How an East Coast Earthquake Affects the Economy

  • August 23rd, 2011
  • Dan Bischoff

How an East Coast Earthquake Affects the Economy

What would have happend to the economy if this hit the East Coast instead? San Francisco faces this threat every day.

Today the Dow Jones closed with its biggest gain in nearly two weeks.

Here are the numbers:

The Dow rose 322 points, or 3 percent, to close at 11,177. Its best day since it jumped 423 points Aug. 11. The S&P 500 index rose 39 points, or 3.4 percent, to 1,162. The Nasdaq rose 101 points, or 4.3 percent, to 2,446.

While it was a good day on Wall Street, it was almost a bad one, too.

Why?

Because of an earthquake that shook things from Toronto to South Carolina for about a minute.

The Dow echoed the Earthquake by rocking back and forth, dipping 60 points shortly after it hit, but recovering within minutes.

While there’s only been reported minor damage, it does make you wonder what would have happened to our economy if it was a more serious quake in the heart of our financial system. Most who influence the markets were in the middle of the earthquake’s tremors. They felt them. They saw things shaking. Numbers dipped.

Hard not to assume some sort of fear and uncertainty from actually feeling the tremors was why the Dow dropped 60 points for a few minutes. As we know, the markets are influenced by people with real emotions.

The video below is an example of those various emotions. During a press conference in New York, Cyrus Vance, the New York District Attorney tries to calm a room full of skittish reporters. Watch the lady behind Vance grab hold of the guy next to her. Notice how some people are smiling, some people are fleeing.

People are like that everywhere. I’d like to see a video of the New York Stock Exchange during that quake. I wonder what those analysts were doing when things were shaking.

Now, how would Wall Street react if there’s a 5.9 earthquake in some place like Omaha, Nebraska?

I’d bet the Dow wouldn’t dip 60 points. What do you think?

About the Author

  • Dan Bischoff

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