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The ups and downs of the “business cycle” can be predicted

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Colin has typed many times that the so-called business cycle goes up and goes down at irregular intervals. The cause and thereafter the effect seem to rhyme but are never the same. A true cycle should be the same process over and over again. But the business cycle downs are instead triggered by something that is different each and every time.

One common thread is a huge loss of asset value. The cause of this huge loss varies but the outcomes are largely similar.

This time we are seeing a loss in Texas in the value of homes, businesses, corporate assets, and infrastructure. At this point in time it looks like trillion$ in value has been lost and the replacement (if funded), will cost our economy really a lot. This downturn will likely cause a relatively immediate recession IMHO.

What should I do with my moolah?

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Posted by (Questions: 27, Responses: 285)
Posted on 08/30/2017 3:49 AM
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Not trying to hijack your post, I think this is in the same vain. Past hurricanes haven’t really produced any major market downturns but caused major losses for people, so why no downturn? The estimate I heard so for was around 60 billion for Harvey, that’s would be the biggest bankruptcy in history.

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Posted by (Questions: 26, Responses: 32)
Answered on 08/30/2017 10:53 AM
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This will cause a recession in Houston. It won’t cause a big change in most other US cities. The vast majority of natural disasters are local economic events that don’t impact the rest of the nation in a serious way.

So stay calm and carry on. 🙂

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Cullen Roche Posted by (Questions: 10, Responses: 1864)
Answered on 08/30/2017 11:49 AM
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Thanks, Cullen (sorry about the type-o above). This is our 4th largest city and encompasses a huge metropolitan area that has been really really been damaged by the floods. I think the question is, how much “moolah” was washed away and how much has to be spent to rebuild and bring it back into production. Does this amount of moolah come close to the amount that went up in smoke in the tech “bubble” of 2000-2001 and the housing “bubble” of 2008-9? I don’t know….I was thinking $600 billion +.

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Posted by (Questions: 27, Responses: 285)
Answered on 08/30/2017 2:47 PM
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Governor said 125 billion in federal funds, so it’s way above that. If you add the largest company bankruptcies together you don’t get near that.
Just throwing out an idea, it’s like insurance were the loss is spread across so many people so there’s not as much damage? 1 million people lose thousands is easier to handle then one company losing billions?

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Posted by (Questions: 26, Responses: 32)
Answered on 08/30/2017 5:18 PM