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View Diary: An Economy On the Brink (153 comments)

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  •  Excellent analysis. (none)
    Just one point, though. Rebuilding and repair in NOLA will provide a (short to medium term) boost to the construction industry, which may help mitigate the reduced number of housing starts elsewhere. There are also, I predict, going to be some major upgrades to the levee system, which may take a decade or more to complete.

    Granted... that's, nearly all of it, government and insurance money... not the best of sources, but at least it will start more dollars circulating through the economy.

    Folly is fractal: the closer you look at it, the more of it there is. - TNH

    by Canadian Reader on Mon Sep 05, 2005 at 10:01:03 AM PDT

    •  Natural Disasters (4.00)
      are essentially a zero-sum game.  They act as a transfer of wealth, not a creation of wealth.

      "You think you can intimidate me? Screw you. Choose your Weapon." Eliot Spitzer

      by bonddad on Mon Sep 05, 2005 at 10:05:30 AM PDT

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      •  Would it be wealth creating (4.00)
        if we gave clean up work to citizens rather than the usual suspects?  Isn't this what the New Deal was?  Taking people to do work needed in infrastructure, etc.  I continue to be worried about eminent domain and the developers sweeping up everything - and of course, getting tax dollars to shore up flooding - it would be to their benefit to consider environmental issues such as wetlands - but they won't.  They don't get it.  Also, we have an opportunity to create affordable housing. (smirk)

        The beneficiaries are likely to be...large corporations and development firms. (O'Connor, J. dissenting in Kelo). God bless you, J. O'Connor.

        by xanthe on Mon Sep 05, 2005 at 10:15:16 AM PDT

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        •  Those in charge would never (4.00)
          do something that responsible. I agree with speculation put forth here and elsewhere that the plan is to scatter the population and rebuild in a purely corporate manner. Provide minimal low income housing and withhold assistance to those low income families to return. They will rebuild NO like they have tried to rebuild Baghdad. Overpaying crony corporations to dole out pitifully small contracts to the little guys doing the actual work. It will be a shining industrial based city with no personality or warmth designed to make the poor unwelcome.
          •  Penny wise Pound foolish (none)
            the part that kills is, Katrina/Buschco will represent another major trip to the taxpayers' grandchildrens' wallets for a civic disaster that was preventable! I am so sick of our short-sighted Korporate culture of magnificent long term waste
          •  So we all throw our hands up and (none)
            despair?

            The beneficiaries are likely to be...large corporations and development firms. (O'Connor, J. dissenting in Kelo). God bless you, J. O'Connor.

            by xanthe on Mon Sep 05, 2005 at 08:06:48 PM PDT

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        •  Nope (none)
          first, the New Deal did nothing to get us out of depression (WWII did that), it did prevent another one though.  Second the difference here is that the work is going to be done, so who does it is a zero sum game.  In the New Deal, the work done by CCC, WPA, etc., was work that was not previously planned, therefore it employed people that were not otherwise going to be.  
        •  The usual suspects (none)
          I've already read that Halliburton has some rebuilding contract.

          Keep an open mind, but don't let your brains fall out.

          by Unstable Isotope on Mon Sep 05, 2005 at 12:33:50 PM PDT

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      •  Zero Sum? (none)
        I have a question about this notion of a natural disaster being wealth creating.  I understand how it spikes those statistics that economists measure but does it really balance?  If you bought your house for $100,000 and the heat in the market raised its value to $150,000 prompting you to refinance your mortgage, pulling $50,000 equity out to buy flat screen tv's and such.  If the hurricane wipes out your house and your flat screen, does your insurance rebalance you to:
         a) $100,000  b) $150,000  or c) $200,000?  

        I'm guessing its a.

        •  I can't answer that (none)
          I would assume it depends on the facts and circumstances of each insurance settlement.

          "You think you can intimidate me? Screw you. Choose your Weapon." Eliot Spitzer

          by bonddad on Mon Sep 05, 2005 at 11:14:20 AM PDT

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        •  Usually Replacement value for structure (none)
          However, Homeowners insurance doesn't cover floods.  Add to that a demand spike in construction materials, so even covered losses may not cover full reconstruction.

          The rapid rise in home values in some markets is not due to the structure, but the land upon which it sits.  So fully covered, non flooded, homeowners shouldn't be too bad off, except for furnishings, clothing etc.

    •  that was my question (none)
      thanks - i was about to ask just that about the effect of the gulf coast reconstruction effort on the housing industry.

      though there's another part of it, right?  that's what happens to construction.  but what about housing prices?  on the one hand housing supply has just taken a huge hit, and demand is way up.  but the units in saint bernard parish are hardly in competition with overheated markets like westchester or los angeles county, so i really don't know what would happen to the housing market nationally.

      anybody able to speak to that?

      we'd better decide now if we are going to be fearless men or scared boys.
      — e.d. nixon, montgomery improvement association

      by zeke L on Mon Sep 05, 2005 at 10:13:51 AM PDT

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      •  Couple of points (4.00)
        Unlike many other disasters in the past this destroyed huge chunks of public and private infrstructure, large chunks of highway gone, oil transport and production lost and damaged, large port facilities eliminated etc..  Andrew on the other hand, flattened a lot of buildings and houses, but infrastructure was largely intact.  It'll be a decade minumum before the Gulf Coast is 100%.

        The rebuilding may be a zero sum, but the lag will be a killer, especially the higher fuel costs.  

        Based on other hurricanes, rebuilding housing put significant demand pressure on materials, invest in plywood manufacturers, roofing suppliers etc.  Home Depot Lowes etc.. will see a short bump, but most of the volume builders use other suppliers.  

        As far as home prices, fuel costs will be the driver.  A lot of the recent development in the exurbs could be at risk for reduced demand, plus the cost of heating and cooling that big new McMansion just went up significantly.  In addition markets that are risk for significant worker displacement, pehaps Atlanta, Seattle, Michigan are aslo at risk.  

        •  thanks (none)
          good thoughts.

          it sounds like the reconstruction could be a little bit positive in terms of offsetting the hurt construction will be facing soon, for the working stiff, that is.

          i like xanthe's idea - we should be working on ways to tilt the scale in favor of small business, independent contractors and local supplier.

          that should be a central part of our 2006 campaign message.  and since the reconstruction should be starting right away, we should get started on that part of the campaign immediately.

          we'd better decide now if we are going to be fearless men or scared boys.
          — e.d. nixon, montgomery improvement association

          by zeke L on Mon Sep 05, 2005 at 01:28:20 PM PDT

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