Posted on 09/07/2005 8:43:17 AM PDT by Matchett-PI
The most noticeable thing about recent government in New Orleans is: there wasn't any. Just now is it starting to come back.
Government is politics. Politics is money. Money and economics are married to each other.
George Friedman, founder of Stratfor Global Intelligence, writes last Thursday, "... geopolitics will force the city's resurrection, even if it is in the worst imaginable place." His logic is penetrating, comprehensive, and difficult to dispute. I believe his conclusion is highly valid.
Where's the money going to come from? You guessed it--Washington.
Even as commentators point to the potential for exploding inflation from runaway energy prices, the Fed will be acting now to flood massive amounts of new money into the banking system to pay for the reconstruction of New Orleans and perimeter.
First stopping place for the money will be the stock market where its the initial effects will be seen in spring or summer of next year. The market will bottom and then start a great rise to new highs. As the money moves on from there, it will begin to spill over into real capital investment and expenditure, booming the economy again by the end of 2006 perhaps in time for the midterm elections.
The Fed has done this before: mostly recently in 1998 when Russia defaulted on her bonds and Long-Term Capital Management was collapsing; then again at the end of 1999 in anticipation of Y2K, the catastrophe that didn't happen. These were both short-duration events. New Orleans will be long drawn out. The Fed will keep feeding and feeding.
I do not much believe in short-term forecasting. Yet the stock market may give up surprisingly little ground in view of the forthcoming Fed posture related to Katrina's devastation.
"Follow the money." It should begin to show up where we can see it in six months to a year in the stock market and the economy.
A couple of IT companies I follow, no need to mention names, are already heavily involved in restoring service. A lot of money is being spent already, $1 billion per day, on recovery, and beginning rebuilding is still several months away. Some are going to get significant boosts to their business, and [this is important] without even a hint of gouging.
Yep! If you haven't read the Stratfor article, you might want to - it is reeeeally interesting. I posted it in its entirety at #16 in this thread.
Many thanks.
Good News bump!
bump that comment.
No thanks. I stand by my previous comment. You can stick with yours.
Given the "logic" of this piece, Bush must immediately order every available B-52 into the air and saturation bomb every major American city.
Now THAT would be a REAL "BOOM."
You are 100% correct. I'm stunned that on THIS site, this kind of idea is given credence. This notion has been covered by conservative economists many times. Sowell, Williams, Friedman, and Hazlett (sp?) especially. I believe it was Hazlett who called it the "broken window theory." Smash a storefront window and just stand back and wait for the economic prosperity as the repairman, the glass manufacturer, the glass seller, etc. all now have jobs and in turn take their wages and buy other things. Absurdity! Think of it this way. BEFORE Katrina you had X number of homes and businesses. AFTER Katrina (if the city is rebuilt) you will have spent 10s of billions of capital and irreplacable things like time, and what will you have? Exactly and precisely what you had BEFORE Katrina. Or... I set my house on fire, and then rebuild it, using all my savings. Before fire I had house and savings, after fire, I have house only.
Could you be any more insensitive. People have lost everything, even the ones who evacuated early. No jobs, no homes, nothing. When they are hurting this bad all they have is hope and a dream that one day they can go home again. But you want to kick them while they are down. And yes, New Orleans will be rebuilt. It is too vital to our economy. It is the number one port in the United States, with non-union workers, unlike strike happy Los Angeles dockworkers. One of the few places in this country willing and happy to locate oil refineries for the rest of the us because they know that is where the jobs are. A major oil port that can offload giant tankers offshore so we never have to worry about Exxon Valdez style spills. Plus a beautiful, european flavor city that is unique with history and culture, unlike so many generic american cities. Maybe if some of our lawmakers had spend a few bucks shoring up the levees and protecting the vital wetlands of this important economic area, instead of spending it on a 250 million dollar bridge to nowhere in Alaska and the 'big dig' in Boston--two projects that have nowhere near the value to the national economy as getting New Orleans up and running again. Even now the barges of harvest grain sit and wait on the Mississippi for the port to be opened again so it can be exported. Most people have no idea what the loss of this vital port will eventually mean to the economy.
I wouldn't be surprised either.
Great post, thanks.
San Francisco might be a good case study for NO.
The earthquake and fire in 1906 devastated the city, most buildings were gone.
The city had grown up in a haphazard way and some things couldn't be fixed the in the cities present form.
The earthquake and fire gave them the blank slate needed to build it back much better, old problems were fixed.
The city came back much faster than most thought possible.
Will NO do the same?
For the "BULLS", yeah. The negative Bears will find a good reason to nay-say everything and wind up cutting their noses off to spite their faces, though, as usual. LOL
You're welcome. :)
Ol' breaux Ponzi keepin' busy, no?
Good post. I'm tired of arguing with the perma-bulls. There's no tale of a forthcoming boom too wacky for them to fall for.
Construction will keep on booming and so will consumer goods.
You're welcome!
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