2015 / Behavior
Lessons Learned From Big Disasters: Chaos Is Temporary
Last week was quite a week, wasn’t it? The drama that played out in Athens left Europe - and much of the world - on edge. Until it signed a deal with its creditors, Greece may have been forced to default on its debt, which ultimately could have led to its exit from the European Union. What that would mean for the rest of the EU is anyone’s guess.
Perhaps more disturbing were the reports from inside Greece. The government was reportedly out of cash, which would have meant disaster for a population that largely lives off of government employment or pensions. Imports to the tiny country could have stopped and there were broad concerns about civil unrest. Even with the deal in place, Greece still faces a long and difficult road.
Of course, Greece wasn’t the only hotspot last week. Further east, China’s stock market decline went into freefall. Since June 12, the Shanghai Composite has lost nearly 30 percent of its value and the smaller Shenzhen Composite has lost almost 40 percent.
It’s easy to panic during weeks like this. It’s easy to throw your long-term plan out the window and run to conservative and “safe” investments. After all, the natural reaction to disaster is to take cover.
When I see big “disasters” in the financial markets, my mind turns to New Orleans. My son just turned ten this month. I remember right after he was born, the country was watching New Orleans suffer through the costliest natural disaster in American history - Hurricane Katrina.
Katrina ultimately killed more than 1,800 people and left a path of more than $100 billion in destruction. In the aftermath, the consensus was that New Orleans would never be the same. No one would move back. Companies wouldn’t headquarter there. Sports teams would abandon the city and Mardis Gras would fade into obscurity.
Ten years later, though, that’s not what has happened. New Orleans has surged back to life. Yes, there are still some very real and visible reminders of Katrina’s destruction. There are still some homes that sit empty and some tracts of housing that were simply wiped off the map.
However, the data tells you that the city is thriving. The metropolitan area’s population is just six percent below its pre-Katrina level. Tax revenues are higher than they were before Katrina. The area has more parks and bike trails. And it’s a leading entrepreneurial city, with 50 percent more new businesses every year than the national average.
Is it the same as it was before? Probably not. But the disaster of Katrina didn’t spell permanent doom for New Orleans.
And the same is true of China and Greece. Yes, there may be some aftershocks. Yes, the turmoil could temporarily disrupt our markets. But the lessons of Katrina and nearly every other disaster in history tell us that the chaos is only temporary.
There’s always a disaster looming. There’s always something to be concerned about. If you throw out your long-term plan every time there’s a potential disaster, you’ll never implement the long-term plan. Stay focused on your goals and your needs and have faith that what is happening in the short-term won’t last forever.