Hurricane Sandy did a lot of damage to the North East of the U.S. Which has us wondering how she will affect the economy and the stock market. Take a minute to vote on our poll and leave your comments below.
Loading ...Good luck getting back into the swing of things today as the markets open up after a historic 2 day closing.
Every Success,
Jeremy
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If the aftermath of Hurricane Sandy is anything like Katrina, I'm afraid my bearish sentiment will get the best of me.
I had family living in the area where Katrina hit; they still haven't fully recouped financially. FEMA did more harm than good, in that it treated the symptoms, not the underlying problem. It threw government aid funds at the public, when it really needed to implement incentives to rebuild and create jobs. In addition, and as a correlating note, my family living down there didn't see much of any insurance money. A bureaucratic government "threw" money inefficiently at the problem, not doing much good, and the private insurance companies tried to ignore the problem.
So, considering that New York is a financial mainstay for the United States, and considering that history has a good chance of repeating itself, from Katrina to Sandy, I'd say I'm bearish on this natural disaster.
In the short-term, it will give a temporary boost, mainly to that sector (construction) of the economy, with small ripple effects. But in the long-run, the money supporting such efforts will have to be accounted for and won't be sustained. Destruction never creates long-term positive effects. How much good did borrowed money for stimulus do? It had minimal effect on the unemployment numbers but added substantially to our national deficit... something that will soon be coming home to roost. That effect will not be pretty. We're currently in a hole that might never be dug out of. We're paying almost a quarter of a trillion dollars a year just in interest payments and that number is growing, as the national deficit is. People in the know are becoming very concerned and even outright scared of what our economic future holds.
I think everybody's missing the boat here with these thoughts on all the spending to rebuild and repair the damage from Superstorm Sandy. Many people now just simply do not have the money to spend on repairs. Even with homeowner's insurance, deductibles are higher than ever, and even meeting that can be difficult at times. Plus I think the biggest thought we're missing, is the possibility that thousands up east who had their homes or businesses flooded by this unprecedented storm may have not had flood insurance. Flood insurance is expensive, and many opt out to just cross their fingers and hope for the best. Their thinking is storms are extremely rare up this far north. Many I'm sure right now are feeling blessed or lucky on the fact their lender insists on both homeowner's and flood insurance.
Another analogy to all this is my mechanic who also runs one of the biggest and most respected auto body shops in this area tells me: "For the last few years, when people get in an accident, they just take the insurance check and drive with the dent or other damage." "They're not getting their car fixed after the accident."
any rebuild job adds to GDP while the losses do not diminish it
strange maths but true
so the net effect is more than positive
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