The news sites and the blogosphere continue to react sluggishly to developments in New Orleans. There are real possibilities here for some extraordinarily serious consequences, many of which don't seem to be getting much discussion.
- Gas prices, already high, are headed much higher in the near future. $4 gas is, apparently, imminent. Europe manages with even more expensive gasoline, but this will create hardship and dislocation. For example, when filling the family car costs $40 or $50, families are going to think twice about buying suburban and exurban houses.
- Nobody has said a word about the New Orleans Museum of Art.
- Do New Orleans homeowner's policies typically cover flood damage? Or not?
- A lot of people with cars houses in New Orleans have lost a lot of property. Those that evacuated don't know how much they've lost. Some won't know for weeks. After October 17, bankruptcy laws become much harsher. Should people go bankrupt right away?
- If New Orleans really is going to be evacuated for months, this creates an unprecedented policing problem. You'll have an entire city of empty houses and businesses. How are you going to handle (or even notice) the burglars? (Any precedent for this?)
- It's one thing to spend a night or two in a stadium, riding out a storm. Spending a couple of months with 20,000 close, personal friends in the Astrodome is going to be interesting. For example: who decides who gets the best sleeping spots?
- If you were sitting on a stock of oil (or a refinery), wouldn't you be tempted to make a killing by holding up your stock or lowering your production rate while the price is climbing, and then selling at the top? Remember, there are a lot of oil guys from Texas in high places...
- Who is going to get the contract for rebuilding I-10? For the cleanup? For the levee construction program, which was slated to run through 2050 but which now is bound to be put on the front burner? How about all those oil platforms?
- If energy costs and the (temporary) closure of a major city and port push the economy into a recession, will the Fed cut rates in the teeth of a big federal spending jump and the huge deficits that will entail?
- How about a tax increase to pay for rebuilding? Say, restore the estate tax for estates larger than 10M?