US markets close as Frankenstein's Monstorm heads to NYC

Hurricane Sandy marks first full trading-day lost to weather in over 25 years.

Hurricane Sandy, which is expected to hit in New York City in just under 15 hours, is likely to throw everything we expected about the upcoming week off-course.

For readers of this blog, the biggest immediate effect is that all equity trading is cancelled for today, and likely for tomorrow as well. The shutdown, announced by the Securities and Exchange Commission (SEC), follows the NYSE's decision, announced yesterday, to close floor trading for the storm.

The NYSE had hoped to leave digital markets open, but the SEC's decision trumps that and also brings down a further dozen exchanges, including the other major NYC exchange, NASDAQ, but also ones based further afield, all the way to BATS in Kansas.

While the NYSE decision was based largely on the physical safety of traders on the floor, the SEC's mandate seems more built around a desire for fairness and stability. Given the storm will likely shut down most of the east coast for at least part of today, large numbers of traders would be unable to log-on wherever they are. The COO of NYSE confirmed to Bloomberg that:

Operating the market that way didn’t seem to serve the public interest. Why do this? To prove we can? That didn’t seem to make a lot of sense.”

The last time the NYSE closed for a full day due to weather was because of Hurricane Gloria in 1985, which says a lot about how bad Sandy is expected to be.

The Atlantic's Alexis Madrigal has written about Why Sandy Has Meteorologists Scared in 4 Images (including one animated GIF, obviously); this is Frankenstein's Monstorm, with a massive confluence of adverse factors. Firstly, and most importantly, it's really, really big. The winds are faster, the affected area is larger, and it will likely stick around for a lot longer once it makes landfall.

Beyond that, though, there's the fact that the eye of the storm will be on central New Jersey, meaning that New York City – the most densely populated area in the US – will be getting full-strength hurricane winds; the fact that the same cold winds that will cause it to "pinwheel" on to land will also strengthen it just before it does, hitting coastal areas even harder; and the problem that the "sheltered" New York City coastline will instead funnel the storm surge directly towards populated areas, meaning that for the coast between Queens and the Bronx especially, there is more chance than not that the surge will be greater than six feet.

The effect of the storm is expected to be worse than last summer's Hurricane Irene, which, despite being thought of as a damp squib (pun not intended), still caused nearly $16bn of damage, mostly from flooding. But the comparatively underwhelming nature of Irene has meant that a number of people aren't taking Sandy as seriously as they perhaps ought to, with evacuations (Mayor Bloomberg ordered the evacuation of around 375,000 people in the worst-hit parts of the city) reportedly being largely ignored.

As well as the physical and economic damage of the storm, there is one other big effect that Sandy could have: it may mess up the US presidential election. No matter how well-run the response is, there are likely to be some areas still lacking power by the 6th. Contingency plans will be in effect, but if there is any uniformity to the areas affect – if, say, rural counties are more likely to be cut-off than urban – then there is the chance that some swings could be down to the storm.

The chance of it affecting the outcome is slim but the possibility is there. Who knows how the parties, and the public, would take it?

Hurricane Sandy making landfall. Image: WeatherBELL

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

Photo: Getty
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Scotland's vast deficit remains an obstacle to independence

Though the country's financial position has improved, independence would still risk severe austerity. 

For the SNP, the annual Scottish public spending figures bring good and bad news. The good news, such as it is, is that Scotland's deficit fell by £1.3bn in 2016/17. The bad news is that it remains £13.3bn or 8.3 per cent of GDP – three times the UK figure of 2.4 per cent (£46.2bn) and vastly higher than the white paper's worst case scenario of £5.5bn. 

These figures, it's important to note, include Scotland's geographic share of North Sea oil and gas revenue. The "oil bonus" that the SNP once boasted of has withered since the collapse in commodity prices. Though revenue rose from £56m the previous year to £208m, this remains a fraction of the £8bn recorded in 2011/12. Total public sector revenue was £312 per person below the UK average, while expenditure was £1,437 higher. Though the SNP is playing down the figures as "a snapshot", the white paper unambiguously stated: "GERS [Government Expenditure and Revenue Scotland] is the authoritative publication on Scotland’s public finances". 

As before, Nicola Sturgeon has warned of the threat posed by Brexit to the Scottish economy. But the country's black hole means the risks of independence remain immense. As a new state, Scotland would be forced to pay a premium on its debt, resulting in an even greater fiscal gap. Were it to use the pound without permission, with no independent central bank and no lender of last resort, borrowing costs would rise still further. To offset a Greek-style crisis, Scotland would be forced to impose dramatic austerity. 

Sturgeon is undoubtedly right to warn of the risks of Brexit (particularly of the "hard" variety). But for a large number of Scots, this is merely cause to avoid the added turmoil of independence. Though eventual EU membership would benefit Scotland, its UK trade is worth four times as much as that with Europe. 

Of course, for a true nationalist, economics is irrelevant. Independence is a good in itself and sovereignty always trumps prosperity (a point on which Scottish nationalists align with English Brexiteers). But if Scotland is to ever depart the UK, the SNP will need to win over pragmatists, too. In that quest, Scotland's deficit remains a vast obstacle. 

George Eaton is political editor of the New Statesman.