HOME	Your Most Trusted Source of Foreign News and Views About the United States

By Alejandro Nadal

September 7, 2005

Original Article (Spanish)

In 1971, one of the greatest periods of urban real estate speculation in U.S. history came to an end. On land expropriated from what was left of an ancient cemetery, the construction of one of America's greatest sports stadiums began: The New Orleans Superdome, with a capacity of 72,000 people. Around the stadium, the value of real estate rose like beer froth, and those that had privileged information became multimillionaires in a matter of months, buying cheap land and selling it at tremendous profits when it was announced that a major new port would be built nearby.

Insignia of the Saints

Superdome Before and After Katrina. Is It the Revenge of the Dead?

They say that the bad luck of the local major league football team, the New Orleans Saints, is a result of the fact that the gigantic construction project disturbed the peaceful repose of the deceased. But if there is a curse afflicting the hosts of the stadium, with Katrina's arrival last week that curse reached its apogee. More than 25,000 people descended on the stadium (the majority for the first time), turning to it as a shelter of last resort after they couldn't [or wouldn't] evacuate their homes during the emergency.

In the following days, the garbage and organic waste accumulated and transformed the stadium into a trash heap of monumental proportions, thus revealing that, more than a natural disaster, the catastrophe of New Orleans is a child of ambition and incompetence. The crises also exposes the poverty and corruption, the incompetence and perversity, of not only Bush and his people, but of an entire predatory economic system based on inequality and indifference.

The economic impact of the hurricane will leave deep scars. The port of  New Orleans is the most important port in the United States and fifth largest in the world, surpassed by only Rotterdam, Shanghai, Hong Kong and Singapore. The bulk of the exports originating in the gigantic Missouri and Mississippi River basins pass through New Orleans, a port that is now in a serious state of disrepair with its labor force scattered and bereft of any means of transportation. The repairs will take three months, which will be sufficient time for the negative impact to extend around the world. The ghost of the 1995 Kobe earthquake and its terrible economic impact back up these predictions.

The harbor facilities of Gulfport, which sits at the mouth of the Mississippi, is essential for the  export of American corn and soy beans. Prices for these exports will increase, and hence the effect on Mexican grain imports will begin to be felt over the next few weeks.

Two of Gulport's Intrepid Water and Sewage Workers on Tuesday

Katrina interrupted the production, refining and import of crude oil over a vast area of the Gulf of Mexico. About 12 percent of the petroleum and 54 percent of the gasoline consumed in the United States passes through this region or is processed in refineries along the Gulf coast. In addition, a quarter of the natural gas is extracted and/or passes through the region, and the Strategic Petroleum Reserve it is stored there.

Katrina destroyed part of this infrastructure, destroying two high-capacity gas and oil pipelines. Also, the lack of electricity interrupted direct distribution to a much greater region than the directly affected area. Twenty oil platforms were destroyed or separated form their anchorages and Port Fourchon (south of New Orleans), a place through which 17 percent of the American crude and natural gas supply passes, will require several weeks to recover. The impact on the price of gasoline will be long-lasting.

Which of These Doesn't Belong? Scene in Alabama

The macroeconomic effect will be felt over the next few months as search and rescue operations continue. Thus, employment in the region has just undergone an extraordinary shock.  In fact, there are no payments being made, there is no demand, and economic activity has been reduced to almost zero over a huge area. The weight of the evacuees on other cities, like Houston, will begin to be felt in the weeks to come, as reconstruction drags on. 

The impact on consumer confidence, a key indicator in taking America's economic pulse, will effect global economic growth. In order to pay the skyrocketing cost of gasoline, U.S. consumer will end up spending less on other things, which will have a generalized impact on economic growth. The effects will extend into a wide spectrum of global economic sectors and have unsuspected repercussions. 

It is possible that Katrina will interrupt the U.S. Federal Reserve Board's policy of increasing interest rates. Nevertheless, if elevated gasoline prices begin to affect inflation, the Fed will face a dilemma. If it increases interest rates to control inflation, this will restrain growth. In addition, the real estate bubble could burst, dragging the stock market into another depressive episode, the effects of which would be felt around the planet.

Perhaps the only the good thing about Katrina is that it could accelerate Washington's withdrawal from Iraq.