Monday, April 19, 2010

More on the Iceland Volcano

This updates my blog entry on Saturday, 17 April.

From the initial announcement of airport closures for 2 days, now the closure has been extended to 21 April -- a full 7 days after the volcano erupted for the second time since March. The real point no one dare ask aloud is, how do they know? The last time the volcano erupted, it continuously erupted for 14 months.  Besides, the neighbouring Katla volcano, being bigger, remains a big threat. It has erupted shortly after the current volcano in both its earlier eruptions in the past 1100 years. The odds are, that it could explode too. Understandably, nobody wants to talk much about this possibility, because the impact is too mind-boggling to consider seriously.

Now, after 5 days of ash spewing, the New York Times is tentatively speculating about how the economic fallout could hurt Greece really bad if the disruption extends into the holiday season, which could affect tourism there. A full three days after I said something similar on my blog, and four days after I actually acted on by apprehensions.

Now people have begun talking about other secondary effects -- on airline profitability, on overnight parcel delivery firms, on floriculture and horticulture product exporters to Europe, on overall productivity because people cannot get to work, and on overall health because of possible rise in respiratory illnesses. People profiting are rail, road, taxi businesses, and the hotel and hospitality industry. However, this is still being seen as a regional issue (Euro region) but it will not be long before analysts and journalists start considering it a global issue, not just because of the global warming potential with so much more CO2 in the atmosphere, but also because of the secondary and tertiary economic fallout that can be felt all over the globe, and in unlikely places. Like the fallout of 9/11 on someone living peacefully in Kirkuk in Northern Iraq.

In one of my earlier posts, I had said that I am an incorrigible optimist, but talking like this could make me sound like a perennial pessimist. This is a risk I am glad to run, for taking a long hard look at what could happen, and taking the only fail-safe option open today to a small investor with limited risk appetite.


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