There are few things on my mind today so I thought it would be easier to briefly write about each of these things instead of focusing on just one thing. Each of these thoughts concern ongoing current events or events that may happen in the next few months. There are multiple things to comment on to say the least…
Update on Katla
Two days after I wrote about Katla scientists and the President of Iceland warned that there is strong possibility that Katla will erupt in the short-term. However, scientists noted that the earthquake activity I noted was not part of anything unusual:
"We conclude that given the high frequency of Katla activity, an eruption in the short term is a strong possibility…It is likely to be preceded by new earthquake activity. Presently there is no unusual seismicity under Katla."
My gut feeling is that Katla is going to erupt. However, it is impossible to predict when it is going to erupt because that is something that scientists cannot even do at the moment.
Busy Hurricane Seasons and the Oil Spill
Each year I watch the tropics very closely because I am fascinated by hurricanes and because a strong hurricane can cripple the U.S. economy if it were to decimate the oil-producing areas of the Gulf of Mexico.
Yesterday, the National Hurricane Center (NHC) released its 2010 Atlantic Hurricane season forecast. This year forecasters are very concerned because conditions in the Atlantic resemble some of the most active years on record, including 2005 (the year that produced Katrina, Rita, and Wilma).
- The NHC is forecasting between 14-23 named storms, 8-14 hurricanes, and 3-7 major hurricanes (winds of 111 mph and higher). I do not recall a forecast by the NHC that estimates this much activity in the Atlantic in any given year, including in 2005 (in fact, the 2005 Hurricane season forecast dwarfs the forecast for 2010).
The Gulf of Mexico oil spill is unlikely going to have any effect on tropical weather systems that travel over it. There was a study done by AccuWeather which found that oil in the Gulf of Mexico had no discernable impact on tropical storms or hurricanes. In fact, two of the stronger storms on record went through a large oil spill areas and had no problems using the water/oil to keep themselves going.
My gut feeling is that the 2010 Atlantic Hurricane Season will be one of the busiest and memorable on record unless Katla erupts during the early part of the season. Katla’s eruption would have such a big impact on weather patterns that it may alter the course of the season.
I have no idea whether a strong hurricane will travel through the oil producing areas of the Gulf of Mexico nor does anyone else. If there is potential for a strong hurricane to pass through the oil producing areas of the Gulf of Mexico you will hear about it here because a direct strike on the oil producing areas would be devastating to the U.S.
Italy’s Restrictive Capital Control
The crisis in Europe has gone another week without being resolved. The main problem still remains the massive debt that European countries have. If I lived in Europe I would take steps to protect myself against a major decline in the Euro.
Unfortunately, it is not easy to protect yourself if you are an Italian because Italy is planning to make it virtually impossible for its citizens to undertake major actions to protect themselves against a devaluing Euro or to flee the country.
- Italy is planning to ban cash transactions of 5,000 Euros or more. This is equivalent of the U.S. government banning transactions that involve $6,200 or more. If you are a person who wants to buy an asset to protect yourself against the devaluation of your currency your choices become limited in what you can do with such a strict limit. In addition, escape from your country would also be a lot harder because it’s hard to live on 5,000 Euros or $6,200 in another country. A person could conduct multiple transactions of 5,000 Euros or less to circumvent the capital control, but the person would then risk getting spied on by the government.
As I’ve written before, capital controls can be dangerous and something that the U.S. is going to have more of in the future. The U.S. government already has stealthily introduced them in the “Jobs Bill” they passed a few months ago. As the financial and economic situation deteriorates in the next few years, the U.S. government may impose equally as restrictive or even more restrictive capital controls than Italy is planning to impose. This would make escape from the U.S. much harder for those who want to escape and would make it much harder for people to protect themselves from a devaluing U.S. dollar.
Usually the news dies down between Memorial Day and Labor Day in the U.S. However, it appears this should be one of the more interesting summers in recent memory…
