Counterparties: Things fall apart
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Infrastructure: you never really appreciate it until it breaks down. As America did after Katrina and the 2007 Minnesota bridge collapse, we are once again suddenly paying attention to infrastructure. That happens when subways flood, power lines fall, and storm barriers are notable by their nonexistence.
Since Superstorm Sandy, there’s been a minor clamor over America’s infrastructure, which received a “D” grade in 2009 from the American Society of Civil Engineers and similar marks from the World Economic Forum. Jonathan Cohn thinks that the lesson of Sandy is that “government matters”, particularly when it comes to disaster management and infrastructure. Jared Bernstein looks at the possible effects of Sandy on GDP and calls for “infrastructure to help mitigate the impacts of these 100-year storms that now seem to hit us twice a year”. The AP argues that neither candidate has a workable plan to upgrade America’s infrastructure.
New York City officials, Reuters reports, have been pondering a $29 billion storm defense system for the area, but can’t find a way to pay for it. In a survey of what it would cost to hurricane-proof New York, Rebecca Greenfield suggests that even limited protection like levees would cost many billions of dollars. And as Matt Zeitlin notes, none of this is anything new: New York City’s been “thinking seriously about how to adapt to climate change to make the system more resilient at least since 2008″.
Der Speigel thinks America’s aging infrastructure is evidence of imperial decline, noting that the Northeast’s power lines are located above ground, “the way they are in developing countries.” While subway service and electricity have been restored rather quickly in most areas of New York, those power lines are proving particularly troubling for residents of Long Island and New Jersey:
Hauser, deputy mayor of the still-dark Village of Flower Hill on the north shore of Long Island, said that not only has the cleanup been too slow, Long Island Power Authority “is doing nothing to prepare for the future.”He would like to see the utility consider underground lines and metal rather than wood poles. “Every year it’s a Band-Aid,” he said. “This can happen next year and nothing will change.”
Citing ultra-low interest rates, Brad DeLong last year suggested that $500 billion of new federal infrastructure spending would create $1 trillion in increased economic activity, including an extra $20 billion in income and social welfare. Kevin Drum last year proposed a trillion-dollar infrastructure program. For context: that’s less than half of what the Society of Civil Engineers suggests we need to spend. — Ryan McCarthy
On to today’s links:
Academic research destroys trading strategies – Chronicle of Higher Education
Mom-and-pop investors are tapping their retirement accounts to buy foreclosed homes – Bloomberg
You are not “investing” in commodities, you’re speculating – Josh Brown
Stuff We’re Not Linking To
What Will Ann Romney & Michelle Obama Wear On Election Night? – Huffington Post