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The Train They Call the City of New Orleans (part 1 of 2)Whiskey & Gunpowder It's time to discuss the good, bad, ugly, and the just plain stupid about what happened in New Orleans. We also need to look ahead at how this will impact our economy looking forward. Before attempting to undertake that task, let me first send out some heartfelt condolences to anyone who has been touched by the tragedy we calmly name Katrina. Many people have lost their homes, businesses, livelihood, and even their lives in this tragedy. Anything that anyone can do to help out will be appreciated, probably in more ways than any one of us not affected can imagine. Let's first dispense with the good. This is easy, because, quite frankly, there isn't any. Oh, sure, some material supply company or some refiner stock you own might rise in price, but, at best, that will be a temporary gain. Point-blank, no matter what economic cheerleader clowns, such as Joe Battaglia on CNBC are saying, there simply is no good that comes out of these disasters. If there were a net positive effect, we should all be wishing for more hurricanes. If you want serious economic
commentary I suggest following Paul Kasriel at the Northern Trust.
This is what Kasriel had to say in "Hurricane Katrina Had
No Silver Lining!": Ben "Helicopter Drop" Bernanke, chairman of the Council of Economic Advisers and perhaps next in line to replace Greenspan as Fed chairman had this to say: "Even the worst affected states like Louisiana and Mississippi should see some benefits in time...Reconstruction will add jobs and growth to the economy." Does anyone want "benefits in time"? Should we all be praying for such benefits? Bernanke is, quite frankly, clueless. What that means is that unless someone even more clueless can be found, he will most likely become our next Fed chairman. Of course, there could be an accident and someone competent might actually be nominated, but I would not count on it. Speaking of stupidity, let's take a look at our priorities: This is what Walter Maestri, emergency management chief for Jefferson Parish, La., had to say way back on June 8, 2004: "It appears that the money
has been moved in the president's budget to handle homeland security
and the war in Iraq, and I suppose that's the price we pay. Nobody
locally is happy that the levees can't be finished, and we are
doing everything we can to make the case that this is a security
issue for us." "The cost of the Iraq war forced the Bush administration to order the New Orleans District Office not to begin any new studies, and the 2005 budget no longer includes the needed money." According to the above link,
the U.S. Senate was seeking to restore some of the Southeast
Louisiana Urban Flood Control Project (SELA) funding cuts for
2006. In 2001, the New Orleans district spent $147 million on construction projects. When fiscal year 2005 wraps up Sept. 30, the Corps expects to have spent $82 million, a 44.2% reduction from 2001 expenditures. In "The FEMA Phoenix," an article about the Federal Emergency Management Agency (FEMA), The Washington Monthly reports: "Because FEMA had 10
times the proportion of political appointees of most other government
agencies, the poorly chosen Bush [Sr.] appointees had a profound
effect on the performance of the agency. Sam Jones, the mayor
of Franklin, La., says he was shocked to find that the damage
assessors sent to his town a week after Hurricane Andrew had
no disaster experience whatsoever. 'They were political appointees,
members of county Republican parties hired on an as-needed basis...They
were terribly inexperienced.'" Gee, it seems we did not have
an exit strategy for either Iraq or New Orleans. Then again,
the Fed does not have one for the housing bubble, either. We
just keep blowing bigger and bigger and bigger bubbles hoping
for some kind of miracle down the road. Mish telepathically receives another question: What hurricane forces were these levees designed to protect against? WOW! That sounds like a good question, so let's take a look. Here is a Q&A to the U.S. Army Corps of Engineers: "Q: Why did the levees
fail? "Q: Why only Category
3 protection? Not doing that levee work makes
you wonder what New Orleans might be like today if we'd been
spending billions of dollars a month right here in the United
States, instead of in Iraq. Bear in mind there is another
side to this story, so I will present it. Building on a flood
plain in a hurricane zone is just plain stupid. New Orleans was
a disaster waiting to happen. This disaster there is a perfect
example of the hubris inherent in man trying to control nature.
In attempting to control river flooding, we caused the destruction
of flood plain marshes and islands that would have helped prevent
the hurricane flooding that we saw. As a direct consequence of
our attempt to control Mother Nature, New Orleans actually sinks
a fraction of an inch every year. Over time, that adds up. "The federal government is already broke. It cannot foot the bill for the hundreds of billions, perhaps a trillion, that would be required to rebuild the areas that have been destroyed. First of all, they haven't even stopped the basin from filling up. Assuming they can solve that problem, just exactly how are they going to drain a huge lake that's below sea level, when the pumps have all been destroyed? "New Orleans is only part of the problem. There's Biloxi, Pascagoula, Mobile, Gulfport, etc., etc., etc. As the magnitude of the problem and the fact of our inability to adequately cope with the idea of a couple million homeless refugees here within our own borders become clear, there will be a sober re-evaluation of what the future holds for all of us in the United States. "New Orleans is ruin.
It may forever remain a monument to man's monumental stupidity." Click here to subscribe.
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