What the Elite is saying about Fukushima

Will Investors Fear the X Factor in Fukushima?

The World Economic Forum in Davos featured a presentation by its Risk Response Network. Investors should be mindful of its conclusions. 

Wall St SectorSelector,

13 September, 2013

Investors worry about loads of things. With all the attention focused on the taper, the Syrian situation and global politics, some subjects slip under the radar. By the time investors become aware of a crisis, it is often too late – as we saw exactly five years ago.

The recent news reports concerning the out-of-control situation in Fukushima, with hundreds of tons of radioactive groundwater and waste water from leaky tanks flowing into the Pacific Ocean on a daily basis, reminded me of an article I read last winter. It is something investors should keep in mind.

On January 23-27 the World Economic Forum held its annual meeting in Davos, Switzerland. Admission was by invitation only. Those invited to the Forum could join a “community”. The World Economic Forum’s website explained the role of its official communities:

A key part of the Forum’s activities is the creation of distinctive communities of Member and Partner companies as well as leaders from civil society for more informal opportunities for interaction.

I would assume that at the 2013 meeting, one of the most popular topics must have been risk management – including risk aversion. Ever since the financial crisis, the world has been on the verge of economic chaos.

One of the World Economic Forum’s communities is the Risk Response Network. The RRN “was launched to provide private and public sector leaders with an independent, impartial platform to map, monitor and mitigate global risks.” It is comprised of individual representatives of leading global corporations, research institutions, media outlets, governments and NGOs. The Risk Response Network released a 78-page report for the 2013 annual meeting entitled, Global Risks 2013 — Eighth Edition. The report’s topics included: Testing Economic and Environmental Resilience, Digital Wildfires in a Hyperconnected World, The Dangers of Hubris on Human Health and Building National Resilience to Global Risks.

I found Section 5 of Global Risks 2013 to be particularly interesting. It begins on page 55 of the report and is entitled, “X Factors”. The report described this section in the following terms:

In this section, developed in collaboration with Nature, a leading science journal, the Risk Response Network asks readers to look beyond our high-risk concerns of the moment to consider a set of five X factors and reflect on what countries or companies should be doing to anticipate them.

* * *

X factors are serious issues, grounded in the latest scientific findings, but somewhat remote from what are generally seen as more immediate concerns such as failed states, extreme weather events, famine, macroeconomic instability or armed conflict. They capture broad and vaguely understood issues that could be hatching grounds for potential future risks (or opportunities).

The five X Factors discussed in the report were these:

- Runaway climate change: Is it possible that we have already passed a point of no return and that Earth’s atmosphere is tipping rapidly into an inhospitable state?

- Significant cognitive enhancement: Ethical dilemmas akin to doping in sports could start to extend into daily working life; an arms race in the neural “enhancement” of combat troops could also ensue.

- Rogue deployment of geoengineering: Technology is now being developed to manipulate the climate; a state or private individual could use it unilaterally.

- Costs of living longer: Medical advances are prolonging life, but long-term palliative care is expensive. Covering the costs associated with old age could be a struggle.

- Discovery of alien life: Proof of life’s existence elsewhere in the universe could have profound psychological implications for human belief systems.

The ongoing radiation leakage from Fukushima and its impact on the rest of the world were surprisingly not included on the list. This may have been due to the false assurances from TEPCO that everything was under control since the earthquake and tsunami first damaged the reactor facility in 2011.

Nothing provides a better example of “The Dangers of Hubris on Human Health” than Fukushima. The plume of radioactive water from this disaster is expected to hit America’s Pacific Coast duirng the first months of 2014.

Investors should be prepared for the economic consequences of this disaster because the worst may be yet to come. With gold prices sinking lower by the day, now might be the time to take advantage of this bargain (NYSEARCA:GLD).

Bottom line: Cautious investors should be paying close attention to the latest scientific data concerning the ongoing risks posed by the continuing radiation leakage from Fukushima because the economic consequences could become even more tragic than they currently seem.