macroeconomics, debt, crisis, investment, riskSometimes I think it is absolute madness to invest in California, particularly along the fault line simply because someday it is going to get a massive earthquake, where lots of people will likely die and there will be enormous cost of damages. It hasn’t had a large earthquake in years yet it still has a large amount of debt. On top of that there are loads of companies particular tech companies that have their headquarters and staff there. Sure it has nice weather and is nearer to the Asian markets, but thats about where advantages end.
I guess I would say the same about areas in Japan, flood and other natural disaster prone regions (sure no areas are perfect, but some receive less massive natural disasters than others). I can understand if some vulnerable people have little wealth like in the Philippines (who had recent devastating floods) and were born and raised in the country and cannot afford to relocate. But successful companies and people still choose to relocate and pour money into places like California when they could easily locate somewhere else.
Should I take the atitude of why should I care, it is their cost? But they may not be able to afford it and at some point it is very likely the rest of us will have to bail them out. Should the government not provide any upfront constraints for investers into disaster prone regions. Do I overestimate the costs of natural disasters? What perspective can help ease these concerns? Does the benefit of nice weather outweigh these costs and risks?
Matthew 7:24-27 “a foolish man who built his house on sand”…
Can California afford a massive earthquake?
Yes. The earth quake is free it does not require any bonds be issued. In fact there is a good chance that the energy required to be released is already stored up in potential energy.
As for can the California economy recover from a massive earthquake… I guess that depends who you are. If you are one of those who lose your life in the quake for you California is done. If you are insured by a company that never intended to be around to pay out after a big quake in California… that wont be fun either. The recovery will not be quick. But the risks are already known and accepted. Assuming California does not change drastically (like fall into the ocean or some other extreme change) chances are people will return and rebuild. The effects will linger after all people still talk about the 1909 SanFran quake that burned the city to the ground.
Can any southern/central State afford a massive tornado? Can any northern State afford an incredible long extreme heat/cold wave? There are earthquakes pretty much everyday in California, but they are not big enough to be in the news for most to know. I think you are over-analizing this.
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