Tuesday, July 07, 2015 02:48am
North Adams, MA now: 66 °   
Send news, tips, press releases and questions to info@iBerkshires.com
The Berkshires online guide to events, news and Berkshire County community information.
LOG IN | REGISTER NOW   

Home About Archives RSS Feed
The Independent Investor: Insult to Injury
By Bill Schmick On: 05:27PM / Thursday November 08, 2012
It has been over a week since Hurricane Sandy descended upon the Northeast. Adding insult to injury, this week's Nor'easter provided yet another punch to a region that is barely standing. Fortunately, yesterday's storm was more of an inconvenience than a disaster.

Of course, those who just had their power restored in places like Long Island and the battered New Jersey sea coast were plunged back into despair at this new power outage. But damage is minor compared to the estimates that Sandy has wrought. The price tag is now ranging from $30 to $50 billion, but that is only a guesstimate. Losses that are insured by private companies could amount to $20 billion or more. Additional losses covered by the National Flood Insurance Program, plus uninsured losses, could boost the total to the $50 billion mark.

Normally, the estimates of property damage are usually revised upward, while those losses incurred as a result of lost business activity are revised downward. That is because businesses usually find a way to make up for lost activity. In the case of Sandy, regaining lost business activity depends on when the power is restored. In many areas, power is still not fully restored and won't be soon, thanks to yesterday's storm.

Damage totals would put the cost of Sandy far above recent hurricanes and at least equal the cost of the four hurricanes the United States suffered in 2004. But the losses are still well below the $100 billion price tag of Hurricane Katrina, although it could beat the next largest storm, Hurricane Andrew in 1992 ($46 billion in inflation-adjusted losses).

There are a lot of misunderstandings about weather-related destruction. I have read a number of articles that seem to suggest that storm damages could actually be good for the economy. Pundits like to point out that although the damage will cause a dip in economic activity in the impacted region over the short-term, the economic reconstruction involved in rebuilding infrastructure (roads, bridges, subways, railways, etc.), plant and equipment (factories, stores, housing), and goods and services could actually act as a stimulus to the economy while creating new employment.

Some of the depressed consumer spending, they argue, will simply be postponed. For example, Hurricane Sandy was responsible for a 20 percent drop in retail sales last week in the mid-Atlantic and Northeast regions amounting to $4 billion. Although some of that will surely be recouped in the weeks and months ahead because of Thanksgiving and the Christmas season, not all of it will be recouped.

What many are forgetting is that natural disasters are destroyers, not creators, of wealth. The opportunity cost that we forego in natural disasters is immense. Think of what the victims could have done with the time, money and effort they now have to spend on rebuilding. No longer can businesses, homeowners and even the government make the purchases and investments on other more productive pursuits that could have generated more jobs and a better business environment if the disaster had not occurred.

Sure, the re-building process may result in a better structure or highway than before but the costs are replacement costs, not new investment. And what value will we place on the 100-plus lives that were lost or the pain and suffering of those that are now homeless or without jobs? What about their opportunity costs?

Sandy was a hurricane, a destructive one, but there was nothing super about it. It will take those in the Northeast a long time to recover from its impact and there are precious few silver linings in this disaster no matter how deeply you look.

Bill Schmick is registered as an investment adviser representative with Berkshire Money Management. Bill’s forecasts and opinions are purely his own. None of the information presented here should be construed as an endorsement of BMM or a solicitation to become a client of BMM. Direct inquires to Bill at 1-888-232-6072 (toll free) or email him at Bill@afewdollarsmore.com.


0 Comments
     
News Headlines
Pittsfield 14s Win by Forfeit in Babe Ruth Districts
Berkshire Bank Completes Company-Wide Week of Service
PGA Junior Series Returns to Taconic
UCP to Host 17th Annual Golf Tournament Fundraiser
Tanglewood Picnic Book Seeing 'Amazing' Success
Waubeeka, MCLA Earn Narrow Wins in Giorgi League
Lanesborough 12-Year-Olds Reach State Final
Brien Center Management, Union Reach Deal to Avert Strike
Steinmann Pitches Pittsfield 13s Past North Adams
Great Barrington All-Stars Top Lanesborough Bulldogs

Bill Schmick is registered as an investment advisor representative and portfolio manager with Berkshire Money Management (BMM), managing over $200 million for investors in the Berkshires. Bill’s forecasts and opinions are purely his own and do not necessarily represent the views of BMM. None of his commentary is or should be considered investment advice. Anyone seeking individualized investment advice should contact a qualified investment adviser. None of the information presented in this article is intended to be and should not be construed as an endorsement of BMM or a solicitation to become a client of BMM. The reader should not assume that any strategies, or specific investments discussed are employed, bought, sold or held by BMM. Direct your inquiries to Bill at 1-888-232-6072 (toll free) or email him at Bill@afewdollarsmore.com Visit www.afewdollarsmore.com for more of Bill’s insights.

 

 

 



Categories:
@theMarket (172)
Independent Investor (234)
Archives:
June 2015 (7)
May 2015 (6)
April 2015 (8)
March 2015 (6)
February 2015 (7)
January 2015 (9)
December 2014 (7)
November 2014 (4)
October 2014 (9)
September 2014 (5)
August 2014 (7)
July 2014 (2)
Tags:
Stimulus Currency Retirement Crisis Metals Debt Ceiling Economy Bailout Rally Energy Stocks Housing Election Federal Reserve Oil Japan Fiscal Cliff Europe Debt Interest Rates Fed Pullback Deficit Recession Banks Markets Commodities Jobs Selloff Euro Congress Europe Stock Market Greece Taxes
Popular Entries:
The Independent Investor: Don't Fight the Fed
The Independent Investor: Understanding the Foreclosure Scandal
@theMarket: QE II Supports the Markets
The Independent Investor: Does Cash Mean Currencies?
@theMarket: Markets Are Going Higher
The Independent Investor: General Motors — Back to the Future
The Independent Investor: Will the Municipal Bond Massacre Continue?
@theMarket: Economy Sputters, Stocks Stutter
The Independent Investor: Why Are Interest Rates Rising?
The Independent Investor: How Will Wall Street II Play on Main Street?
Recent Entries:
The Independent Investor: Tiny Houses Gain Appeal
@theMarket: From Russia With love
The Independent Investor: Robo-Advisers Have Landed
@theMarket: Don't Try to Trade This Market
The Independent Investor: Why Interest Rates Are Moving Higher
@theMarket: Too Hot or Too Cold
The Independent Investor: How to Run for President and Make a Fortune
The Independent Investor: Man's Most Expensive Friend
@theMarket: June Is Off the Table
The Independent Investor: Will Memorial Day Kick Off a Strong Summer?


Sheep Hill Firefly Hike
Children and parents enjoyed a hike through the Sheep Hill...
Williamstown July 4 Parade
Williamstown celebrates its 250th anniversary with the...
Pittsfield 4th of July Parade...
The annual Pittsfield Fourth of July Parade marched down...
Solid Sound Day Three
Solid Sound concluded Sunday with performances from the...
Solid Sound Day Two
Saturday's performances at Solid Sound included NRBQ,...
Solid Sound Day One
Solid Sound gates opened at 4:30 and concert goers enjoyed...
Colegrove Park School Tour
School and city officials toured the far-from-completion...
Down Street Art 2015 Kickoff
Down Street Art kicked off Thursday night with music, food,...
High School Softball All-Star...
High school softball players from throughout the county...
Bashevkin Farewell Party
Nearly 100 staff, friends, family and partners of the...
Little League Championship...
Hunter Sarkis and Logan Briggs Tuesday evening singled...
Candlelight Vigil for S.C....
More than 300 residents gathered at United Methodist Church...
Central/South Relay for Life...
Hundreds spent Friday night and Saturday morning walking...
'Amazing' Book Launch Party
Hundreds turned out for the release of Ty Allan Jackson's...
Third Thursday June 2015
Third Thursday in Pittsfield brought thousands to North...
Bruins Rally At Cheshire...
The Boston Bruins held a rally for Cheshire Elementary...
Sheep Hill Firefly Hike
Children and parents enjoyed a hike through the Sheep Hill...
Williamstown July 4 Parade
Williamstown celebrates its 250th anniversary with the...
Pittsfield 4th of July Parade...
The annual Pittsfield Fourth of July Parade marched down...
Solid Sound Day Three
Solid Sound concluded Sunday with performances from the...
Solid Sound Day Two
Saturday's performances at Solid Sound included NRBQ,...
| Home | A & E | Business | Community News | Dining | Real Estate | Schools | Sports & Outdoors | Berkshires Weather | Weddings |
Advertise | Recommend This Page | Help Contact Us
iBerkshires.com is owned and operated by: Boxcar Media 102 Main Street, North Adams, MA 01247 -- T. 413-663-3384 F.413-664-4251
© 2012 Boxcar Media LLC - All rights reserved

Privacy Policy| User Agreement