Economics Explained The Economics of Disasters
May 30, 2024
The podcast explores the economic impact of global crises like the Wuhan Coronavirus, natural disasters, and other tragic events. It discusses how fear affects economic confidence, the influence of media on stock market behavior, and the deceptive increase in economic activity post-disaster.
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Fear Amplifies Market Moves
- Fear and speculation can drop markets quickly through short-selling.
- Short sellers amplify panic by increasing share supply and triggering more selling.
Confidence Drives Economic Activity
- Economic activity depends heavily on confidence and perception.
- Markets react to what people expect, not just to immediate facts.
Weekend News Moves Prices
- Closed markets don't stop sentiment; pending orders and weekend news change expectations.
- Investors cancel orders to pre-empt weak earnings, lowering prices before markets reopen.