Many thanks for all emails and good wishes. Here are some answers to questions received in last two hours.
I’m in Sarasota. We live in zone A and had mandatory evacuation. We are six miles inland staying in a private shuttered home with friends. We have a tornado room, water, food, flashlights, inflated raft, etc. We are personally safe but getting power fluctuations. My biggest fear is losing power and then running down batteries.
Half my firm is away. Our backup in NJ is fully staffed. Cumberland will be fully operational tomorrow morning.
Last night I got a telephone call from Bloomberg TV journalist, Erik Schatzker, who is currently between Orlando and Tampa with a camera and producer and two trucks. He may try to get an interview with me today in the midst of this mess. But it is not likely as the big story is Tampa. Storm surge is terrible risk. Huge. Whole towns will be devastated. We discussed the current Irma path, which now looks like a direct hit on Tampa Bay with a storm surge in double digits. Sarasota is forecast at 10 feet. Yikes!
Bloomberg is interested in economics and financial markets. Insurers. Banks. Munis. Rebuilding. Rail and trucking. GDP forecast for the recovery over next two years. Much more. Many friends sent data in response to the earlier missive. Thank you to all who replied.
All media are already covering the human toll in great detail, as all people of good will are doing worldwide. My email confirms a global following of the Irma story coming right behind the Harvey story. That story is being told everywhere.
Here is a direct quote from an expert in insurance economics. He is in a quiet period and must remain anonymous. We emailed this morning.
“Private insurance companies don’t insure for flood, that is the National Federal Insurance Program (NFIP, woefully underfunded). Insurance companies pay for wind damage…and for cars (even if flooded). Note that most insurance companies don’t insure properties in FL at all because the state Department of Insurance did not allow proper pricing — so you’ve got a state insurance fund, also woefully underfunded.”
Auto replacement, infrastructure, numbers or estimates help but need to be refined. One estimate of insurance losses is 15 billion. Another is 4. Another is 50. These are wild guesses.
Harvey means a replacement of 500,000 to a million cars and trucks. Add Irma. Who knows? Mortgage defaults. Lost equity in uninsured houses. Millions without housing. These estimates were supported or exceeded by over two dozen friends who replied this morning.
A dedicated environment observer said: “The message: let’s start ‘believing’ in science, specifically climate change. The companies that profit from fossil fuels need to help pay for weather related damages. It’s full cost accounting. Carbon tax?”
Harvey-Irma certainly will make that debate lively. And debt ceiling and deficit spending and federal assistance, too. Is a 2 trillion repatriation for hurricane infrastructure coming? Will there now be national consensus? Can we make national decisions without regional division? Many asked.
Storm surges of 10 feet or more are huge, and they can flatten everything in their path. I saw the result personally in Waveland, Mississippi, with the total flattening of the town. And I saw it personally in New Orleans after Katrina. Note that the national impact of Houston/Harvey and now Florida/Irma is many times larger than Katrina.
My colleague Bob Eisenbeis noted that a quick look at the Atlanta Fed’s Beige books in the aftermath of Katrina can provide some clues as to what to expect. The immediate impacts were a slowdown in economic activity, an increase in prices, especially for gasoline, etc. Rebuilding put upward pressure on housing prices, on inputs to construction, etc. as cleanup proceeded and people sought to rebuild. Auto sales slumped for at least two or three months. There was a general slowdown in tourism and I would expect that this will have a lasting many month impact on Florida, depending upon the damage to theme parks, boating, etc. In general, after the initial slowdown, the rebuilding resulted in lots of spending. What we saw with Katrina in those areas where there was storm surge as opposed to flooding is that houses were totally destroyed so construction was complete rebuilding as opposed to repairs. Katrina saw a lot of destruction of energy/oil drilling which hasn’t happened this time, but the refinery shutdowns will impact 30-40% of energy output.
Over time we will see spending pump up GDP, especially given the economic importance to the total economy of both FL and TX. There will be upward pressure on prices, especially gasoline and construction supplies. Federal spending will be important and looks to be quicker on line this time than in the past.
Bob is also hunkering down in Sarasota and is inland.
We say Thank you to all who can read this while we still have power. All electric power is off in the Keys. It is fluctuating here. I expect that an outage will happen soon enough in our area.
Many thanks to those who emailed us with supporting messages.
A massive national task lies ahead. Millions of our fellow citizens will need our philanthropy and energy.
And our government at all levels must provide unity of purpose and not acrimony.
It is an auspicious date. The Tampa Bay storm surge peaks on 9/11. Food for thought on this stressful day.
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