Guest Post: The Tremendous Economic Benefits Of Superstorm Sandy

Tyler Durden's picture

Submitted by Jim Quinn of The Burning Platform

The Tremendous Economic Benefits Of Superstorm Sandy

The public relations propaganda campaign to convince the ignorant masses that Sandy’s impact on our economy will be minor and ultimately positive, as rebuilding boosts GDP, has begun. I’ve been hearing it on the corporate radio, seeing it on corporate TV and reading it in the corporate newspapers. There are stories in the press that this storm won’t hurt the earnings of insurers. The only way this can be true is if the insurance companies figure out a way to not pay claims. They wouldn’t do that. Would they?

It seems all the stories use unnamed economists as the background experts for their contention that this storm will not cause any big problems for the country. These are the same economists who never see a recession coming, never see a housing collapse, and are indoctrinated in Keynesian claptrap theory.

Bastiat understood the ridiculousness of Kenesianism and the foolishness of believing that a disaster leads to economic growth.

Bastiat’s original parable of the broken window from Ce qu’on voit et ce qu’on ne voit pas (1850):

Have you ever witnessed the anger of the good shopkeeper, James Goodfellow, when his careless son has happened to break a pane of glass? If you have been present at such a scene, you will most assuredly bear witness to the fact that every one of the spectators, were there even thirty of them, by common consent apparently, offered the unfortunate owner this invariable consolation—”It is an ill wind that blows nobody good. Everybody must live, and what would become of the glaziers if panes of glass were never broken?”

Now, this form of condolence contains an entire theory, which it will be well to show up in this simple case, seeing that it is precisely the same as that which, unhappily, regulates the greater part of our economical institutions.

 

Suppose it cost six francs to repair the damage, and you say that the accident brings six francs to the glazier’s trade—that it encourages that trade to the amount of six francs—I grant it; I have not a word to say against it; you reason justly. The glazier comes, performs his task, receives his six francs, rubs his hands, and, in his heart, blesses the careless child. All this is that which is seen.

 

But if, on the other hand, you come to the conclusion, as is too often the case, that it is a good thing to break windows, that it causes money to circulate, and that the encouragement of industry in general will be the result of it, you will oblige me to call out, “Stop there! Your theory is confined to that which is seen; it takes no account of that which is not seen.”

 

It is not seen that as our shopkeeper has spent six francs upon one thing, he cannot spend them upon another. It is not seen that if he had not had a window to replace, he would, perhaps, have replaced his old shoes, or added another book to his library. In short, he would have employed his six francs in some way, which this accident has prevented.

Economists and MSM faux journalists don’t want you to think for yourself. If you just consider some basic situations that are happening or will happen to average people throughout the Northeast, you’ll understand that this storm will have a huge NEGATIVE impact on the economy.

  • Small stores, restaurants, and thousands of other businesses were shut down for at least two days and some will be closed for a week or more. These businesses employ hundreds of thousands of hourly workers. These businesses earned no revenue, therefore their profits were reduced. The hourly workers did not get paid. Therefore, they have less money to spend for clothing, tech gadgets, food, etc. Both the business and the workers will pay less taxes to the government.
  • The reduced revenue at retailers due to being closed and reduced spending by customers will cause them to layoff more workers or in the case of smaller retailers, go out of business altogether.
  • The damage caused by the storm will result in insurance companies providing billions in claim payouts. This will reduce their earnings, causing them to layoff employees in order to meet their quarterly earnings expectations. Some smaller insurance companies may go out of business.
  • Anyone with a tree down in their yard, damage to their fence, roof damage, etc that is not covered by insurance will have to spend hundreds or thousands of dollars on fixing the damage. This is money they won’t spend on Christmas presents next month.
  • Many people do not have the savings to fix the damage to their houses. They will put the costs on their credit cards paying 15% interest to the criminal Wall Street cabal.
  • Politicians and government drones will declare we must rebuild and help those in need. They will approve $20 billion of “Federal” disaster relief. But, we all know the $20 billion does not exist. It will be borrowed from future generations. It will just be added to our current $16.3 trillion tab. We will pay interest on this $20 billion FOREVER. The true cost of the $20 billion relief will be $30 billion after decades of accumulated interest. It’s like an ignorant American taking a $20,000 vacation, putting it on their credit card and making the minimum payment for eternity.

You may realize that the only beneficieries of this tragedy will be the issuers of debt. That’s right, the criminal Wall Street banks will earn more interest as desperate Americans have to use credit cards to survive. The destroyed automobiles will be replaced with autos financed by Wall Street. Businesses and homeowners will go further into debt making repairs.

Considering the country has been in recession since June, this disaster will be the final straw that breaks the camel’s back. The powers that be will try to keep the broken economy fallacy going as long as they can, but anyone capable of thinking realizes the country is in the shitter. The mood continues to darken. The storm clouds continue to swirl and a bad moon is rising. But don’t worry, unnamed economists say everything is just fine. Fix that window and boost the economy.

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gdogus erectus's picture

The only Sandy stimulus he's going to get is in his ass crack from visiting the beach.

markmotive's picture

Don't tell me PK doesn't know about this...can't be happening.

Peter Schiff on Broken Window Fallacy:

http://www.planbeconomics.com/2012/10/30/peter-schiff-and-broken-window-...

old naughty's picture

"...Not cause any problem for the country..."

That's just like morning after 3.11 tsunami, Japanese e-con-o-mist came out telling the world "nuclear is good and booming, not causing any problem..."

And you don't need a nobel prize to do/say that !

Has he got a hand in declaring TS just before Sandy landed? Lucky/evil.

salvadordaly's picture

I believe that was "Bagdad Bob"! I could be wrong?

redpill's picture

Paul Krugman is an arrogant dumbfuck who should be kicked in the crotch repeatedly. Then we'll ask if his payments to the plastic surgeon who has to try to reassemble his twig and berries represent a net economic positive. Fucker.

economics9698's picture

Damn redpill remind me not to piss you off.

macholatte's picture

 

WTF!!!

Doesn't anybody draw upon historical precedent anymore? Like, uh, is this the first major hurricane or natural disaster in the last, say, hundred years? Do we need to guess at what economic impact it will have? Gimme a break!

 

A word to the wise ain't necessary - it's the stupid ones that need the advice.
Bill Cosby

 


GetZeeGold's picture

 

 

That picture of Krugman makes him almost look sane.......almost.

aint no fortunate son's picture

In my email from BAC last night - and I live in fucking FLORIDA!

Dear Valued Bank of America Customer,

We hope this message finds you and your family safe and well.

While the actual storm may be winding down, it's often in the days after that its effects continue to be felt, as personal finances take a back seat to clean up and repair.

We're here to help in any way we can, one customer at a time. If you or someone you know was affected by severe storms and floods, our Customer Assistance Program can help. You may qualify to:

  • Receive credit line increases on your existing Bank of America Visa® card and MasterCard®.
  • Modify or extend payments on loans, credit cards or lines of credit.
  • Receive special assistance with lost, missing or late loan or card payments.
  • Avoid early withdrawal penalties on bank certificates of deposit (CDs).
  • Receive a refund on any overdraft, non-sufficient funds (NSF) and non-Bank of America ATM fees incurred as a result of storm conditions.

Then there was lot's of touchy feely caring sensitive bullshit after that.

Fuck you Moynihan.

 

Big Slick's picture

Line of the night is from a Coney Island looter (who sums up our thoughts about Timmy and The Bernanke perfectly):

"Look, they've been looting our wallets for too long," said a young male who claimed he helped himself to a TV at the Rent-A-Center.   “It's about time we start taking this sh—back," the youth, who identified himself as Jesse James, told the Daily News.

Read more: http://www.nydailynews.com/new-york/brooklyn/looters-target-coney-island-sandy-article-1.1195080#ixzz2AyWqLAIT

 

 

steve from virginia's picture

 

 

Krugman has nothing to say about the hurricane other than a report about him trapped in his own house by a downed power line.

 

Certainly nothing about any 'broken windows' ...

 

see for yourselves:

 

http://krugman.blogs.nytimes.com/

Bay of Pigs's picture

Yeah Steve, he's a real oracle of truth and enlightenment isn't he?

We're all well versed with Krugmans economic heresy.

 

Michaelwiseguy's picture

I think it will be hilarious when Progressers and Climate Changers get increases in their electric and tax bills in the democrat states to pay for this natural disaster, enhanced by Geo Engineering.

booboo's picture

Yes and of course Cuomo just announced that the Hurricane Deductible would not be allowed to kick in on his precious "yawkers" so those increases WILL take that into consideration. The insurers will get their pound of flesh, if not off the ass, then the face will do.

But back on subject, where does the broken window theory come into play here, a 3% deductible is greater then a fixed $1000 deductible? but, but but I thought more expenditures on broken windows (insurance deductibles) is Goooood!

ebworthen's picture

redpill: Agreed!

Krugman is the potato with a beard.

He needs to be peeled, baked, topped with butter, sour cream and chives then served to senior citizens who have lost 50% of their savings since 2008.

Dumb fucking potato!

350 Degrees!

One Hour!

Sour Cream!

Chives!

NorthPole's picture

ok, but pull out his beard first.

flacon's picture

I've been beating my head silly trying to get my older brother to understand the simple concept of the broken window fallacy. He still clings to the notion that "some productive good will arise because demand is stimulated and overall it is good for the economy". What you have to know is that he has a PhD from an accredited ivy leage university. Does he have any hope?

akak's picture

I still think every so-called "Ivy League" (would that be poison ivy?) university should have signs over their gates declaring "Abandon (moral and intellectual) hope, all ye who enter here".

economics9698's picture

"He has a PhD from an accredited ivy league university."  That’s a fucking heavy dose of brainwashing from the Yids, probably no hope for him.  Sorry dude you lost your brother.

 

Acet's picture

Modern teaching teaches the same mental posture as modern management uses: is all about the visible and easilly measurable - if you can't see it or it's hard to gage it can safelly be ignored.

Hence things like "opportunity cost" are ignored, just like things like worker morale, customer loyalty and tail risks (the "known unknows" and the "unknown unknowns").

And so the economy is in the shitter ...

 

 

cranky-old-geezer's picture

 

 

He still clings to the notion that "some productive good will arise because demand is stimulated and overall it is good for the economy".

It's only good for banks when this artificial "stimulus" is funded with borrowed money.

Taking the broken window theory to its logical extreme, the government could borrow 10 trillion dollars and do all the infastructure maintenance / repair / upgrades needed across America.  It would create lots of jobs, boost GDP, boost tax revenues, all that.

Sounds great doesn't it?   

But printing 10 trillion dollars and dumping it into the economy would cause massive inflation, maybe hyperinflation, and might kill the dollar once and for all. 

You can't run an economy on borrowed / printed money very long.  It causes inflation, then hyperinflation, then destroys the currency eventually.

Krugman and other Keynes worshippers never talk about that part.  They never mention how the currency is being debased from all the printing.

Hell let's go all the way.  Borrow a hundred trillion and give everybody 30 billion dollars to spend however they want.  Now that's stimulus.

But printing a hundred trillion dollars and dumping it into the circulating money supply would destory the dollar instantly.  It would be Zimbabwe overnight, where 30 billion might buy a loaf of bread.

Clowns on Acid's picture

flacon - kick your brother in the balls. When the fat feck gets up to chase you, start running and shout "I was just trying to get you to exercise".

glenlloyd's picture

Just ask him whether he'd enjoy paying $1000 to have a fallen tree hauled off or spend it on something else of his own choosing.

How people cannot understand how the BW fallacy works is beyond me..it's like people I know who say they feel more secure now than they did four years ago but now have about $50k more in debt....how can any sane person say that?

dogbreath's picture

I read some birth order psycology book one time and it said that first borns were the bag likkers of the status quo of the family.  Of course they have power over you and more so depending on the age difference.  He went all in on the status quo.   sucks to be him.

xtop23's picture

actually it does stimulate growth somewhat. the problem is the law of diminishing returns and the unavailability of that capital for lasting investment / technological innovation / et al. its the same story with all stimulus packages. government does only one thing with capital and that is fuck up ( whether by idiocy or design ) where its allocated.

BeaverFever's picture

Krugman's so excited that he's giving free handjobs to anyone named Sandy for the next 2 weeks. For an appointment please call 1-800-Me-Sandy.

Debugas's picture

ask him to pay you in advance - first for digging the ditch then for filling it up. Upon receiving the money do nothing but tell him you have already done all the work (the result is that nothing changed right ?)

BooMushroom's picture

Tell him that for a small fee of $1, you will go to his house, and break out all the windows! And for an additional $5, you will go inside, take half his stuff, and mess up or break everything else.
$6 is such a small price to pay for such stimulus.

If he balks, tell him you are so concerned about his finances that you will even do it for free.

monoloco's picture

It's no different than the dumbfucks who think war is good for the economy.

Bear's picture

Love the new designation ... Dr. Troll

Eireann go Brach's picture

I only had one request from the Storm Sandy, that Paul Krugman was washed out to sea!

NidStyles's picture

Hard to remove stains never just float off...

akak's picture

It takes more than a shower to get rid of a tick.

Manthong's picture

I submit that toxic sludge should be incinerated, not dumped in the ocean.

RockyRacoon's picture

Krugman seems to be the poster boy here, but quotes are lacking.  Wouldn't it be fair to at least offer a qualifying remark by the goofy bastard -- just to be equitable.  I'm not saying there aren't any quotes, just none here, where they should be.  Lest I be misunderstood, he's not on my list of economic heroes.  I just don't think the article is fleshed out without a connection.  Poor journalism, great sensationalism.

knukles's picture

Same noted and concluded

Ridicule for pertinent reasons is one thing, judgmentalism for self aggrandizement is another.

Manthong's picture

We know what Jim meant, but for the record, Bastiat didn’t know anything about Keynesianism per se because he preceded Keynes by the better part of a century.

However..

“OK, Paul Krugman has not claimed that Hurricane Sandy will make us rich or revive the economy, but..”

“Krugman actually did succumb to this fallacy 11 years ago, as Reason.com points out:

The ultimate example of broken-window lunacy comes from Nobel Prize-winning economist Paul Krugman. On September 14, 2001, Krugman used his New York Times column to lecture Big Apple residents about the upside of the utter destruction of the World Trade Center and a good chunk of lower Manhattan just a few days earlier: "Now, all of a sudden, we need some new office buildings...the destruction isn't big compared with the economy, but rebuilding will generate at least some increase in business spending.":

http://krugman-in-wonderland.blogspot.com/2012/10/will-sandy-revive-economy-yeah-right.html

In my book, that qualifies him for Bastiatic ridicule until they cart his philosophical carcass off to the landfill of economic history.

Cathartes Aura's picture

if you're looking for a fleshed out thread, probably need to head on over to the "Ethics of Halloween" piece. . .

cranky-old-geezer's picture

 

 

Sensationalism?

Didn't Krugman say something about an alien invasion being great for the economy?

Quoting a madman is good journalism?

Mike in GA's picture

The picture of the Krugman was bad enough; I don't need no stinkin' quotes!

Jim Quinn's picture

“This is hard to get people to do, much better, obviously, to build bridges and roads and healthcare clinics and schools. But my proposed, I actually have a serious proposal which is that we have to get a bunch of scientists to tell us that we’re facing a threatened alien invasion, and in order to be prepared for that alien invasion we have to do things like build high-speed rail. And the, once we’ve recovered, we can say, “Look, there were no aliens.” But look, I mean, whatever it takes because right now we need somebody to spend, and that somebody has to be the U.S. government.”

Paul Krugman

“Alan Greenspan needs to create a housing bubble to replace the NASDAQ bubble.”

Paul Krugman

“It seems almost in bad taste to talk about dollars and cents after an act of mass murder. Nonetheless, we must ask about the economic aftershocks from Tuesday’s horror. These aftershocks need not be major. Ghastly as it may seem to say this, the terror attack – like the original day of infamy, which brought an end to the Great Depression – could even do some economic good.”

Paul Krugman – 9/14/01

 ”We have a world-class budget deficit not just as in absolute terms, of course — it’s the biggest budget deficit in the history of the world — but it’s a budget deficit that, as a share of GDP, is right up there.”

Paul Krugman warning about Bush’s $400 billion deficit in 2004

RockyRacoon's picture

Better late than never, Mr. Quinn.   I guess you assumed that we were all on the same page.  For regular ZH readers that would be the case, but your literary creation would have been much more credible with the quotes included.  Thanks for posting them.

Jim Quinn's picture

It was an article written in 30 minutes. It isn't a literary creation. It wasn't about Krugman. I don't give a shit about your opinion of credible. Try not being a pompous ass.

RockyRacoon's picture

Maybe you should allow more time to focus on your future pieces?  My criticism was directed at the piece posted, that's all.  And my criticism remains valid.  If Krugman wasn't the poster boy why is his ugly mug featured?  Since I don't follow you around like a wide-eyed devotee I can't be expected to read between the lines.  I only judge the black part.  You did return with the missing pieces, and I thanked you for that.  I see that  you added some bolstering Krugmanese to your website post of this piece.  Wonder why?

Oh, and being a pompous ass is my raison d'etre

RockyRacoon's picture

I was trying to raise the level of civility, but it didn't seem to work.  I guess ole Jimmy is a bit stressed.

PLove's picture

All who believe Sandy was the work of Mother Nature are brain dead and fully deserve the Sheenie Shit Storm coming.