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Katrina Could Push World In To Recession

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Guest Riser

Looks like the price of Petrol (US Gas) is expected to rise much harder and faster than the crude from which it is refined:

econ.gif

This is going to have a much larger impact than many people think, this is just the start. If people in the States start panic buying Gas and heating fuel the current balance of supply and demand will go out of the window.

New York Times - Carriers Are Stricken by Cancellations and Lack of Fuel

The airline industry felt the brunt of Hurricane Katrina yesterday, with some airports running low on jet fuel and carriers canceling hundreds of flights. Meanwhile, Wall Street feared that the financial problems of the sickest airlines could grow worse.

The industry's trade group, the Air Transport Association, said the nation's supply of jet fuel had been cut 13 percent because of damage to refineries on the Gulf Coast.

The association arranged for supplies of jet fuel to be shipped by air tanker to airports in Charlotte, N.C., and Fort Myers and West Palm Beach in Florida, where supplies had dwindled, the group's chief economist, John Heimlich, said yesterday.

The group also planned to send jet fuel by tanker truck as well as plane to other airports, Mr. Heimlich said. Of particular concern are supplies at two big airports -Hartsfield, serving Atlanta, and Dulles, serving Washington. Both airports generally rely on supplies from refineries in Louisiana and in Memphis.

Complicating matters is the coming Labor Day weekend, which wraps up the summer travel season and is generally the last period of strong travel for the airlines until Thanksgiving. Car travel is also heavy then.

And with gasoline selling for upward of $3 a gallon in some parts of the country, versus $1.88 for jet fuel, Mr. Heimlich said the airlines were worried that refineries might choose to produce gasoline rather than jet fuel, which would be less in demand..........................

Edited by Riser

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Looks like the price of Petrol (US Gas) is expected to rise much harder and faster than the crude from which it is refined:

While drifing round sky last night I ended up watching MSBC <???> and they said that at one point Gas trading was suspended due the sudden price increases.

They also showed so nice footage of an oil-rig hitting a bridge!! :blink:

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remember after sept 11, the FED cut interest rates to 1%. Katrina looks like being an even bigger disaster - who knows what they will do ? and what effect will it have over here?

This time round the FED may wish to look for a scapegoat to hide the breakdown caused by the failure of previous policy.

This may be it.

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Yeah, yeah, doom & gloom.

Pretty nasty stuff when we see the pictures on the news and I sympathise with the people caught in this disaster, but what the article doesn't talk about is the boom in building & other construction & renewal that will now go on in the area funded by insurance $ & govt $. This money floods back into peoples pockets & causes further investment & consumption rather than sitting idly on the stock market as many insurers money does.

I visited Florida after Hurricane Andrew and most of South Miami was undergoing a building boom. Unfortunately for some they had no insurance and it showed, especially outside the city.

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I visited Florida after Hurricane Andrew and most of South Miami was undergoing a building boom.

Indeed: we should obviously be praying for _more_ hurricanes to destroy more cities, then US GDP will skyrocket.

Actually, why bother praying? Why don't the government just pay the unemployed to riot and smash up every house in London... the repair costs will cause a massive boom that will make us all rich!

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Ah yes, the "if we dig a hole to China" fallacy

If we pay people to dig a hole to China, then the money will flow to people's pockets!

TTRTR, if someone smashed all the windows in your properties, that would be a boost to GDP (as someone would need to be paid to replace them, plus buying replacement glass) But whether you pay from your bank account, or an insurance company pays from theirs, it is hardly a recipe for sustainable growth & wealth creation. If you think it is, feel free to do the UK economy a favour and start smashing them (even better, PAY someone to smash them, thereby injecting even more money into peoples' pockets than sitting uselessly in you bank account)

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BTW I visited New Orleans on that same trip & enjoyed a week in the old french district (whatever its name is) which is right next to the river. When I was there they mentioned a lot to tourists that the city was below sea level & the engineering miracle & potential disaster etc, but I never thought I'd see it!!

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Indeed: we should obviously be praying for _more_ hurricanes to destroy more cities, then US GDP will skyrocket.

Actually, why bother praying? Why don't the government just pay the unemployed to riot and smash up every house in London... the repair costs will cause a massive boom that will make us all rich!

Actually riots wouldn't be covered by insurance & therefore would be a disaster.

Ah yes, the "if we dig a hole to China" fallacy

If we pay people to dig a hole to China, then the money will flow to people's pockets!

TTRTR, if someone smashed all the windows in your properties, that would be a boost to GDP (as someone would need to be paid to replace them, plus buying replacement glass)  But whether you pay from your bank account, or an insurance company pays from theirs, it is hardly a recipe for sustainable growth & wealth creation.  If you think it is, feel free to do the UK economy a favour and start smashing them (even better, PAY someone to smash them, thereby injecting even more money into peoples' pockets than sitting uselessly in you bank account)

Same to you. But lets just point out here that renewal is consumption. Consumption moves our economies & is therefore good. Think about it for a moment. When I build a house, I expect it to stand there for 50+ years. When it becomes dilapidated, I need to renovate it and the items I replace are my future housing consumption that I am investing in today (along with the building itself ageing). Insurable disasters bring forward future consumption by diverting invested $ to consumption just like IR drops do. So overall they are a boost to the economy, but unfortunately a human disaster.

Edited by Time to raise the rents.

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Actaully riots wouldn't be covered by insurance & therefore would be a disaster.

Irrelevant. Who do you think ends up paying for those insurance handouts?

Ah, us. The same people who end up paying if we have to replace our windows ourselves... the only slight benefit is that some of the cost would be offloaded onto people outside London who didn't decide to get rich by destroying their property.

Either way it takes money away from real productive uses and diverts it to pointless replacement costs: insurance redistributes wealth, it doesn't _create_ wealth. Though I have to say, I'm hardly surprised that you don't understand this.

Similarly, who do you think will end up paying the massive billions of insurance handouts to rebuild New Orleans?

Edited by MarkG

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Irrelevant. Who do you think ends up paying for those insurance handouts?

Ah, us. The same people who end up paying if we have to replace our windows ourselves... the only slight benefit is that some of the cost would be offloaded onto people outside London who didn't decide to get rich by destroying their property.

Either way it takes money away from real productive uses and diverts it to pointless replacement costs: insurance redistributes wealth, it doesn't _create_ wealth. Though I have to say, I'm hardly surprised that you don't understand this.

Similarly, who do you think will end up paying the massive billions of insurance handouts to rebuild New Orleans?

Wrong as usual Mark.

Uninsured damage causes a loss in value to property, most people would divert what they can to repairs (a balanced impact on the economy) or they may borrow to repair if they can. They would tend to be able to repair to a lower standard if they were uninsured, meaning they would have permanently lost value.

Insured repairs are funded by savings held by the insurers. The insured damage is usually reaired to a high standard & does not divert money away from other parts of the economy. It is therefore a boost and in most cases the value of the property would be fully restored or even improved.

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Insured repairs are funded by savings held by the insurers.

And where does that money come from? Do the insurers have a magic money-printing machine?

Ah, no: they increase your premium next time around. You have to pay more money for insurance, which could alternatively have gone to a productive use like investing in a high-tech industry that would create sustainable and well-paid jobs here in the UK.

Seriously, if you believe that smashing windows makes us richer, I can't help but feel that your future pronouncements on economics will be taken even less seriously than before.

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And where does that money come from? Do the insurers have a magic money-printing machine?

Ah, no: they increase your premium next time around. You have to pay more money for insurance, which could alternatively have gone to a productive use like investing in a high-tech industry that would create sustainable and well-paid jobs here in the UK.

Seriously, if you believe that smashing windows makes us richer, I can't help but feel that your future pronouncements on economics will be taken even less seriously than before.

You might be starting to get it. But you still have a way to go.....

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I often smash the windows in my rented house when Im feeling skint at the end of the month.

You know, that's not such a bad idea. 'Yeah, some ******* smashed the windows again. But give me a hundred quid and I'll fix them for you'... could be onto a winner there, mate.

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The Yanks can do some amazing things - put an army ashore at Normandy and then, shortly afterwards, put an army ashore in the Pacific... Or get German scientists to put a man on the Moon... or give us the technology boom... but I think they are going to treat the Katrina disaster in the same way they have treated the post-Iraq war situation - leave it to capitalism.

I am amazed just how few resources - troops, helicopters, emergency aid - is being sent to the disaster area. To be honest, I am not surprised at all. This is predominantly a poor black/poor white trash area of the US and I think it will be left to sort itself out.

I am so UNDER-impressed by the female Governor - whenever she comes on TV she seems she is about to cry and is, IMPO, very weak and does not display the leadership quality now required. Anyone else notice the guy standing behind the male Governor smile broadly when the Governor said that he had told the Police to deal harshly with looters - "Yeeha, the area is flatterned and thousands could be dead but, yeeha, it is open season on them there critter looters!"

'Nuff said.

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A quick question for you TTRTR....

If regeneration/renovation has such a positive effect on the economy as you seem to be suggesting, can you please explain to me why Germany has been suffering such an economic downturn/recession? Given that its generally accepted a large factor as to why Germany has such problems is due to their need to bring the former East Germany upto the standard of the rest of the country after decades of neglect during the cold war.

Surely by your logic, such massive regeneration should have caused a massive boom in the German economy?

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I am so UNDER-impressed by the female Governor - whenever she comes on TV she seems she is about to cry and is, IMPO, very weak and does not display the leadership quality now required.

That's because today's politicans are elected on spin and five-second sound-bites, not practical ability.

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A quick question for you TTRTR....

If regeneration/renovation has such a positive effect on the economy as you seem to be suggesting, can you please explain to me why Germany has been suffering such an economic downturn/recession? Given that its generally accepted a large factor as to why Germany has such problems is due to their need to bring the former East Germany upto the standard of the rest of the country after decades of neglect during the cold war.

Surely by your logic, such massive regeneration should have caused a massive boom in the German economy?

I have no idea what you are talking about and why you have read something into my post which, despite going back and reading it several times, I cannot even see there.

I am so UNDER-impressed by the female Governor - whenever she comes on TV she seems she is about to cry and is, IMPO, very weak and does not display the leadership quality now required.

Too late - the waterworks, (Bad choice of words), have begun on TV.

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Anyone else notice the guy standing behind the male Governor smile broadly when the Governor said that he had told the Police to deal harshly with looters - "Yeeha, the area is flatterned and thousands could be dead but, yeeha, it is open season on them there critter looters!"

'Nuff said.

I'm sure a few of them are old enough to have taken part in a few lynchings back in the day...... bet they didn't dream of a chance to relive their youth in this way.

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I have no idea what you are talking about and why you have read something into my post which, despite going back and reading it several times, I cannot even see there.

Hmmm, my question was addressed to TTRTR (TimeToRaiseTheRents) rather than yourself. If I were asking you a question I would refer to you as TMT :P

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A quick question for you TTRTR....

If regeneration/renovation has such a positive effect on the economy as you seem to be suggesting, can you please explain to me why Germany has been suffering such an economic downturn/recession? Given that its generally accepted a large factor as to why Germany has such problems is due to their need to bring the former East Germany upto the standard of the rest of the country after decades of neglect during the cold war.

Surely by your logic, such massive regeneration should have caused a massive boom in the German economy?

On this general theme note that WWII destruction necessitated a capital base renewal in Germany and Japan but less so in eg the UK. US already had a newish capital base which was intact after WWII. A couple of decades later the UK with its intact but antiquated machinery and infrastructure was economically derelict - having been leader pre WWII.

So it is not axiomatic that all of the cost of New Orlean's renewal will be wasted money. But on balance most probably will be.

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Of course TTRTR is right that the damage caused by the hurricane will lead to a short-term boost to economic activity, however it happens to be funded. But the confusion is between increases in GDP, which will certainly happen, and increases in wealth, which won't (unless there is "betterment", which insurers don't generally pay for, and that's really beside the point).

This was in a book on economics I read years ago. Take a happy, isolated tribe, and introduce them to candyfloss. People set out to farm sugar cane, make the kit to make the candyfloss, sell it, market it, and so on. GDP goes up and up. Then build hospitals to cope with obesity related diseases, and set up lots of dentists (obvious?). GDP keeps on going up and apparently the people are all wealthier. Are they? What if they decided that candyfloss was the devil's work and they wanted to go back to a state of pre-floss innocence - what now?

Increases in GDP very often don't improve people's well-being and often don't translate into anything that can meaningfully be called "wealth". Or we'd have govt-sponsored gangs going round smashing cars, windows, houses, etc etc.

Yet another point on which conventional economic theory fails to capture what matters, as TTRTR so eloquently points out. And yes, I do "get it".

Edited by munro

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Hmmm, my question was addressed to TTRTR (TimeToRaiseTheRents) rather than yourself. If I were asking you a question I would refer to you as TMT 

I've had a hard, tiring day. I am going to have a lie down. :rolleyes:

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  • 301 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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