Thursday, September 08, 2005

Domino

Bill Cara: The Katrina Domino, Tues., September 6, 2005, 5:40 AM
Traders have to understand the magnitude of what happened before they can begin to appreciate the implications of what’s to come. We can now refer to “After Katrina” just like “post-9/11”. Our future may indeed be called the Katrina Era.

First, the U.S. economy now stands a likelihood of going into recession. S&P states that the chance of that occurrence has more than doubled to 25 pct.

Second, the U.S. government has approved the initial funding of $10.5 billion for emergency relief measures. By the time the final bill is tabulated for replacement of lost assets, and lost tax and personal income, and the negative effect on corporate profits, the smallest number you can consider is at least ten times that one.

The U.S. economy is huge, but there will be a domino effect at work that will soon cut it down in size.

Had Katrina not destroyed so many assets in the U.S. Oil and Gas industry, the final tabulation of costs would be much smaller. But, I fear that because of the resolve by Americans to prevent such an affront to their national security recurring, I suspect the world will never again see Crude Oil prices less than $35 a barrel.
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