Typhoon Hato lashed Southern China two weeks ago. Hong Kong and Macau were struck head-on with strong winds and heavy rain.
A widely-shared youtube video of Macau showed thousands of cockroaches getting out of their underground hiding places and crawling one after the other over a sea wall. It was a well-coordinated effort to march to higher grounds to flee from possible flooding caused by the tropical cyclone.
Response to natural disasters: cockroaches versus humans
It is impressive to see how cockroaches can prepare an advance contingency plan when there’s a perceived danger ahead. They manage to escape to safety in an orderly manner to avoid unnecessary casualties.
It is said that animals and insects have the sixth sense to predict natural disasters. Unfortunately, as humans we don’t possess the same sense.
When Typhoon Hato attacked Macau, the local observatory downplayed the severity of the storm and held back public warning to avoid any financial impact on the casinos.
As a result, over half of the city had water and electricity cutoff. Casino guests gambled under dim lights with no air conditioning. It also resulted in a death toll of 12 because many residents reported to work and the victims were trapped in flooded carparks.
Despite huge government reserve from gambling taxes, technology to predict bad weather has not been upgraded since Macau’s return to China in 1999. Typhoon signal no. is determined by one person – Macau’s weather chief. Similarly, not much has been done over the past decades to solve the problem of flooding in low-lying areas.
Are cockroaches smarter than humans?
Well, didn’t they just prove that they have more advanced life-saving skills and better group coherence compared with us?
Studies show that cockroaches live in closely-knitted egalitarian societies. When everybody is equal, it is easy to make group decisions. When no one has secret agenda, the group can make collective decisions for the greater good.
Remember the 2008 financial crisis?
Have you read Reuter‘s recent article ‘Nine years on, another Lehman Brothers bankruptcy‘ (Sept 2)?
Remember how the collapse of Lehman Brothers triggered the global financial crisis in 2008? Nine years later, the debts have not been settled yet. Last Thursday, two affiliates of the failed investment bank filed for Chapter 11 to generate $485 million cash for Lehman Brothers.
The 2008 financial crisis was caused by the US housing bust and subprime mortgage debts.
On the eve of the financial crisis, the Federal Reserve tried in vain to avoid a total collapse of the financial markets after dumping hundreds of billions to bail out mortgage banks and bond dealers.
It is a strange thing, but when you are dreading something, and would give anything to slow down time, it has a disobliging habit of speeding up.
– J.K. Rowling, author of Harry Potter and The Goblet of Fire
Similar to many financial crises, the 2008 version started with a banking panic. When IndyMac Bank was taken over by the government on July 11, hundreds of nervous depositors gathered outside the bank since FDIC only insured up to $100,000 (in Singapore, it is capped at S$50,000 per person).
U.S. Treasury Secretary Henry Paulson then reassured the public in a talk show that the US banking system is solid and there is a $25 billion bail-out of Fannie Mae and Freddie Mac. Shares of the two government-sponsored enterprises tumbled.
… when reality can no longer sustain the exaggerated expectations .. when people continue to play the game although they no longer believe in it. Eventually a crossover or tipping point is reached.
– George Soros, The Crash of 2008 and What it Means: The New Paradigm for Financial Markets
On the fatal day of September 15, U.S. Treasury thought it’s enough to bailout Bear Stearns ,Fannie Mae and Freddie Mac, and refused to take on more. Lehman Brothers had to file for bankruptcy. Merrill Lynch was sold to Bank of America, AIG was taken over by the Federal Reserve.
Two days later, investors fled the once considered ultra-safe money-market mutual funds. They withdrew a record $144.5 billion from the financial market in a single day on September 17. Banks couldn’t get the money they needed to fund their day-to-day business. The US economy was close to a complete collapse.
The stock market finally crashed on September 29. The Dow Jones Industrial Average fell 777.68 points in intra-day trading – the largest drop in any single day in history. It created a ripple effect through the financial system and created widespread panic of the global markets. Investors were desperate to sell . They were willing to get out at any price.
How we react to financial crises
Similar to a stampede in the crowd, a market crash is usually caused by mass panic. Trampling happens when people are scared and flee from a perceived danger.
In an overcrowded market, a rumor or a piece of shocking news can easily trigger irrational fears which lead to disastrous results.
How to prevent unnecessary damages and loss of wealth facing the onset of a financial crisis? Perhaps we can take the hint from a crowd management expert.
When you start to feel uncomfortable in a crowd, this is the time to start looking at leaving. This is very difficult, because if you’ve come a long distance, or you’ve waited for a long time, for example in front of a stage, you don’t want to leave.
Make a mental note of all the exits in a venue as soon as you arrive. The natural urge is to use the same entry when you exit, not because it’s safer, but it’s familiar.
– Paul Wertheimer, crowd control expert
It’s easier said than done. In reality, because of greed and comfort, many people leave that decision until it’s too late and end up being trapped in a large panicking crowd totally out of control.
The human instinct of self-denial
By the end of the 2008 subprime crisis, Dow fell more than 50 percent from its last peak.
The 1997 Asian Financial Crisis occurred in July when foreign investors fled the Asian markets which caused the collapse of the Thai, Indonesian, Philippine and South Korean currencies.
On the Black Monday of the 1987 stock market crash, Dow lost 23 percent of its value or $500 billion dollars.
The Wall Street Crash happened on October 28 and 29 in 1929. Dow fell 25 percent in two days. The stock market dropped 90 percent during the Great Depression.
Despite history keeps repeating itself, we still choose to believe that this time it is going to be different, that prices still have room to go up.
We behave as if the Black Swan does not exist: human nature is not programmed for Black Swans.
That night, on October 19, 1987, I slept for twelve hours straight. It was hard to tell my friends, all hurt in some manner by the crash, about this feeling of vindication.
– Nassim Nicholas Taleb, The Black Swan – The Impact of the Highly Improbable
Consequently, very few people survive an investment mania unscathed. The bears are either mildly hurt because they underperform on the upside or badly damaged because they go short too early while the bulls are eventually devastated because they “overstay” by remaining too optimistic too long.
– Marc Faber, Tomorrow’s Gold – Asia’s Age of Discovery
To sum up, what are the things we can learn from the cockroaches in order to survive the next crisis?
1. Put aside individual interest. Stay united for the common good.
2. Plan for an exit strategy right at the entrance.
3. Look out for signs of crisis. Recognize early and leave in time.
4. Don’t panic and evacuate in an orderly manner.
Thank you for writing. Yesssh, that is one great lesson to learn from Siu Keung…
Thanks.
Yes, cockroaches are stronger than we think. They can stand exposure to radiation. Some say they can even survive nuclear explosion!
Thanks again!
Have to respect those who come from the same age as dinosaurs, which is a long time before the 1st mammal existence. Surely have their ways of wisdom in terms of survival 🙂
Unlike insects, human behaviours are affected by greed and fear. The former is a by-product of our big ego when we think luck is on our side, while the latter is driven by irrational fear during unexpected events or crises.