Sunday Stew: Katrina in the Spotlight
Turn on CNN -- the conditions you see take you to an imaginary Third World country called Biloxi.Except it is not imaginary.
It's America, home of the starved and land of the de-hydrated.
Katrina is a terrible disaster which is affecting millions of people in the South.
Meanwhile, the rest of America feels the effects of Katrina at the pump, as well as in their hearts.
Katrina was a natural disaster that became a legal, moral, economic, medical, political, racial, environmental, military and humanitarian disaster overnight.
Worse, there has been absolutely no sign of leadership down there to restore order and give those distraught souls a sense of hope.
Only in America can you put together a rock concert faster than you can transport water to dying people.
After the Twin Towers fell on that clear & crisp September morning, millions of New Yorkers -- myself included -- felt that Rudy Guliani would carry them through it all.
New Orleans, in contrast, has not even an inkling about where its future may lie.
At least where the capital markets are concerned, let's look forward.
Looking forward is what Americans do best.
The US stock market is a resilient beast.
Granted, we stated 2 weeks ago that our outlook on the US Economy -- and its barometer, the stock market -- was bleak.
Then Katrina hit.
And that changed everything:
...Important lows in stock prices are often accompanied by specific and usually frightening events in the economy or in world affairs: bankruptcies, wars, terrorist incidents, and natural disasters.Ironically, Katrina will create jobs and awaken the dormant investor who forgot stocks are the best asset class in which to invest.These events serve to crystalize bearish sentiment in stock market and shake out the weakest of the longs, the people who sell when they read scary headlines in the newspaper.
Once the news has forced these sellers to act, the way is cleared for a big move upward.
The current situation is no different.
Newspaper headlines are screaming disaster, as is cable and network tv. When the media devote any space to economic events, they talk about reduced GDP growth, high and rising gasoline prices. The media are ecouraging people to sell stock, so is the market dropping?
Clearly the answer is no.
The real estate bubble will pinch, debt will accrue (the other thing Americans do best -- borrow), and bombs will continue to mar our morning commutes.
That will continue.
But something else will continue.
The rise of the Dow, proof of our untrammeled faith in the US economy.
As far as the Big Easy is concerned, it too will pick up the pieces.
Whether it's the Big Apple after 9/11 or Chicago after the Great Fire, American cities are distinguished by their ability to rebuild themselves.
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