The Katrina Economy: It's Actually Going to Be Pretty Good

self | 9/10/05 | LS

[meadsjn]

There are some more points that support your analysis.

1) Some of the media have reported that over 67% of the NO population was on welfare. Even if we couldn't improve that rate, the monthly costs won't be any greater once the recipients are resettled in other cities and states. Personally, I believe such a rate represents a huge economic and social failure, and that many, if not most, of the recipients will opt for a more productive life in different circumstances.

2) Given the above welfare rate for the NO area, it obviously has not been an efficient use of land, labor, or capital for the past x generations. We can, and should do better with our resources.

3) The expenditures for the cleanup and restoration will be going mostly into the American economy instead of other economies half-way around the world. This should be the norm rather than the exception. It's a shame it only happens after a disaster like Katrina.

[F16Fighter]

"Normally, economics would say that this would result in higher prices for things, but that's where politics comes into play: no politician wants to appear to be contributing to a disaster, so I predict Greenspan (essentially a political appointee) and the Fed will either leave interest rates alone or even lower them to facilitate 'recovery.' This will give the new-home builders their second wind."

But what about $3.00 per gallon of gas inevitably resulting in higher prices across the board for ALL goods, the quarter billion dollar tab for NO, and the billions draining of the federal coffers for the Iraq War?

Either the gub'mint raises taxes OR prints up more money.

And btw, I happen to agree with you regarding Greenspan -- he may lower the prime in hopes of maintaining some kind of economic equilibrium in the housing market.