11/1/2012 7:30 PM ET|
Rebuilding after Sandy? Maybe not
Home-repair stocks will do well. But what about big projects that might prevent the next disaster? That's a different question entirely.
Sand deposited by superstorm Sandy fills the streets of Jersey Shore, N.J.
Is this any way to run an economy?
In an efficient economy with a rational political class, I'd be recommending shares of cement makers such as Cemex (CX), pump-makers such as Flowserve (FLS) and engineering companies such as Chicago Bridge & Iron (CBI) as post-Hurricane Sandy rebuilding plays.
But instead, casting a despairing eye on U.S. politics, I'm suggesting stocks such as Lumber Liquidators (LL) and Home Depot (HD). (For more on my reasons for buying Lumber Liquidators now, see "16 stocks for the rest of 2012.")
Investing in infrastructure to prevent some of the damage from the next Sandy would be the smart thing to do. But I think our political system is way, way past doing the smart thing.
In 1798, South Carolina Rep. Robert Goodloe Harper could fend off French threats to seize American ships unless the U.S. paid a bribe with the heroic "Millions for defense but not one cent for tribute."
Today, our motto is more like "Millions in insurance payouts for new hardwood floors but not a cent for infrastructure."
Counting the cost
What will be the cost of Hurricane Sandy?
In human life, more than 80 have died as a result of the storm.
The consensus estimate of physical damage seems to be around $20 billion, although I've seen figures as low as $7 billion and as high as $50 billion. The actual total is very dependent on how much damage needs to be repaired in New York's 108-year-old subway system. Big damage there could easily push the price tag past $40 billion. (By contrast last year's Hurricane Irene cost $10 billion. Katrina in 2005 is estimated at $100 billion.)
About $7 billion to $8 billion of the damage from Sandy is covered by insurance, estimates say.
The worst damage in Manhattan, where I live, came when a 13-foot storm surge swamped the southern end of the island. A giant transformer station at East 14th Street exploded, knocking out power to most of lower Manhattan. The water filled the Brooklyn-Battery tunnel, poured into the foundations of the under-construction World Trade Center complex and then backed up in the train tunnels under the Hudson River. And, of course, water poured into the New York subway system. Early estimates were that it could take a week or more to pump out the system and restore full service. (Some trains did start running today.)
The damage wasn't limited to Manhattan. The storm knocked out power to 8 million households. Power outages and flooding caused sewage-treatment plants throughout the region to fail, dumping untreated sewage into rivers. In Howard County, Md., for example, the storm sent 2 million gallons of sewage an hour into the Little Patuxent River. In Atlantic City, N.J., Hurricane Sandy ripped a huge hole in the city's famed boardwalk. A fire in the Breezy Point area of Queens turned 111 houses into damp cinders. Hoboken, Newark and Jersey City, N.J., all flooded. Hoboken's mayor estimated that 20,000 people were stranded in their homes by floodwaters. Waves and high winds pushed the damage as far west as Chicago. In West Virginia, Hurricane Sandy turned into a killer blizzard.
Nor was the damage limited to the United States. Hurricane Sandy destroyed 15,000 homes in Cuba. In the Dominican Republic, 17,500 people were forced from their houses. More than 17,000 people in Haiti were forced to flee.
Shots of row after row of cabs in Hoboken, submerged to their windshields, were reminders that the damage from the storm wasn't limited to the destruction of property. Livelihoods, like each of these cabs, took brutal blows. In fact, the economic damage from Sandy may turn out to be even greater than the physical damage.
The storm could cut economic activity in the fourth quarter by $25 billion, according to IHS Global Insight. Wells Fargo put the hit to output at $30 billion. Some of this activity isn't lost to the U.S. economy; it is simply delayed, with Sandy reducing the gross domestic product by as much as 0.2 percentage point in the fourth quarter and then adding to growth in the first quarter of 2013.
Prevention is costly
Some of this damage could have been prevented. And some of it, on the economic numbers, is and was worth preventing. But deciding what is worth doing -- in economic terms -- is a matter of assumptions and arguments. And the bigger a project's price tag, the louder the arguments become.
So, for example, the winds from Hurricane Sandy had barely died down before the talk about building sea gates intensified in New York. A 2004 study by the Storm Surge Research Group at the State University of New York at Stony Brook recommended building three sea gates -- at the upper end of the East River near the Throgs Neck Bridge, under the Verrazano-Narrows Bridge and at the mouth of the Arthur Kill between Staten Island and New Jersey. That project would cost an estimated $10 billion. And at the time and for years afterward, the biggest argument against spending that money was that no hurricane had made landfall directly in New York City in more than a century.
Sandy has changed this calculus. (As New York Gov. Andrew Cuomo has put it, after Irene and Sandy, New York seems to be experiencing a hundred-year storm every year or two.)
But I doubt that it has changed the calculus enough -- yet.
For spending $10 billion to make to economic and political sense, you have to assume that indeed something has changed in the global climate and that rising sea levels and warming of the air and water are combining to increase the frequency of big storms and make them more devastating when they occur. As you can tell from the silence about climate change from the presidential campaigns this year, we're nowhere near a consensus on that issue. Heck, we're not even having an intelligent discussion about it.
(For an intelligent discussion of the statistics of climate change see Chapter 12 of Nate Silver's new book, "The Signal and the Noise: Why So Many Predictions Fail -- but Some Don't," which you can find on Bing. There are also scientists who worry about the effect of sea gates on the natural flushing of pollutants in New York's coastal waters and the effect on aquatic ecosystems. My guess is that if we ever decide to build sea gates, it will be done in a moment of panic and the attitude toward these objections will be: "Aquatic ecosystems be damned. Full speed ahead.")
If we go down the price list, we pretty quickly get to territory where the cost of doing something to improve infrastructure -- and not just in New York and environs -- gets very reasonable compared with the cost of doing nothing.
The Metropolitan Transportation Authority, which operates the subways, has begun to spend money -- $34 million in its recent budget -- to raise ventilation grates, to design entrances to keep floodwater from entering the system, and to increase pumping capacity. The agency could easily have spent more if the perennially strapped system had more to spend. Talk to any business in any borough of New York still without subway service about how much that would be worth to them.
Consolidated Edison, our electric utility, estimates that installing submersible switches and moving high-voltage transformers above ground level would cost at least $250 million. In the aftermath of Sandy, that seems like a bargain. The utility has spent about $24 million on changes like these in flood zones since 2007.
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The funniest line I ever heard from the late, great George Carlin:
"I have a message for the people of New Orleans. If you want to live five feet below sea level, join the Navy."
And the old rule will hold true until the end of time: "You can't fix stupid."
We cannot make a United States of Holland. You cannot build a levy around the coast lines of a whole world. And this is exactly what some authorities are suggesting, regardless of common sense, regardless of the facts sitting right in front of our eyes.
Once again, we have been reminded of the most obvious fact -- that nature (like an ocean) is going to go where ever nature wants. Placing the majority of a country's population along one coast line that was suceptible to hurricanes was just looking for trouble.
What we should be doing now is asking ourselves how would you honestly classify the investment value of a city, like New Orleans, that has levies on all sides and resides well below the level of the ocean, and will one day flood permanently? And in sorting through the debris that is New York City and Hoboken, how do we avoid the fact that we have more than just one New Orleans right here in in the present to deal with.
This whole business about "shining cities by the sea" said nothing about how dry they would be.
I too live where I can look out my window and see the surf / fishing /diving conditions along the ocean. The view is spectacular, neighbors are great, and there is nothing better than watching that sun rise every morning with that first cup of coffee. HOWEVER- My windstorm & flood insurance are very expensive, and that's on top of my regular home owners insurance. I have metal, roll down shutters that seal up the house but again, they're very expensive. If you want to live on the coast, or near it, you have to invest or buy those things to protect your property & your life. When the victims of Sandy rebuild, and they will, they should consider all of these important to maintain their lifestyle.
Here in Florida, we are well seasoned in hurricane preparation and if anyone would like some advice, just ask .
The problem seems to be we spend so much on the politically popular or nonessential stuff that nothing is left for what is needed. What makes this even worse is that both sides are dug in and will not move.
hehe unemployment "inched" up to 7.9, you people kiddin' or what?!! seriously now! INCHED!!?? ok, ok you want to talk INCHED? it INCHED up from 17% to 18%, there you go, there's your INCH you idiot whacko marxist loony libs!
man, if only Sandy blew away all the insane libs in media and gov't and left only logical humanity behind, can you imagine how great this nation would actually be?
The following came from ABC News Again, NOT FROM FOX!
When the mainstream media starts outing Obama, you know The Chit is about to Hit the Fan!
They know that if they hide this until after the election, what little cred they have left, is TOAST!
Republicans on the House Committee on Oversight and Government Reform have released new documents backing up claims by security personnel previously station in Libya that there was a shortage of security personnel in Benghazi.
contain previously unreleased cables from Ambassador Stevens and his staff reflecting concerns about safety in the country.
The U.S. State Department did not have an immediate comment.
One signed by Stevens and titled “LIBYA’S FRAGILE SECURITY DETERIORIATES AS TRIBAL RIVALRIES, POWER PLAYS AND EXTREMISM INTENSIFY,” dated June 25, 2012, assess the increase in violence. ”From April to June, Libya also witnesses an increase in attacks targeting international organizations and foreign interests,” Stevens wrote, describing attacks on a United Nations official in Benghazi, International Committee for the Red Cross buildings in Benghazi and Misrata, and IED at the mission in Benghazi, and RPG fired at the British Ambassador’s convoy, and an attack on the consulate of Tunisia.
Here’s CBS’ latest release on Benghazi, NOT FROM FOX;
"CBS News has released a clip of an interview by Steve Kroft of 60 Minutes on Sep. 12 with President Barack Obama that indicates Obama knew the assault on the U.S. consulate in Benghazi, Libya was a premeditated terror attack–and suggests the White House later deceived the public by blaming protests against an anti-Islam video. CBS chose not to air the clip for over a month–but did air Obama’s attack on Romney that same night."
"CBS News has learned that during the Sept. 11 attack on the U.S. Mission in Benghazi, the Obama Administration did not convene its top interagency counterterrorism resource: the Counterterrorism Security Group, (CSG).
The CSG is the one group that’s supposed to know what resources every agency has. They know of multiple options and have the ability to coordinate counterterrorism assets across all the agencies,” a high-ranking government official told CBS News. “They were not allowed to do their job. They were not called upon.“
NOBODY placed the population anywhere.......people, at least for now, are FREE to live where they want. Many chose the coast. They will suffer the consequences, then freely decide to stay or leave.
That's the price of freedom. Many nitwit "I know what's best" types will scream for laws, taxes, and other ways to force and control peoples choices on movement. To the extent that they succeed, we loose as a free people.
After the hyper-storm years or 04' & 05', the weather channel had a special program called "What If?" It chronicled a 'what if' storm event to impact New York City. Anyone remember that ? Kind of scary now that this prediction is a reality . To say, "oh-it's just a cat 1, it won't be bad" is fools thinking. Hurricane Wilma in 05' was a cat 1 and flooded 60 % of Key West, and the Keys, half of South Florida (some were miles from any coast line) & knocked power out for day's on end everywhere here. This storm, Sandy, was a wake up call for anyone living near our coast lines (West coast too).
Now we're seeing the break down of raw emotions of hurting, grieving people trying to cope with thIs destructive event. If you can volunteer some time to go and help, please do - we're all
ONE HUMAN FAMILY !
If you can't travel there, send monies, food, clothing, medical needs, or whatever you can think of-they have nothing.
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