The Canterbury earthquake

The NZX 50 Index of stocks climbed in Wellington, led by building-related companies. Insurers fell. New Zealand’s dollar rose to 72.41 U.S. cents from 72.07 cents in New York on Sept. 3. The nation’s bonds declined, pushing 10-year yields to their highest in more than a month.

Here is more.  The costs of repair are estimated at about two percent of gdp.  Milk supply from New Zealand has not been disrupted.

Comments

I guess New Zealand's speculators never heard of Bastiat.

it's related to swishin' in the biords. buggs.

JSK - the effect of the earthquake is that money is going to transfer from the insurers to the (re)builders. if the insurers are internationally-diversified (and if you're selling earthquake insurance in NZ you'd be crazy not to) and the builders are mostly NZ firms then a rising NZ stock exchange makes sense.

And the other effect of earthquakes is that people work extra hours firstly in direct response to the emergency, and then repairing stuff. So measured GDP goes up, even though national assets goes down and economic utility goes down.

John T

I've seen claims that the LOCAL stimulus from rebuilding will outweigh the costs of the earthquake.

This is possible, bacause the Canterbury region contains about 15% of NZ's population, and the other 85% of us are largely going to pay for the rebuilding.

So they (Canterbury) may be better off (or in an unchanged position), but we (rest of NZ) will be worse off.

Of course, given that politicians in NZ aren't more economically savvy than anywhere else, it is possible that some of them believe that earthquake = stimulus.

It's Christchurch, not Canterbury.

And thanks to the wonders of the USGS and Google Maps, we can find that the epicenter is in an odd pie-wedge shaped field near the small farming town of Darfield.

Anthony:

Christchurch is the main city within the region (formerly province) of Canterbury; the epicenter of the earthquake was in Darfield, outside Christchurch city limits, also in Canterbury. So it is quite correct to refer to it as the Canterbury earthquake.

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