The governors of North Carolina, Virginia and Maryland have declared states of emergency as Hurricane Earl whirled into a powerful Category 4 storm and barrelled towards the east coast of the United States, packing winds of around 225 kilometres per hour. The highest storm category is 5, with winds of 250 km per hour and higher.
Russia has faced unprecedented drought, heat and wildfires this summer, which have badly hurt its economy and resulted in many human casualties.
Floods have swept over Pakistan and China, inundating vast areas of land and killing thousands.
These are only a few examples of the natural disasters that are rocking the planet with unprecedented frequency and on an ever-larger scale. This has been going on for over a year now.
My cautious reading is that natural disasters could bring about a global economic depression. If one of the major economies were to suffer badly from a huge natural disaster, its economy could be irreparably damaged, and this could create a contagion effect. When factories and properties are destroyed in natural disasters, banks are hurt and goods can't be shipped either in or out. Bad debts arising from disasters are widespread. With increasing international linkages in the global economy, when one country really suffers in a disaster, it could potentially drag others down with it.
It is increasingly apparent that some natural disasters are caused by decades of human attempts to overcome and defeat nature. When we suck oil or natural gas from the ground or beneath the sea, the earth undergoes a seismic and geological change. Lava moves in instead. This could also be one of the reasons why drought has been widespread. When it rains, the water quickly moves into the soil and reduces its stability, leading to mudslides. Meanwhile, factories and vehicles continue to emit CO2 into the atmosphere.
The relentless process of industrialisation in pursuit of high economic growth has hurt planet earth. It appears that we are now receiving payback through natural disasters.
Already the global economy has been hurt by sovereign debt and sluggish growth, which have threatened to create a double-dip recession. Societe Generale Investment of France has advised clients to be ready for a possible "global economic collapse" over the next two years. The Telegraph in the UK this week reported that most developed economies still face a huge debt overhang. "As yet, nobody can say with any certainty whether we have in fact escaped the prospect of a global economic collapse," Ambrose Evans-Pritchard wrote, citing a 68-page report written by asset chief Daniel Fermon.
"Even without fresh spending, public debt will explode within two years to 105 per cent of GDP in the UK, 125 per cent in the US and the eurozone, and 270 per cent in Japan. Worldwide state debt will reach US$45 trillion, up two-and-a-half times in a decade. High public debt looks entirely unsustainable in the long run. We have almost reached a point of no return for government debt."
It is now time for nations to get ready for the worst. Preparations should be made in case further and severe natural disasters hit us abruptly and cause a halt in economic activities. A task force in each country should be set up to deal with the unexpected. Not one single country will be spared from natural disasters, which seemingly are reactions to global climatic change and massive human exploitation of resources.
This is not a time for complacency. The downside risks are growing by the day.