How the Gulf Oil Catastrophe Brought Upon a True Black Swan
Even before the economic bubble started to burst in 2005, I frequently talked about Black Swan events (Haiti, Transcript and Video from Presentation back in November of 2008) You know the kind of low probability events that have a huge impact on the economy.
Examples are Hurricane Katrina, the Haiti and Chilean earthquakes and, of course, the devastating Gulf Oil catastrophe. Who could have imagined an underground oil well would explode and the government would not have a logistical safety plan in place. Now we watch each day helplessly as the oil destroys our beaches, marine ecosystem — and our way of life.
It is always events that just come out of nowhere that shock our senses. This oil deluge is no different except it is happening in slow motion over weeks and months instead of minutes or seconds. Each day tens of thousands of gallons of oil are fowling our shorelines and animal life. Fisherman and those in the marine industry are feeling the effects first, but so are the folks in the hospitality business.
Many small businesses will be put out of business, and there will be a new round of mortgage defaults by those that have lost their livelihoods due to this crisis. Individuals generally involved in tourism in the bordering Gulf States will be most affected.
Economists are suggesting that along the Florida Panhandle alone 195,000 people may lose their livelihoods. Not just their jobs! Those fishermen who only know how to fish as a livelihood face a huge problem since the fishing industry as a whole is at risk. Estimates suggest the losses to the Florida Panhandle alone could top $10 Billion!
So just when we thought maybe we had hit rock bottom in the real estate market, one can only imagine the number of new foreclosures we will see crashing ashore in the coming months courtesy of BP, its contractors, subcontractors and the latest Black Swan.
From the Trenches,