|On Tuesday, for the first time in months perhaps, Southern Californians forgot about the slumping housing market, credit issues, fuel costs, and employment blues and rode out a serious 5.4 earthquake punch. I must confess, having lived here for a total of three years, this ranks pretty high on the list of scary events that I have witnessed.
As I was working in my brand new office in the new building of the Mihaylo College of Business and Economics (a very fine structure with the latest technology and academic facilities), the ground shook and the walls started rocking back and forth with such a ferocity that for a few seconds I seriously doubted if I was going to make it (and while the building is great, I can think of a few more exotic places where to spend the last few seconds of my life).
Fortunately, there was no damage (except a few books flying off shelves), the building is still standing, grand and magnificent as ever. Given the proximity of our campus to the epicenter of the quake, this is indeed remarkable. Much credit should be given to modern technology, its precise execution, and the strict building codes adopted in California in 1997 in response to the ’94 Northridge earthquake. More impressively, after the excitement of the first few hours, most people went back to work, shops opened and business continued as usual.
This infuses me with new optimism. Yes, we are all riding the harsh waves of a very sharp economic downturn. Perhaps, in a perverse way, the collective amnesia we all developed for a short time on Tuesday to our economic troubles may help place things in perspective. More importantly, the reassurance that we are today better prepared to deal with these types of natural disaster can certainly serve as a confidence booster.
Tuesday’s quake did bring up yet again the perennial question: Are we ready to face the “Big One” which, depending on sources, is supposed to happen over the course of the next 20, 30 or maybe 100 years. My knowledge on seismic events is extremely limited so I will leave it to the experts to weigh in on the this issue while adding simply that we have seen considerable improvements on that front. As an economist, however, the catchy phrase “the Big One,” served as a reminder that the current economic environment has been described by many as “worse than the big depression.”
If we accept this prognosis (and I don’t), then the economic storm we are facing can be viewed as the “Big One.” While current economic pains are far from over and we might have to face them for another 4-6 quarters, much like Tuesday’s quake, we have the capability to ride out this storm. Our financial infrastructure is overall fundamentally sound (Congress and the Fed are patching a few holes), oil prices have retreated from their record-highs, and global economy continues to remain relatively strong.
Is this big economic storm going to cause more collateral damage? Without a doubt. Can we survive it? You bet.