years hence...About these matters there is no scientific basis on which to form any calculable probability whatever. We simply do not know." (J.M. Keynes, 1937)

you know, you do your best. You try to be a good man, a good woman, a good son, a good daughter, a good father or mom, a good neighbor, and friend. You try to act in a rational way... behavior that makes you proud when you look back on it through the eyes of Father Time. That's about it, near as I can tell. There's no protection from a drunk driver, falling stars, cancer, volcanos, hurricaines, and inevitable death.

So...
As Jesus said... be he son of God or just really smart philosopher..

Which of you by taking thought can add one cubit unto his stature?
And why take ye thought for raiment? Consider the lilies of the field, how they grow; they toil not, neither do they spin: And yet I say unto you, That even Solomon in all his glory was not arrayed like one of these..... seek ye first the kingdom of God, and his righteousness (be one of the good guys); and all these things (riches and weath) shall be added unto you. Take therefore no thought for the morrow (the things you can't affect): for the morrow shall take thought for the things of itself. Sufficient unto the day is the evil thereof.

that's how I see it... that and this last thing... if you're walking down the beach and all of a sudden the water starts rapidly receding... run like Hell

e
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No. of Recommendations: 7
There have been Tsunami warnings issued which were false alarms. People have been pissed, and tourism hurt. People evacuated for no reason. But it is not often such false alarms have occurred. What would it have hurt to issued a false alarm? A few million in sales? Sadly, the Thai officials were afraid of losing money- afraid of hurting tourism, afraid of being sued by lawyers representing the tourist industry. Money, money, money. Fear of money costing lives.

First, and foremost, the tsunami warning system that exists all around the Pacific Ocean does not exist in the Indian Ocean. They couldn't have broadcast an adequate warning if they'd immediately known that a quake happened. I'm not sure, having not checked, that a tsunami warning system exists in the Atlantic, or the Mediterranean Sea either. Next, warnings issued for things that do not come to pass (commonly misnamed "false alarms") are a real problem because of human nature. Your statement, "People evacuated for no reason." illustrates it better than anything I could write. My bet is that there was a mighty good reason for the evacuation but it simply didn't come to pass...this time. People ignore warnings when they can see the truck hurtling toward them, never mind when a couple warnings are given that aren't immediately followed the expected event. Are the scientists crying wolf or are they being too careful or are they dead nuts on target? What measure of certainty is there that a warning will be followed by the event? ...that we haven't wasted a warning thereby encouraging people to ignore the next one? What does it take to get people to heed a warning?

As to costs, look at it this way. You get a paycheck. In economic terms you have limited resources (the paycheck) with which to fulfill your unlimited wants (house, car, vacation, new clubs, groceries, medical care, ball game, childbirth, MP3 downloads, et al). You have to choose how that money is to be spent. All governments are faced with the same situation. There's only so far you can tax your citizens before uprisings occur. The probability of a large tsunami occurring in the lifetimes of South Asian officials is quite low. How can they justify spending money on something that may happen in the next century when there are so many immediate and greatly more-pressing wants? It's so-o-o human of us to believe that something that hasn't happened recently won't happen to us or that it won't happen again, having occurred just this (choose one) week/month/year/decade. It just isn't important now. Well, it gets mighty important when it happens. You say you want a traffic signal at a dangerous intersection? You need to be able to show that enough people have been killed there. Mere collisions and risk of death are by no means enough to merit the expenditure. You say you want an Indian Ocean tsunami warning system because the South Asian economy just took a huge hit? Well, the people who own or work at the tourist hotels would prefer cleanup and construction and good roads and efficient airports so the tourists will come spend their money. That's a more immediate need than preparing for the next tsunami that is undoubtedly a century in the future.

"All these people are making investment choices." You said it! The risk is there but its degree is unknown and its time is unknown. My old professor espoused the Keynes-inspired model of Certainty, Risk and Uncertainty. Certainty is when you know all the outcomes and you also know which one will result from a decision or series of decisions. Risk is when you know nearly all the outcomes and the probabilities that each may occur. Uncertainty is when you know some or none of the outcomes and cannot establish the likelihood that any given outcome will occur. The investment markets are Risk environments and Mother Nature ranges from Risk to Uncertainty. Is it economically justifiable to take money away from investments in Risk to put into investments in Uncertainty?

KennyO
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No. of Recommendations: 8
(In response to yttire's post.)

There are many levels of discussion wrapped up in your post. These are just two thoughts your post brought out in my head.

First - The Human Animal:
Humanity, as a group, has been formed because of adversity and our ability to adapt to change, that is our animal side. Despite anyone's stance on evolution, it is self evident that humans can live in and adapt to any environment on earth. (The only other animals that I can think of are ... dogs and rats, but then we bred the dogs.)

So from a very basic sense, humans as a race live with, and tolerate, risk very well. Groups of us can be killed off, but the race survives and comes back again. Just as you have noticed, we live next to volcanoes...(Fuji being one), we live on fault lines...(Califonia), we live in tornado/hurricaine zones...(Midwest and Southeast). It is that very risk tolerant nature of the beast that allowed us to populate the whole Earth. It is that very risk tolerance that will eventually allow us to leave this planet and move on

Second - The Human Civilization:
Humanity has been working for millenium to raise above it's animal side. To this end it (we) have created many new forms of thought, reasoning, and rationality. We have worked to attach reason, cause and effect, to everything around us. This effort has created many of humanity's greatest achievements...Ancient Egypt, Ancient Rome, today's Globalism.

One side effect of this rationalism is that we need to place blame. We as a culture, as a race, have developed a need to apply the cause and effect theory to the point that we can place blame some where. Because of this there are some that feel that with rational thought, all people everywhere can be 'protected'. All we need to do is find out where the blame lays and then 'fix' it.


Unfortunatly, many of us forget that we are both animal and civilized. We will always be that way for as long as I can envision. Humanity is just a small fragile force in the universe. Our own world can, and will hurt us in many ways. It is part of who we are. We can work in our 'rational being' persona to monitor and minimize risks, but our 'animal' side cannot survive without the constant challenges and adversitities that force us to grow and adapt. (Look at bungee jumping, sky diving, etc.)

Could there be blame in this situation....maybe. I don't know. But I will tell you this, the email I got from a cousin who got off the ocean 1 minute before the wave hit didn't blame anyone. Nature cannot be avoided...and limiting Humanity's growth because something 'could' be dangerous is worse in the long run.

This is a sad and tragic event, but tell me where in the World will Humanity be perfectly safe? Tell me, how many people you can get in there? A newscaster on TV made a statement that flabbergasted me...."Death should not come this suddenly." This shows the complete disjunction between the rational person and the animal person. With that statement she is implying that 'Death', the great leveler, can and should be controled. It cannot. The best we can do is to survive, help our fellows to survive, and find enjoyment when we can.

Buffy (who believes it is fine if someone what's to assume risk, just don't cry that you weren't aware of it...)
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No. of Recommendations: 36
Risk analysis as a function of time will always seem skewed when you are radically shifting time scales and use human tragedy is your measuring stick.

People who live along coastlines in geologically active areas are taking a risk. People that live in San Fransisco are taking a risk. Over 25 million people in Mexico City staring up at Popocatepetl are taking a risk. People have to live somewhere. Why not with a view of an ocean or some volcanic peak?

The recent tsunami and the amount of human devastation seems disproportionate because we are viewing the earth and what it tends to do naturally from a human time scale. We take the human suffering personally. The earth doesn't care.

Think no farther back than the Carribian Island of Martinique within the last 10 years. Those lahaars had happened before within the time frame of human occupation. In fact, they had happened less than 150 years ago - a modern day Pompeii re-dux. The geologic record is filled with clear evidence of natural earth processes that are unfathomable from a human time scale and strictly anthropomorphic perspective. It isn't just the tilting at Yellowstone that is impressive, it is the size and scope of the ash flows that came out of those calderas when they went off. They extended past Kansas. Would not have been pretty if people were around.

A caldera at Mammoth California also has a nefarious record of blanketing Nevada repeatedly in the geologically recent past with ash flows tens of multiple tens of meters thick. According to the tilt meters Mammoth is again is swelling as we speak. The Colombia flood basalts (Washington State) and Deccan Trapps (India) are each thousands of cubic kilometers of volcanic rock that poured out on the surface. In the late 1800's the island Krakatoa blew up in the South Pacific and darkened the earth's atmosphere for a year. The tsunami's asociated with that historically recent event would have had a similar effect as last Sunday's had the earth's population distribution been what it is today.

What happened last Sunday is a major human tradgedy no doubt, but even on a global scale it is a localized event. If you that forgot about that little island in the Carribbean, Martinique just because it wasn't your back yard, you will also probably consider vacationing in Phuket within a decade or even go Christmas shopping in San Francisco in the next few years.

If we take a planetary and human species perspective, investing in near-earth asteroid detection and planning (globally) for what to do when one found to be is headed our way makes more sense. Remember comet Shoemaker-Levy breaking into nine pieces and hitting Jupiter? Quite impressive. In retrospect, the meteor crater off the Yucatan penninsula that probably defines the Permo-Trassic extinction and reflects the end of the age of dinasours was a pretty impressive warning shot.

What if the Tunguska meteorite/coment event on June 30, 1908 had happened near New York City? Around half a day's rotation of the earth made the all difference. Who can plan for that? Try and convince any government deeply in hock that looking into space and planning inter-governmentally as how to cooperate as a planet is a sound investment. We can't beat Mother Nature, we just need to be good to her when we can.

All things considered, each of us is personally at greater risk each day when we get into our car and drive to work.

Heads up and drive safely.

Saludos,
BWoods0744

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