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Mercnbeth -> RE: What will happen to us after Rita? (9/22/2005 2:45:25 PM)
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Short term high cost of fuel, maybe $4 - 5 / gal; because of broken supply lines and the refineries being shut down. Yes the oil companies will be making more money than they can count but until we allow a new refinery to be built or (GOD FORBID!!!~) an atomic power plant; they are the only game in town. Unless of course you want the government to take over and privatize the oil industry. But that would be socialist and fodder for a different tread. But I digress. Meanwhile, fuel heating oil may be as high as 3 times last winter's price contingent on the weather. If it's a cold winter maybe even higher. Low supply, high demand, equal higher cost.
By spring, barring any other disaster, natural or terrorist you will see one of the greatest economic booms in recent times. The entire gulf coast needs to be rebuilt. Insurance and government money will be paying the cost. EVERY construction and raw materials corporation will realize record profits. Any person wanting to work in the construction industry will be employed. Skilled laborers will be able to demand top dollar but even the general unskilled laborer will have all the work they want. Supporting businesses, such as supply houses, warehouses, trucking, and the manufacturing of hard goods will also be working at peak capacity. Traditional retailers, such as Macy's, Sears, and the other Mall type stores will be looking at a lean holiday season. There won't be much holiday spending available.
Subsequently inflation will be back in a BIG way. Interest rates will be rising as the Fed tries to govern the "growth". The biggest impact will be to the housing market which, except for the CA coastal market, will finally see some depressed pricing. We could see a mass exodus from the colder northern climates to the gulf coast. The weather will be contributory, but that will also be where the work is. It will be like the last 10 years of Los Vegas spread across a much wider area of the country.
Politically, 2006 is an election year. I doubt that any rationing or price control will come into play unless there is another disaster behind Katrina and Rita. It would be political suicide for both sides of the aisle. Remember, regardless of party, when there is that type of drastic impact to the public's standard of living they will ALWAYS vote out who's ever in.
Buy raw materials and construction company stock. Sell or go long on your real estates holding, but make sure you're not trapped by a bad floating interest rate mortgage. If you have any air line stock try your best to give it away. The entertainment sector, casinos, cruise lines, resorts will also have a difficult time making projections. More people will just stay home. An interesting possibility could be that the home gaming/entertainment based industries could see a real increased demand. October is always the month when things happen in the financial markets. Companies will be pushing to make budget. Corporate officers will begin to "manage" their businesses so they can achieve their year end bonuses. This year's October will be very interesting.
Add the potential "wild card" of a large scale terrorist attack such as a small nuclear bomb or even a "dirty bomb" going off in the middle of any US city between now and the end of the year all bets are off. In that event, I'd expect Marshall Law at best - anarchy and civil war at worst.
[8|] But that's just my answer to the question you asked.
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