The Panic of 1873

#1

Rasputin_Vol

"Slava Ukraina"
Joined
Aug 14, 2007
Messages
70,813
Likes
38,872
#1
With Hurricane Harvey behind us and Irma coming right behind it, thought it would be interesting to have a little history lesson. Can this economy survive this?

Panic of 1873 - Wikipedia

In September 1873, the U.S. economy entered a crisis. This followed a period of post-Civil War economic over-expansion that arose from the Northern railroad boom. It came at the end of a series of economic setbacks: the Black Friday panic of 1869, the Chicago fire of 1871, the outbreak of equine influenza in 1872, and demonetization of silver in 1873.
 
#2
#2
I personally believe disaster bolsters the economy. Interested to see where the labor comes from for the massive construction that will be needed. I think it'll be a good opportunity for Trilump to implement a temporary work visa program that actually works for the laborer and the employer.
 
  • Like
Reactions: 1 person
#5
#5
I personally believe disaster bolsters the economy. Interested to see where the labor comes from for the massive construction that will be needed. I think it'll be a good opportunity for Trilump to implement a temporary work visa program that actually works for the laborer and the employer.

What is the broken window fallacy? - INVESTOPEDIA

In Bastiat's tale, a man's son breaks a pane of glass, meaning the man will have to pay to replace it. The onlookers consider the situation and decide that the boy has actually done the community a service because his father will have to pay the glazier (window repair man) to replace the broken pane. The glazier will then presumably spend the extra money on something else, jump-starting the local economy. (For related reading, see Economics Basics.)

The onlookers come to believe that breaking windows stimulates the economy, but Bastiat points out that further analysis exposes the fallacy. By breaking the window, the man's son has reduced his father's disposable income, meaning his father will not be able purchase new shoes or some other luxury good. Thus, the broken window might help the glazier, but at the same time, it robs other industries and reduces the amount being spent on other goods. Moreover, replacing something that has already been purchased is a maintenance cost, rather than a purchase of truly new goods, and maintenance doesn't stimulate production. In short, Bastiat suggests that destruction - and its costs - don't pay in an economic sense.
 
  • Like
Reactions: 3 people
#6
#6
Panic of 1907 - Wikipedia

When U.S. President Andrew Jackson allowed the charter of the Second Bank of the United States to expire in 1836, the U.S. was without any sort of central bank, and the money supply in New York City fluctuated with the country's annual agricultural cycle. Each autumn money flowed out of the city as harvests were purchased and—in an effort to attract money back—interest rates were raised. Foreign investors then sent their money to New York to take advantage of the higher rates.[6] From the January 1906 Dow Jones Industrial Average high of 103, the market began a modest correction that would continue throughout the year. The April 1906 earthquake that devastated San Francisco contributed to the market instability, prompting an even greater flood of money from New York to San Francisco to aid reconstruction.[7][8] A further stress on the money supply occurred in late 1906, when the Bank of England raised its interest rates, partly in response to UK insurance companies paying out so much to US policyholders, and more funds remained in London than expected.[9] From their peak in January, stock prices declined 18% by July 1906. By late September, stocks had recovered about half of their losses.
 
  • Like
Reactions: 1 person
#7
#7
Cleaning it up will stimulate business for some:

Analog Devices and Goodyear (new vehicles)

American Axle (GM truck drivetrain components)

Oil services: Halliburton / Schlumberger / Fluor / Flowserve / Jacobs / KBR

Infrastructure: Cemex / Vulcan / Martin Marietta Materials

Caterpillar

United Rentals

Home builders (D.R. Horton is HQ'd in Texas) / lumber producers / building materials (Fastenal / Fortune Brands / Johnson Controls / Masco / Sherwin-Williams)

Waste Connections / Waste Management / Clean Harbors / Stericycle / Republic

Home Depot / Lowe's
 
Last edited:
#10
#10
How much is going to get repaired when it comes to residentially? Only what, 15% of affected residences had flood insurance. Most of these people weren't located in flood zones, so why bother with flood insurance?
 
#12
#12
Cleaning it up will stimulate business for some:

Analog Devices and Goodyear (new vehicles)

American Axle (GM truck drivetrain components)

Oil services: Halliburton / Schlumberger / Fluor / Flowserve / Jacobs / KBR

Infrastructure: Cemex / Vulcan / Martin Marietta Materials

Caterpillar

United Rentals

Home builders (D.R. Horton is HQ'd in Texas) / lumber producers / building materials (Fastenal / Fortune Brands / Johnson Controls / Masco / Sherwin-Williams)

Waste Connections / Waste Management / Clean Harbors / Stericycle / Republic

Home Depot / Lowe's

I like where your mind is at. Quick guide on how to profit from other people's misfortune
 
  • Like
Reactions: 1 person
#13
#13
Expect inflation too. Building materials will go up rather quickly. We'll all pay through higher insurance premiums.
 
#14
#14
Cleaning it up will stimulate business for some:

Analog Devices and Goodyear (new vehicles)

American Axle (GM truck drivetrain components)

Oil services: Halliburton / Schlumberger / Fluor / Flowserve / Jacobs / KBR

Infrastructure: Cemex / Vulcan / Martin Marietta Materials

Caterpillar

United Rentals

Home builders (D.R. Horton is HQ'd in Texas) / lumber producers / building materials (Fastenal / Fortune Brands / Johnson Controls / Masco / Sherwin-Williams)

Waste Connections / Waste Management / Clean Harbors / Stericycle / Republic

Home Depot / Lowe's

Broken window fallacy?
 
  • Like
Reactions: 1 person
#16
#16
With Hurricane Harvey behind us and Irma coming right behind it, thought it would be interesting to have a little history lesson. Can this economy survive this?

Panic of 1873 - Wikipedia

Gold and Silver have had a decent run lately. This clean up will have to go on the credit card too. Raising the debt ceiling again in the next couple of weeks. Just a short matter of time before we have to inflate this sucker away.
 
#17
#17
Gold and Silver have had a decent run lately. This clean up will have to go on the credit card too. Raising the debt ceiling again in the next couple of weeks. Just a short matter of time before we have to inflate this sucker away.

Make sure to mention this to the people in here calling this a blip and saying it is only 1% of GDP. We are not paying for this in real time, but on credit.
 
  • Like
Reactions: 1 person
#20
#20
How much is going to get repaired when it comes to residentially? Only what, 15% of affected residences had flood insurance. Most of these people weren't located in flood zones, so why bother with flood insurance?

Something to consider..... if your home is about to be flooded or in the process of being flooded..... set that thing on fire
 
  • Like
Reactions: 3 people
#25
#25
Broken window fallacy?

Probably so. I listed several companies that should benefit from the resulting economic activity that follows the destruction by Harvey. But there will be obvious industries that will have set backs... most notably companies in the upstream and midstream oil business. Refiners are losing revenue. Drillers can't pump as much with the demand for crude depressed. Pipelines and shipping companies are losing revenue. Actually Halliburton and Schlumberger should maybe be omitted from my list since the new business as a direct result of the destruction probably won't off set the setback by the industry as a whole. However, if you own a company that will be handling waste or selling shingles in Houston, you're sitting pretty. But the flooded areas and the US economy as a whole are taking a hit.

It kind of reminds me of O'Bama's Cash for Clunkers stimulus attempt. Grinding up dated vehicles was great for vehicle manufacturing, rails, steel, recyclers, and new & used car dealers to name a few... but families struggling to make ends meet were screwed if their vehicle had to be replaced and the used truck that they needed to buy just doubled in price because of the huge reduction in supply.

Economics is hard.
 

VN Store



Back
Top