Natural Disasters Seen As Spurring Economic recovery

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Editor’s Note: It is a sad state of affairs when natural disasters are seen as a good thing for the economy — because there is nothing else. They are grasping at straws when they could be holding the brass ring. If you want the real thing, you must want to have a real economy — not one in which the GDP is filled up (50%) with trading paper. Truth, justice and the American way may sound like cliches but they represent the core of the solution. Acknowledging that fraud was at the core of the mortgage crisis which triggered the credit crisis which in turn triggered the so-called economic crash. It is ONLY when we stop pandering to ideology and special interests that the solution will be launched.

Here is the solution: FOLLOW THE LAW. The investor’s allegations are true, and everyone in government knows it. The homeowners’ allegations, which is the same as the investors are also true. 20 million plus homeowners AND the combined intelligence of professional money managers could not have been fooled, nor could they be culpable. They were deceived by active collaborative lying by all of the securitization players on Wall Street. Not one deal was actually on the level. They were all defective pieces of crap based upon the defective pieces of crap they were selling to borrowers. And it was done in that order, with sales to investors of empty pools and the   use of some of the money to fund mortgages, concealing the largest money grab and now the largest land grab in human history. All without firing a shot and all without the indictments and convictions of more than 800 bankers in the S&L scandal of the 1980’s. 

 

Reconstruction Lifts Economy After Disasters

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The deadly tornadoes and widespread flooding that have left a trail of death and destruction throughout the South and the Midwest have also disrupted dozens of local economies just as the unsteady recovery seemed to be finding a foothold.

But a new phase is slowly beginning in some hard-hit areas: reconstruction, which past disasters show is typically accompanied by a burst of new, and different, economic activity. There is no silver lining to a funnel cloud, as anyone who survived the tornadoes can attest, but reconstruction can help rebuild local economies as well as neighborhoods.

More than a tenth of the businesses in Tuscaloosa, Ala., were badly damaged or destroyed in April when a tornado swept across a 5.9-mile stretch of the city, and nearly 6,000 Alabamians have filed storm-related claims for unemployment benefits.

An even deadlier tornado laid waste to roughly a quarter of the businesses in Joplin, Mo., on May 22, wiping out some of the big-box stores the city relies on heavily for sales tax receipts. The flooding Mississippi River closed all nine riverboat casinos in Tunica, Miss., this spring, leaving 4,600 hotel rooms empty for weeks and depriving the county of so much tax revenue that it had to reduce its workers’ hours.

But there are already stirrings of economic activity. Home Depot, whose store in Joplin was destroyed, began selling lumber and other supplies from a parking lot there on Tuesday as it prepared to open a 30,000-square-foot temporary store.

Tamko Building Products was doubly hit. Its plant in Tuscaloosa had to halt production for weeks after the April 27 tornado destroyed a warehouse, blew out windows and knocked out power. Then in May disaster struck closer to home: Tamko’s headquarters are in Joplin, where the company was founded in 1944. The tornado that tore through Joplin left Tamko’s facilities undamaged, but destroyed the homes of roughly 20 of its employees.

But as much as it was buffeted by the storms, Tamko, which donated $1 million to the Greater Ozarks Chapter of the American Red Cross, is well-positioned to prosper once reconstruction fully kicks in. Its main product — roofing shingles — is always in demand after a tornado.

No one would suggest that disasters are a desirable form of economic stimulus. But economists who have studied the impact of floods, tornadoes and hurricanes have found that after the initial anguish and huge economic disruptions, periods of increased economic activity frequently follow as insurance money and disaster relief flow in to jump-start rebuilding.

But reconstruction also attracts vultures who prey on the desperate, through price-gouging or fraud. The Kentucky attorney general, Jack Conway, accused the Marathon Petroleum Company of price-gouging in April when it raised gasoline prices steeply after the flooding Ohio River led to a state of emergency. The company denied the accusation, and a judge denied Mr. Conway’s request to force the Marathon to lower its prices.

Alabama’s attorney general, Luther J. Strange, recorded a public-service announcement warning people not to be conned into paying steep “up-front” fees for construction work or to be lured by “today-only” prices.

“Let us be vigilant against unethical, unprofessional contractors who seek to take advantage of our citizens in their time of need,” Mr. Strange says in the announcement.

Even as the natural disasters eliminated thousands of jobs, the needs of recovery have created others. Companies like Unified Recovery Group, which is clearing storm wreckage in Alabama and Tennessee, are hiring workers and subcontractors to cart off debris. Construction companies are hiring, too. In Tuscaloosa, James E. Latham, chief executive officer of WAR Construction, said his firm had rehired workers who had been laid off during the downturn and had added new employees to prepare for the work ahead, like rebuilding an elementary school.

As insurance claims are paid, a further economic stimulus lies in the shopping that some people will do to replace lost goods.

When researchers studied the economic impact of a deadly tornado that hit Oklahoma City in 1999, they found that the labor market improved after the storm, and not just in the construction sector.

“The fact of the matter is, it created this catalyst for a renewal,” said one of the researchers, Jamie Brown Kruse, director of the Center for Natural Hazards Research at East Carolina University.

Of course, that Oklahoma tornado struck in a very different time, Dr. Kruse noted. The American economy was strong, and people felt confident enough to rebuild and replace what was lost, often with new structures that were better than the old.

Communities, for the most part, are “amazingly resilient,” said Kevin M. Simmons, an economics professor at Austin College and author of “The Economic and Societal Impact of Tornadoes.”

But struggling communities have sometimes been undone by tornadoes. Mr. Simmons pointed to Picher, Okla., a Superfund site that never recovered from a tornado in 2008. “The tornado was basically the last nail in their coffin,” he said.

The flurry of economic activity in a recovery often realigns the jobs market.

After Hurricane Katrina hit the Mississippi Gulf Coast in August 2005, employment dropped steeply, said Marianne T. Hill, a senior economist at the Mississippi Institutions of Higher Learning. By May 2008, however, the area had 99 percent of the total jobs it had before the storm, Ms. Hill said, but the employment makeup had changed. There were more construction jobs and government jobs, and fewer jobs in manufacturing, retail, transportation and, as tourism suffered, leisure and hospitality.

“You get a huge spurt of activity,” Ms. Hill said in an interview, “but it’s very different from what happened before.”

Kevin L. Kliesen, an economist at the Federal Reserve Bank of St. Louis, studied the economics of natural disasters after the Mississippi River flooding of 1993. He began a paper on the subject with a quote from the 19th-century English economist John Stuart Mill, who wondered at “the great rapidity with which countries recover from a state of devastation.”

That may seem a long way off in some places.

Terry Waters, executive director of the West Alabama Chamber of Commerce, said the Tuscaloosa tornado killed 41 people and destroyed or significantly damaged about 650 businesses that employ 7,200 workers. But Mr. Waters said he was proud of the city’s resiliency.

“Every day when I drive out,” he said, “I see more and more debris that’s been removed — front-end loaders on private property scooping up debris and hauling it off.”

6 Responses

  1. […] SEEnatural-disasters-seen-as-spurring-economic-recovery […]

  2. It’s sad that natural disasters are seen as spurring economic recovery. Even as the natural disasters eliminated thousands of jobs, the needs of recovery have created others. As a result of more construction companies hiring, there are more construction jobs.Even though it’s because of horrible circumstance, it will save the day, and potentially my budget. I am so happy by any new Construction Jobs in Alabama, because it means I may have more work. However, it is important to find out which jobs are right for me. That’s where Dodge Projects has proven really helpful. I recently stumbled across them and I was amazed because they have detailed job listings, sorted by state, project and type, which means I can quickly see what jobs are not only available, but perfect for me. You should really take a look.

  3. JUST LIKE HOW ATTORNEYS SEE AMBULANCE LIGHTS AND SIRENS AS WORK OPPORTUNITIES.

    THIS LUCRATIVE MENTALITY OF HOW OTHER PEOPLES’ TRAGEDIES ARE ECONOMY BOOSTERS AND GOOD FOR THE COMMUNITY IS BECOMING MORE INSIDIOUS BY THE MINUTE.

  4. It’s a sad state of affairs when it takes something like a natural disaster to spur economic growth.Whats even sadder is this helps create a false sense of security in people that things are getting better when truthfully it is only a temporary state and not permanent.People need to be really clear in thier expectation levels in regards to this and stay focused on the fact that once restoration is complete all the jobs will be gone and everything will be right back where it started from.

  5. a great and very telling post.

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