Hurricane Sandy Is Bullish for the Economy
NEW YORK (TheStreet) -- The usual thinking is that human genes must have been loaded with an aversion to crisis. But what's often not discussed is that we actually get excited about crisis.
We didn't get to where we are today by sitting on the couch and gulping beer; we survived countless crises big and small, collectively and individually, over the evolutionary scale and in everyday life.
Look at the media coverage of hurricane Sandy. You could see the sparkles in the eyes of politicians and newscasters when they talked gravely about it, nonstop.
People are excited about this. Despite the tragic loss of life and property that will happen in some areas, let's face it: Deep in our hearts, we don't believe whatever damage we incur will really matter.
There will be insurance. There will be emergency crews. There will be neighbors and community help. There will be government subsidies. It is, viewed in a cold-hearted but accurate way, just a big, collective roller-coaster ride. People are genuinely scared. People are also genuinely excited, if only secretly. The meaning of crisis has gone through tremendous inflation in the developed world. Whereas it used to mean life-or-death or at least grave hardship, nowadays in the developed world it means a manageable inconvenience for most people involved. This must be why disaster movies are popular in the developed world but not so popular in the developing world; out there it's too real for comfort. In an economy not constrained by resources, such as that of the U.S., limited crisis means only two things at the statistical level: stimulus to individual and government spending; and stimulus to jobs.
Insurance companies will suffer in the short term, of course. But even they likely will benefit in the longer term as crises make people value the products they sell even more. Furthermore, since Sandy has been so hyped for so long, if it does not live up to the hype, even insurance companies will get a boost. In other words, in the economic sense, destruction is constructive before reaching the resource-constraint boundary. It is no different from a boy's old, beat-up toy car finally getting totaled; as long as his parents can buy him a new one without meaningful impact to the family's lifestyle, it's a good thing, again not considering the emotional/sentimental aspect.
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV