The $1 Trillion Storm: How a Single Hurricane Could Rupture the World Economy
Climate change and a potentially vulnerable insurance market could combine in a disaster that starts in South Florida but hits the entire globe.
Nobody is going to be ready when a Category 5 hurricane slams into Southeast Florida, flattens Miami, bankrupts insurance companies, threatens a foreclosure crisis, and sends financial shockwaves across the world.
The catastrophe, if it comes, will first manifest as just a natural disaster. Floridians will flee the impending hurricane, emptying neighborhoods and clogging freeways. Some will stay in their homes, confident this hurricane will be no worse than previous years’ storms, while a smaller minority might be persuaded by far-right talk show hosts the whole thing is a left-wing conspiracy. Entire swathes of the state will be destroyed. People will die. But what comes next will be even more shocking. The storm’s financial aftermath could spiral outwards from Florida, creating conditions that inevitably draw comparisons to the 2008 Wall Street crash.
The conventional wisdom is that a scenario like this is so unlikely to occur that it’s almost not worth discussing. The odds of a worst-case hurricane making landfall in Florida in any given year is low, insurance companies have sophisticated strategies for mitigating risk, and the financial system by and large is insulated from physically destructive events. (Even 9/11, for instance, caused a stock market downturn that only lasted a month.)
Yet in recent weeks VICE spoke with financial, political and scientific experts—including a former special assistant to President Barack Obama, the dean of science of a major Canadian university, and a UK organization on the global vanguard of disaster modeling—who believe that conventional wisdom has its limits. Without wanting to be seen as alarmists by overstating dangers, these experts think it’s crucial that we question and challenge common assumptions around financial risk.
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