Close X Cookies are necessary for the proper functioning of 24hGold.com. By continuing your navigation on our website, you are accepting the use of cookies.
To learn more about cookies ...
EnglishFrench
Gold & Silver Prices in
In the same category

The Economics of Disaster

IMG Auteur
Published : November 06th, 2012
464 words - Reading time : 1 - 1 minutes
( 18 votes, 4.5/5 ) , 1 commentary
Print article
  Article Comments Comment this article Rating All Articles  
0
Send
1
comment
Our Newsletter...

 

 

 

 

Hurricane Sandy was one of the worst natural disasters the east coast has ever seen. Clean-up and recovery will take months, if not years and estimates run in the tens of billions of dollars. Parts of New York and New Jersey will never be the same. Entire seashore communities have been wiped out, but the determination to rebuild has been lauded as courageous and admirable. Yet as with all natural disasters, Sandy raises uncomfortable questions about the extent to which taxpayers should fund the cleanup and the extent to which government programs create moral hazards.

For example, FEMA and the National Flood Insurance Program (NFIP) are expected to pick up the tab for much of the flood damage caused by the hurricane. Of course this will mean more federal debt and inflation for the rest of us, since the program only has about $4 billion to work with and is already $18 billion in debt from hurricanes Katrina and Rita. Many think there is a need for the government to provide flood insurance of this kind. After all, the market would never provide insurance in flood prone areas at an affordable price. But shouldn't that tell us something?

Shouldn't that tell us that it is a losing proposition to insure homes in coastal areas and flood plains often threatened by severe and destructive weather patterns? And if it's a losing proposition, should taxpayers subsidize the inevitable losses arising from federal flood insurance?

The NFIP disguises the real cost of flood insurance in flood prone areas, which influences homebuilding and sales in such areas. Recklessly taking unwise risks when risk is underpriced is known as moral hazard. When politicians decide that private insurance premiums are too high, as with houses built in flood plains, the solution is to under price the risk through federal subsidies. The obvious and expected outcome is more danger to life and limb when disaster strikes.

Even NFIP has been forced to raise rates significantly in coastal areas, and is now dropping second homes from coverage altogether,

Many assume it is compassionate to entrust government central planners with disaster recovery. However, the greatest compassion brings results, not just good intentions. And we've seen how bureaucratic organizations like FEMA mismanaged recovery and relief in the wake of hurricanes Katrina and Ike. Organizations such as the Red Cross and private companies like Home Depot and Duracell have already stepped in admirably to help those in need, and we can only hope FEMA has learned this time not to impede and frustrate private efforts as they have in the past.

Above all, my thoughts and prayers are with the victims of Hurricane Sandy in this tremendously difficult time and hope they can get their lives put back together as quickly and seamlessly as possible.

 

 

Data and Statistics for these countries : Jersey | All
Gold and Silver Prices for these countries : Jersey | All
<< Previous article
Rate :Average :4.5 (18 votes)
>> Next article
Latest comment posted for this article
Be the first to comment
Add your comment
Top articles
Latest Comments
Spain to Suspend Evictions, Rewr...
04:05overtheedge
"... negotiate funding agreements with creditors for half of the accrued liability ..." The devil is always in the details. Accrued l...
The Price of Everything and the ...
03:54overtheedge
Debt Jubilee? Not gonna happen. 1. All collateral will be seized before any debate on debt forgiveness happens. 2. All pension plans will b...
Watch: This Is Why Russia Can’t ...
20 DecA.
Area 51 conspiracies in support of the American "exceptional-ism" theory. REALLY ?? I was expecting more from this site...
Evolution of YouTube: Will it Su...
22 Decprljr
It all depends on how much control the j-mafia will buy into like any other enterprise that can be purchased. Makes it easier if you can print your...
North Korea Threatens White Hous...
22 Decprljr
The president said the hack on the Hollywood studio was not an act of war but was “very costly”, To whom is it costly? Not having t...
Lessons Learned from the Suisse ...
22 Decsneezy67
Hello Switzerland....goodbye Switzerland :: Hello USA...goodbye USA :: Hello financial elite...you have had your way for 100's of years...kiss my ...
Sick Market Moves While Gold Rem...
22 Decsneezy67
Oh..... the agony and many pains it must be as a financial analyst (prognosticator ?)
Chinese Copper Elephant
21 Decovertheedge
If some of the central African countries, such as Nigeria, get their politico-economic acts together, then increased demand for base metals, especi...
Most commented articlesFavoritesMore...
World PM Newsflow
ALL
GOLD
SILVER
PGM & DIAMONDS
OIL & GAS
OTHER METALS
Comments closed
  All Favorites Best Rated  
All clues indicate Sandy is an unnatural disaster caused by weather modification and HAARP steering! Congress surely controls the usage of these two unnatural weather devices. "ALL Law making Power is vested" in the Congress of this United States, (Constitution). Could the "Executive Branch be exceeding it's Constitutional Powers of only "Executing the Laws passed by the Congress" ??? A Concerned Citizen of this Nation!!
Rate :   1  2Rating :   -1
EmailPermalink
Subscribe to 24hGold’s daily market briefing
  • Prices and data of precious metals in 119 currencies and world mining companies
  • Daily analysis of the economy, markets and more
  • Free, daily and indispensable
Stay informed, subscribe now !
* Your email will never be shared.