The cost of Katrina

This is one of a set of articles about Hurricane Katrina and the related flooding of New Orleans in Business Week. They appear to believe that the biggest impact to the economy will be from damage to the energy infrastructure. Without minimizing the impact on oil prices, in my mind a bigger impact is likely to come from clean-up costs (especially if they try to more or less fully rebuild New Orleans) and possible health-related costs (with all the people who have been wading through highly polluted and dangerous water--and at least some have consumed water out of desperation--I also predict a sizable disease outbreak among the stranded).

The impact of the hurricane cannot readily be understated. For better or worse (and there are legitimate military concerns with this course of action), I expect heavy demand to at least draw down troops from Iraq to help with the clean-up process. I hope that charitable appeals such as the one covered in the prior two posts bear fruit; in general, I believe that the nonprofit sector frequently is more efficient and compassionate than government bureaucrats.