Posted on 09/07/2005 8:43:17 AM PDT by Matchett-PI
The most noticeable thing about recent government in New Orleans is: there wasn't any. Just now is it starting to come back.
Government is politics. Politics is money. Money and economics are married to each other.
George Friedman, founder of Stratfor Global Intelligence, writes last Thursday, "... geopolitics will force the city's resurrection, even if it is in the worst imaginable place." His logic is penetrating, comprehensive, and difficult to dispute. I believe his conclusion is highly valid.
Where's the money going to come from? You guessed it--Washington.
Even as commentators point to the potential for exploding inflation from runaway energy prices, the Fed will be acting now to flood massive amounts of new money into the banking system to pay for the reconstruction of New Orleans and perimeter.
First stopping place for the money will be the stock market where its the initial effects will be seen in spring or summer of next year. The market will bottom and then start a great rise to new highs. As the money moves on from there, it will begin to spill over into real capital investment and expenditure, booming the economy again by the end of 2006 perhaps in time for the midterm elections.
The Fed has done this before: mostly recently in 1998 when Russia defaulted on her bonds and Long-Term Capital Management was collapsing; then again at the end of 1999 in anticipation of Y2K, the catastrophe that didn't happen. These were both short-duration events. New Orleans will be long drawn out. The Fed will keep feeding and feeding.
I do not much believe in short-term forecasting. Yet the stock market may give up surprisingly little ground in view of the forthcoming Fed posture related to Katrina's devastation.
"Follow the money." It should begin to show up where we can see it in six months to a year in the stock market and the economy.
Rebuild, rebuild, and rebuild some more!!!
Its the American way, my friend!!!
BILLIONS and BILLIONS are going to spent on New Orleans, Mississippi, etc.....It will be a booming region.
Exactly. Henry Hazlett pointed out that a broken window does generate economic growth---fixing the window, more police, lumber/glass sales---but at the expense of other stuff we would be doing with that money (more productive.) So I think there will be a boom, but I think that it would have been even better, obviously, without the hurricane.
What are you gonna use for a port?
"The President of Mexico has offered 2 million construction workers."
They are already here, you can find them in California.
A smart investor would ignore Baton Rouge and start looking at waterfront industrial properties in major cities like Seattle, Portland, and Oakland -- and smaller cities like Superior, Wisconsin and Duluth, Minnesota. With The port of New Orleans out of commission for a while, these ports are going to become alternative hubs for the transportation of products to and from the heartland of the U.S.
Chicago is another good example of rebuilding after a hideous disaster. The Fire of 1871 brought total devastation, but Chicago was rebuilt and changed the building codes as well.
You make some good points.
Things like this are always bullish for the economy overall.
That's where the author's logic is so flawed - the port doesn't need New Orleans. It needs infrastructure (physical and power) and it needs 15,000 or so employees (just a guess) who can come from anywhere in the surrounding region. New Orleans is tourist town, and this author is a bozo.
That said, untold billions will be spent on the city's recovery.
Not picking on this one particularly, but many of the posts in this thread seem to be based on the "broken window fallacy". Bottom line: instead of having a city and a hundred billion dollars, we will instead have a city and no hundred billion dollars. The nation will be poorer by that amount. The benefit to contractors in LA will be matched, and then some, by losses to other areas in the economy.
NO could end up looking a whole lot different.
Maybe it will have canals through the city, like Venice.
It could be smaller if they upgrade the levee system. Which incidentally is not a good idea as I understand the winds that hit the city were a CAT 2. The buildings will not survive a CAT 4 wind storm so why protect them from a flood that comes after they have been blown away?
I hate to disappoint the author of this article, but I'm betting that not a single one of the tens of thousands of people trapped at the Superdome and the convention center were port employees.
In fact, I'd be surprised if more than a few dozen of them have ever received a W-2 statement from the IRS in their lives.
The report is entirely correct in saying that there will be a lot of economic activity, i.e. money changing hands from insurance companies to the insured to Home Depot, etc. Also the gov't will be spending money to rebuild roads, etc.
I didn't see anything stated here that syas we haven't had a huge hit to the total wealth of the nation. Since the thrust of the article was that New Orleans was needed to keep the economy of the great interior going, it wasn't essential to point out the great loss we've taken; the loss is implicit in the need to rebuild.
The BWT theory only applies if you claim the loss of New Orleans is a net positive after rebuilding and not acknowledging the foregone possible other uses of our savings.
What this article claims is that, given that NO is gone, that rebuilding NO is a better choice than other use of our savings.
How about Texas? Florida? Alabama? Naw, that would be too easy.
No. This is 2 million MORE.
Thanks for this good news ping!
I was actually responding to all the posters who WERE invoking the broken window theory, not the article itself.
Not only on the city, the entire region. Think of all the construction materials, refrigerators, cars, stoves, household furniture, etc., which will be required. Big bucks will be pumped into the region for years to come. It's called making lemonade out of lemons.
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