Volcanic and economic disruptions

Volcano.jpgExpect the unexpected! That message has been driven home through the global financial and economic crisis of 2008-2009. Who could have foreseen Mother Nature’s volcanic surprise? Along with stranding thousands of travelers, including this global editor, the volcano’s economic impact will be felt throughout the world.

Jet fuel prices in Europe and the US tumbled early last week, according to global chemical market intelligence service ICIS pricing. And crude oil initially traded off before recovering. The bigger picture is the impact of all the travel disruptions on economic growth.

Airlines are losing an estimated $200m/day, and are demanding compensation from governments. But it’s not just the fly guys that are suffering. The volcano is hitting everything from deliveries of goods to tourism to labor productivity. And the effects of a major disruption can be significant and long-lasting.

The reverberations from the global financial eruption in 2008-2009 are still being felt today. Last week, the US Securities and Exchange Commission charged Goldman Sachs with defrauding buyers of certain mortgage-backed securities. And the UK government is launching a full investigation into the matter.

Like the ash cloud over Europe, the haze hanging over the global economy has yet to fully dissipate.


Photo credit: Washington Post

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