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Reporting from a diner in Paoli, PA, near 40°02′27″N 75°29′24″W.

Power went out in Malvern about 2AM this morning. After sleep, we have fled to where there is power and light and steak and eggs. 

It feels like aftermath. The NOAA seems to no longer be issuing track updates and the storm track has disappered from the Google crisis map, suggesting that the anticipated conversion to a large but normally (un)structured nor'easter has completed.

This area got off lightly, especially compared to the ration of apocalypse-now the storm handed New York City.  Exploding high-power transformers are very bad news - they tell us that all that tunnel flooding seriously damaged the downtown end of the Manhatten power grid. That kind of equipment is extremely expensive and difficult to replace, and the halogen compounds they use as insulators are hazmats when they get loose. The prompt repair costs are going to be a large fraction of a billion dollars.

But that isn't the worst of it.  Considering that this will have have paralyzed the largest node in the international financial system for some time, downstream economic losses could easily crack a trillion dollars. The impact will be global and manifest as higher prices for everything with cross-border supply chains, rippling all the way down to Third-World farmers buying fertilizer.

By comparison, the handful of treefalls we got here was nothing.  We were braced for hurricane winds but didn't even get get gusts of more than gale force; sustained winds never got higher than we see in a normal nor'easter, and there were lulls.  With temperatures now around 40F, conditions are not life-threatening for anyone who can find even minimal shelter, and road travel passed from being dangerous to merely slightly difficult hours ago. We see worse local effects than this in most years.

The remaining question locally is how long the power will be out.  Normally the worst case in exurban Southeastern PA would be well under 24 hours, but while the damage is relatively light anywhere in particular it's spread over a much wider area than usual.  The line crews are going to be way oversubscribed. 

Thankfully, all this nets out to a great deal of inconvenience but no tragedy. We did indeed dodge a bullet.  The collective sigh of relief is nearly audible.

#HurricaneSandy
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B. Gabriel Helou's profile photoChristian Conrad's profile photoEric Raymond's profile photoNeeraj Bhope's profile photo
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Sounds about like what we got here in Newtown, PA. Except, we didn't even lose power. Feel like a huge bullet was dodged.
 
NPR did some speculation about the effects of the SEC shutting down-- there will be a jolt when it syncs back up with international trading. However, it's plausible to me that this is going to be a another push towards all-electronic distributed trading.
 
+Johan Strandberg You apparently misunderstood what I was referring to. What is no longer displayed is the blue-line projected track of Sandy itself, the cyclone that gave rise to the big nor'easter we now have. 
 
Yeah the infrastructure damage in NYC looks medium bad.  But I am waiting for news from the Jersey shore barrier islands.
 
Latest guestimate I've heard on restoring power to most of downtown NYC (south of 39th) is as much as four days out, but likely sooner.  Uptown neighborhoods like the Upper East and West Sides got through pretty much unscathed.

My understanding is that NYSE, Nasdaq, and the Jersey City electronic exchanges are running on diesel and able to continue functioning for several days with no power.  That's also the case with big tech firms in the city who are south of 39th (though any company with decent infrastructure has already failed over out of region anyway).
 
" . . . power and light and steak and eggs."

Excellent!  Civilization's necessities are covered.

(Glad to here you're both okay.)
 
That " trillion dollars" is of course not a real economic loss. What you're talking about are just "profits" in monopoly money, made by buying and selling money. The REAL economy, remember, is actually about tangible goods and usable services; it's just MEASURED in money. The whole financial market system is just a derivative thereof, a meta-game. (This is of course the whole trouble with the modern economy, and the largest reason for most of what ails the world economy nowadays: That this monopoly-money tail is wagging the real-economy dog.)
 
+Christian Conrad I was deliberately ignoring paper losses. 

When a Third-World farmer has to pay more than he otherwise would have for fertilizer because some market up the supply chain didn't clear as fast as it could have, that's a real loss to the real economy.

Wall Street's job is to make markets clear more rapidly and efficiency than they would have without money and other financial instruments to lower transaction costs and provide liqyudity.

Yes, there's froth and bullshit generated in the process, but if you forget that there's a real job being done behind all that you'll be throwing out the baby with the bathwater.  Don't do that!
 
But do you really think some chemicals-market clearing or not clearing would slow down the bulk carrier shipping the fertilizer that is (or isn't, as the case may be) being sold back-and-forth umpteenth-hundred times, without actually shifting hands physically? I don't actually think there's much of a connection.

It's like pork bellies: You can dabble in pork belly futures on the Chicago exchange (or, wait, was it in the news recently that they stopped dealing in those?), but you do that while they're trotting around alive, or being slaughtered, or hanging in a warehouse somewhere, or being shipped somewhere else -- but you don't actually have to take physical custody of them just because you "own" them for a while. So why should it work the other way; just because your nitrates or whatnot don't get traded back-and-forth in the virtual world of the financial markets, why should that stop the ships and trucks that deliver the actual goods?

From your last paragraph, it seems to me that you're under-estimating the sheer scale of bullshit here: The global financial market system transacts, I can't remember if it's hundreds or thousands of trillions of dollars each... Week? Day? Something like that: It utterly dwarfs the GGP (Gross Global Product) of the whole world, by a factor of hundreds or thousands or possibly even more: For every dollar that's lent to build a brick-and-mortar shopping mall in the US, hundreds or thousands of play-money dollars are zipping around the financial-market network; every cent that your third-world farmer spends on that fertilizer has been "bought" and "sold" a hundred or a thousand times. Are you really trying to say that missing out on a few hundred rounds of this on-line Monopoly game would do any real harm? Bah!

That's precisely the problem with Baby's bath: It's almost ALL froth, almost NO actual bathwater -- that's why Baby isn't getting cleaner, and can't see what's going on.
 
A market outright failing to clear often means the fertilizer won't get made at all, let alone ship. And that's what we're looking at when the financial system seizes up - markets failing to clear.

This is exactly what happens in serious depressions; there are lots of goods,  there is lots of money looking for the goods, but they can't find each other because the clearing mechanisms aren't working.

You're qualitatively right about the bloat in derivatives markets, but you have the scale wrong.  The estimate has been done; it isn't "hundreds or thousands", it's about 7. Which is quite bad enough - that bubble is undergoing a slow-motion burst right now, which is why there's a ghost fleet rusting east of Singapore.

Still, don't forget that there are real markets underneath the froth, and Wall Street being crashed does actually damage those in a serious way, if only by denying a lot of liquidity that would otherwise lubricate them.
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