Though i voted option B as the markets outlook still very gloomy. Already this year is gone and we can only be hoping for positive development towards 2013.
Ariella, I know those of us on the East Coast believe Hurricane Sandy was a big deal but for the rest of the US and the world, this isn't that much. It's economic effect in local neighborhoods will be significant but countrywide, it won't be more than a blip and worldwide, not even register. Give us four months and it's all forgotten not to be remembered outside of New Jersey, New York and adjacent locations.
@Bolaji I'm not sure that it will be forgotten that quickly. No storm in anyone's memory has ever come close in this area, one in which many major companies keep offices -- if not in New York itself, then often in neighboring NJ. I've seen two views of the economic impact.
One take that thought it could turn into a boon global post :
However, rebuilding after Sandy, especially in an economy with high unemployment and underused resources in the construction industry, will unleash at least $15-20 billion in new direct private spending - likely more as many folks rebuild larger than before, and the capital stock that emerges will prove more economically useful and productive.
Regarding the latter, consider a restaurant with inadequate patronage - its owner invests the insurance settlement in a new more attractive business. On the shore, older smaller homes on large plots are replaced by larger dwellings that can accommodate more families during the summer tourist season. The outer banks of North Carolina saw such gains several decades ago after rebuilding from a storm of similar scale.
All of this is not to discount the direct costs to individuals by temporary, and in some cases permanent, disruption to lives and communities, much of which cannot be quantified. However, when government authorities facilitate rebuilding quickly and effectively, the process of economic renewal, in many tangible ways, can leave communities better off than before.
Factoring in the multiplier effect of $15-20 billion spent rebuilding yields an economic benefit from reconstruction of about $27-36 billion. Add to that the gains from more a more modern and productive capital stock - likely in the range of $10 billion - and consumer and business spending that is only delayed but not permanently lost - likely in the range of $12 billion - and the total effects of natural disasters of the scale of Sandy are not as devastating two years down the road.
If electronic equipment was wiped out, and likely much was, a number of businesses that had no intention of upgrading may well be forced to buy replacements.
You see, Keynes is wrong. The $20 billion is a real loss to the economy, and in the long run it will not simply come out of insurance company profits, but be passed on throughout the economic system as higher costs-which equals less money.
Similarly, the $50 billion economic costs of the storm are real.
To take one example, if Goldman Sachs (NYSE: GS) averages $100 million every day in trading profits, then having the exchange closed for two days will reduce their fourth quarter profit by $200 million, with no chance of making that up.
This effect will also be reflected throughout the larger economy. Many New York and New Jersey businesses will go bankrupt, because the losses push them over the edge. And if the state decides to refund the costs, the additional taxes in future years will push other businesses over the edge as well.
Yes, the money spent on reconstruction is real, but it just substitutes for other money that won't get spent.
Maybe a restaurant is forced to rebuild using insurance money, and now has a larger, newer building. However, apart from the insurance premium increases discussed above, and any out-of-pocket cost to the restaurateurs, there may have been customers attracted by the old restaurant's charm, who will be repelled by the antiseptic new one.
Though i voted option B as the markets outlook still very gloomy.
@Wale, I agree things are still bit gloomy but we are seeing some recovery. I am hoping the 2012 will end "with a roar" for electronics manufacturers because uncertainity related with election will be over and holiday season might help improve companeis sales numbers.
Anandvy, although difficult to predict how year 2012 will end for electronics manufacturers, I voted with a thud. Recovery signs are not vibrant and consumers are still cautious of parting with their hard earned cash.
As I have said many times , in many cases it is difficult to speculate and it is wise just to wait the time to unfold the results. If you don't have enough information is like playing lottery ;)
EBN Dialogue enables and encourages you to participate in live chats with notable leaders and luminaries. Not only editors and journalists, but the entire EBN community is able to comment and ask questions. Listed below are upcoming and archived chats.
Archived Dialogues
Thailand Stages a Comeback Join EBN contributor Jennifer Baljko on Thursday August 23, 2012, at 11:00 a.m. EST for a live chat on how electronic manufacturers in Thailand have shored up their supply chain to reduce the impact of future natural disasters.
Euro-Crisis: What It Means for High-Tech Firms Join EBN Editor in Chief Bolaji Ojo and Contributing Editor Jennifer Baljko on Thursday, July 12, at 10:00 a.m. EDT for a Live Chat on high-tech and Europe's economic difficulties.
Microsoft Surface: Potential Winners & Losers What are the implications for the electronics industry supply chain of Microsoft Corp.'s decision to launch its own tablet PC? Join industry veteran and EE Times' systems and OEM expert Rick Merritt on Tuesday, July 3, at 12:00 pm EDT for a Live Chat on this subject.
Join EBN contributor Jennifer Baljko on Thursday August 23, 2012, at 11:00 a.m. EST for a live chat on how electronic manufacturers in Thailand have shored up their supply chain to reduce the impact of future natural disasters.
Peter Drucker famously said "Trying to predict the future is like trying to drive down a country road at night with no lights while looking out the back window." Yet in the razor's-edge world of electronics—with a lean supply chain and just-in-time demands—the need to know the future is vital.
While no one really can accurately predict the future, we can take guidance from another Drucker saying which is the best way to predict the future is to create it.
You've heard the saying "the No. 1 supply chain risk is your people." That hasn't always been the case. But today's complex global supply chain requires a new type of multitalented employee. It's one who understands, finance, marketing, economics, is savvy with technology, graceful with relationships and can think analytically.
Where are these people? Are universities properly preparing the next generation supply chain professionals? How do train your existing workforce for these new, demanding positions?
Brian Fuller, editor-in-chief of EBN, will lead a 60-minute Avnet Velocity panel discussion that will ask and answer these and other questions swirling around today's supply-chain talent challenges.
To save this item to your list of favorite EBN content so you can find it later in your Profile page, click the "Save It" button next to the item.
If you found this interesting or useful, please use the links to the services below to share it with other readers. You will need a free account with each service to share an item via that service.
Tweet This
