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Dave Clements - To back up CS's claim on the adjustable rate mortgages, a report put out recently by the Mortgage Bankers Association stated that, of the mortgages closed last year (re-fi or purchase), 32% were ARM's.

Bloomberg.com

To add more fuel to that fire, and the article above touches on it, real estate appraisers are now starting to come back to reality. At least here in Michigan, gone are the days of double digit property appreciation values.

As an aside, Charlie, I would point out that what sold folks on the ARM's probably had more to do with paying off debt (consolidation loans) and the ability to keep more cash in pocket. But yes, some inscrutable lenders, I'm sure, utilized your "rates will only go down" reasoning.

And while a lot of folks are running round talking about the impending collapse of the sky, I have to say that I believe it is merely a market adjustment. While the number of sales is down, property appreciation is still there, albeit not nearly as robust as it was.

Stuff like cholera is one of the reasons why military ration packs include water purification tablets.

It's also one of the reasons why the British military rat-packs include teabags and boil-in-the-bag food. You can cook your dinner and make a nice hot cup of tea. at the same time.

Anyway, here's a link to the BBC's decription of the British 24-hour rat-pack. Worth reading (and the comments) for anyone who has time to do a little preparation.

http://news.bbc.co.uk/1/hi/magazine/4221838.stm

OK... all the USisans I know have been more sensible. I didn't realise the variable rate disease had spread.

Dave: over the past decade or so a lot of Americans have been sold variable-rate mortgages "because interest rates are only going to go down".

Martyn: forget cholera -- cholera is trivially treatable if you have a source of heat for boiling water, and a supply of sugar and salt. (It kills through dehydration; the treatment is simply to make the victim drink lots of isotonic fluids until their gut flushes itself clean -- or, if they can't drink, to hook them up to an i/v drip.)

The real forthcoming medical threat is H5N1, which from some reports in Malaysia may have already hybridized into a human-transmissible form and be about to go epidemic. Ick.

a single percentage point can batter millions of home-owners into bankruptcy

Won't the prevalence of fixed rate mortages in the US protect a single many home owners form the immediate effect of interest rate rises? Its not like the UK where your payments go up and down with base rate...

Martin, people will frequently strive to stay in their homes, because that's what they know, and that's where they live. And in the present circumstances, their trust in the government is probably rock bottom.

Each day makes this situation at once more ghastly and farcical - Bush may have been asleep at the wheel but Murphy was evidently wide awake, 'cos it seems as though whatever could go wrong, did go wrong.

Something that is really concerning me, however, is the seeming determination of many to stay on in a plague zone. What sort of country is it - what sort of opinion of their neighbours do people have - when they think cholera is a preferred option? And it is cholera we are talking about, not the user friendly, not very serious, maybe the runs at worst e-coli outbreak that the media decided to call it. Insured or not, if someone steals something you are still alive. If you get cholera you will be dead, horribly (unless anyone believes the authorities will be able to cope with that better than everything else, and they are batting zero for a hell of a lot)

The sight of the Emperor Bush declaring he would hold an enquiry would be laughable if it wasn't so pathetic. He genuinely has no idea that he is (part of) the problem, and his mouthings remind me of Jonathan Aitkin marching into his perjury trial, confident he would win because whatever he - the Knave of Hearts - said had to be true because he - the Knave of Hearts - said it. Like I say, it would be laughable if it wasn't pathetic and we weren't seeing real people suffer and look like continuing to suffer for a long time to come.

Question. How did the media of the world get into New Orleans before the relief effort, and where did they get their food, power and water in a city where there were none of the above?

As for NASA, Charlie - just think of this word. Scapegoat. The fact that they were probably the only Federally funded quango to have nothing whatsoever to do with the failure just makes them more suitable to carry the can. After all, they're scientists and engineers, and everyone knows the guy in the white coat is ALWAYS to blame.

The state of NASA is either Bush or Clinton's fault too, depending on who you ask?

(What, take the piss out of US political discourse? Me?)

Guys -- what does NASA have to do with the geopolitical aftermath of Hurricane Katrina?

JVP:
>Scientists at NASA? Mostly engineers, technicians, and >managers at NASA, enabling scientists as Principal >Investigators to figure out what spaceraft instrument data >means. Well, hats off to Professor A'Hearn et al., the >scientists who captured the amazing results of the Deep >Impact mission.

Nice to hear something nice about NASA. I may not be perfect, but I think the whole bashing is somewhat
unfair. Just think about the number of successful
NASA-missions (or with NASA involvment) are going on
at the moment - Deep Impact, two Mars-rovers (how many orbiters at the moment ?), Cassini, Stardust, and two (!)
space telescopes, Hubble and Spitzer (I probably even forgot some). Each of these mission already had at least significant impact on astronomy or planetary sciences.
Remember the times when there was maybe one such mission
all few years ?

Andreas

Scientists at NASA? Mostly engineers, technicians, and managers at NASA, enabling scientists as Principal Investigators to figure out what spaceraft instrument data means. Well, hats off to Professor A'Hearn et al., the scientists who captured the amazing results of the Deep Impact mission. Comet nuclei have the methyl cyanide so useful in initiating life on Earth! And, somewhere between the stars, larger comet nuclei might be hot enough to evolve their own life, as the late Sir Fred Hoyle suggested.

"New Orleans: A Geopolitical Prize"
    By George Friedman
    STRATFOR
Thursday 01 September 2005

"... During the Cold War, a macabre topic of discussion among bored graduate students who studied such things was this: If the Soviets could destroy one city with a large nuclear device, which would it be? The usual answers were Washington or New York. For me, the answer was simple: New Orleans...."

MSNBC has a video today of a city official saying that a great deal of NOLA housing in the Orleans Parish flood zone will probably be razed and new structures built. My earlier post re: gentrification and the future absence of low income housing for people of color seems to be bearing out. Some of those homes were owner inhabited. Most were owned by absentee landlords who were white , black and every shade in between. The land those ruined houses sit on is now ever so much more valuable than it ever was before. The greater part of the population of the people of color that left NOLA will never again walk the banquette of their old home street. Some see it as fortuitous urban renewal. A great deal of wealth will result from that misery.

Maybe we should just let scientists run the country like we are finally doing with NASA.

Science is far from in first plac at NASA. If it were then they wouldn't have to follow Bush's Moon/Mars project and could do something more sensible instead.

Shoot'em and let the gators have them. They are taking shit from people who desperately need it.

Er, there's a possibility that they also desperately need it. As someone mentioned on other blogs, if I had a kid whimpering from thirst, I'd also be robbing nursing homes and cop cars.

Edited by author 09-03-2005 04:36 PM
The Free State Project has its roots in Federalism:

This would probably be more of a basis for it:

The Federalism Project:
http://federalismproject.org/

http://plato.stanford.edu/entries/federalism/

Limiting the role of central government and creating more competition between states hence no more emperor Bush (Slick Bushy) or Clinton for that matter/Kerry/Dean/Grandma etc... It doesn't matter. Any clown can come along and start ordering people around but if you create open competition (Like Linux distros) then it wont happen.

We need to rethink our country and do it quick and I will get very involved.

Also America is not the only culprit.

"The [USA] government seems to worship scarcity." Only for those below the megabuck per family class. Above that (i.e. starting at the upper part of the Professional class of doctors, engineers, lawyers, et al.) the USA government is engaged in wholesale plundering of the assets of this and the next generation of the majority.

My wife, a dual British-Australian citizen, says that in any civilized country, the massive failure of the Bush administration would bring down the government.

It is not so simple. Emperor Bush II, after all, came into office by a coup, and consolidated power 4 years later (involving election machine software as well as more traditional fraud). In the process, he betrayed (1) the Bush family (firing the remnants of his Dad's friends from Cabinet-level and the next rung down), and recall that Bush Senior fought to SAVE the wetlands around New Orleans; (2) the rump-state of the Republican party (which had been nominally run by the technocrat Goldwater, whose election failure led to the takeover by the anti-government Reagan wing, which in turn was displaced by the current anti-Science Imperial Theocrats; (3) the country (as reconfirmed by the Gulf Coast fiasco); (4) the World (unilateralism, Iraq, Bolton in UN, etc.); (5) the universe (see Anti-Science, supra), where putting an actual scientist in charge of NASA may be too little, too late, as the current NASA Administrator (whom I admire) is still married to the Shuttle/Space Station welfare system.

It makes me physically sick to see, on TV, Emperor Bush II put his arm around Michael Brown (fired for Gross Incompetence from his previous job), call him "Brownie," and praise FEMA action in one paragraph, while calling it "unacceptable" in the next.

Message to terrorists: hit a major US city with impunity. Homeland Security cannot do their minimum job even in a city where contingency plans have been effect for years, and RPGd in detail recently (the "Hurricane Pam" exercise in New Orleans).

This is the way the world ends, not with a bang or a whimper, but the gurgle of a child drowning in an flooded attic.

Edited by author 09-02-2005 11:19 PM
The government seems to worship scarcity. “Well we had to truck food in on wheel and cart and most of the men were pregnant and such.” An obsession with timing. In 1812 they would have been ready with some food and a decent backup guard from Texas knowing the hurricane was coming a week in advance direct toward the city. They would have seen it by boat. There were only the New Orleans police out there for 4 days and they couldn't police the city because they were saving people.

It's weird but this reminds me of the overly Historical Sci-Fi being written today. Like an off balance time warp.
These usually means a large inefficiency somewhere.

An example of our ability today to manage scarcity that isn't being done in the U.S.
http://www.capp.ca/default.asp?V_DOC_ID=688

In Accelerando it says the closer we got to the Singularity the more government control came to be until society was too open to manage.
The more the central-government tries to manage and hide information the more irrelevant it becomes. Gladly Accelerando stayed relevant for me by shaking it up. As a side, Linux is moduler based also.

Bush made some wild statements about Fuel Cells at the election. What??? I dunno
Clinton made some weird statements about nanotech in the early 90's Huh???

Maybe we should just let scientists run the country like we are finally doing with NASA. Is this a sign?

A probable OSI/Linux type solution.

Open merit-based government:
http://www.freestateproject.org/

Libertarians are the leaders here, as they are strong moderators, but are not the exception to the rule. No single political style rules all

I'm old enough to remember Ronald Reagan canceling virtually all the alternate energy R & D projects the DoE and other agencies had started working on under Carter following the 70s oil shocks. Solar, wind, geothermal, hydrogen cars, hydrogen storage, fuel cells and several others. All long-term, online in 10-20 years stuff that would also have helped the greenhouse problem that was then just starting to be talked about. No need to waste government money on that nonsense now that oil was cheap again and major corporations needed tax relief. I remember thinking "Oh dear, we're probably going to live to regret this..."

Charlie

Oil price hike? You ain't seen nuthin yet. Me? I'm an old man. I remember the first two price hikes, caused by OPEC (remember them?) We wiseguys in the West got our own back by lending all those Middle East petrodollars to Third World countries in the form of loans they would never be able to pay back and then took it back from them in terms of grandiose building schemes they didn't need and couldn't build - but we could - or in the form of armaments they needed to fight the surrogate wars we fomented.

Fuck you very kindly, Sheikh Yamani.

Plus ca change, mais c'est la meme chose.

Once again, whatever we may think of Gee Whizz or any of our leaders, elected or otherwise, those are real people dying on the Gulf Coast and the questions our American friends MUST ask themselves is whether any died because the organisation wasn't up to delivering the aid (and could the evacuation been done more thoroughly - just 'cos you're poor doesn't seem like a good enough reason to drown) and, if so, what are they going to do to make sure it doesn't go down that way the next time - because their will be a next time.

Stephen:

Actually, one can't keep petrol reserves--it has a lot of volatile components and will break down in only a couple months. Diesel is much more stable, which is why it's the main choice for military vehicles. The Strategic Petroleum Reserve was intended to prevent complete collapse in case the USSR got miffed and nuked Yanbu, or if OPEC got in a snit and turned off the tap. Running our oil supply chain at its maximum capacity is a relatively recent phenomenon, due to zero effort to increase fuel economy, a growing population, and low fuel prices that encouraged sprawl and SUVs. So nobody made an effort to reinforce that particular weak link, and there's no quick way to do much about it. The US is simply going to have to use 10% less fuel for at least a month, and likely more.

Dave:

If al-Qaidi decides to blow up anything in Saudi Arabia, it will be intended to hurt the Saudi royalty, not us. It's hard to imagine what else the US could do to boost bin Laden's standing without getting into B-movie villian territory, so why bother provoking us? Better to save the sleepers for when the US seriously considers abandoning their #1 jihadist recruitment effort, aka Iraq.

 There are oil reserves but they are stored as crude oil, and the Federal government has released some of this for domestic production. The refineries that turn this into gasoline and diesel fuel have been running at the ragged edge of their production limits for some time now though and Katrina whacked several of them, knocking out a signifiant percentage of the nation's refinery capacity. Even after the damaged plants are brought back on-line there is still the problem of shipping the refined fuel away from the Gulf to the rest of the USA -- several pipelines were also hit.

 Just-In-Time became a mantra for efficient business in the 80s and 90s, with little or no buffer stocks of expensive material stored in expensive warehouses, relying on daily deliveries from suppliers orchestrated by computers and telecommunications links. JIT breaks bad when there is a disruption in the supply chain though and something like Katrina is bound to cause knock-on effects as other supply chains dependent on gasoline get hit in a cascade.

One of things I've learnt about the US from this is that there is absolutely no petrol reserves in the US, they're talking about shipping them across from Europe. I find this shocking.

Just to be more depressiong, here's a thought... Wouldn't it be a great time for al-Qaida to mount an attack on Saudi oil facilities? Just an attack would bump up the price of oil. If they're actually successful in cutting production, then the effects could be enormous.

As an FYI, there is an interesting article by Jonathon Weisman on the Washington Post webpage on the economic impact of Katrina. He interviews reps from places like Dow Chemical and a PR rep for the Air Transport Association.

Fuel prices for aviation are shooting up, and a lot of chemical manufacturing capability is reduced. This should have a serious impact on the near term US economy.

Dave,

The Army National Guard units, which fall under State Governor authority (none of them have been Federalized) do have the full authority to use force to restore civil order.

All the Governor has to do, is give the order.

And I might point out, they are stealing more than mere bottled water and cheetoes. They are breaking into medical facilities, nursing homes, the homes of the dead, hijacking food shipments being carried in police vehicles as well as stealing cars, firing on Army helicopters, law enforcement, etc, etc, etc.

If it were me, if I was there as a Guardsman, I'd throw down my gear and tell my chain of command I wouldn't do another thing to help until I was given a rifle, some rules of engagement and the authority to put an end it to this anarchy.

And if they die, well, maybe they should have thought about that.

Shoot'em and let the gators have them. They are taking shit from people who desperately need it.

Respects,
Steve
Northtown, Missouri

"martial law" is one of those things which varies by place, and Louisiana is a bit different to the rest of the USA.

Under English Common Law there's no such thing. What would happen is that the military, as an organised and disciplined body of Englishmen, would be fulfilling the general duty toi maintain the Queen's Peace. It may even be that the Sheriff calls out a posse. More likely, there's statute law from the Cold War era, and maybe before, which affects all this.

I know that the USA has Federal Law which requires the military to have special permission before they can do such things.

Alex--

Today at the job I also heared that twenty(!) oil rigs were missing. I work at a company that makes sea propulsion systems (propellers, CPPs, side- and azimuth thrusters, waterjets), and we have a *lot* of business in the Gulf of Mexico.

So I'm afraid that this blog post of rig losses is on the money, indeed.

Port activity is stretched up the Mississippi River for 50 miles. Facilities in the immediate NOLA area may be affected in the near term due to transport and highway access but adjustment will be made. The loss of port capacity in NOLA will shift north to undamaged facilities with available capacity. As long as the Mississippi River channel is navigable ships and barges will come and go. The worst damage is to the populated areas of old NOLA. If there is rebuilding in the NOLA basin, it will be to the exclusion of the greater number of the former residents. The city will be rebuilt on the basis of gentrification and upscale development. The French Quarter will be carefully repaired and shored up in many ways but the underclass that lived in the immediate area that gave the Quarter its real flavor will be excluded. I foresee the mass destruction of damaged lower value homes on lots that will now surge in value. A lot of folks now sheltering in Huston will become Texans because as their absence from NOLA goes on in time, many will reluctantly accept settling elsewhere. A truly sad consequence of this storm.

Scary blog post from The Oil Drum about rig losses in the Gulf:

http://216.127.55.83/story/2005/8/31/83553/8973

And a more thoughtful one about the future of energy in the US:

http://216.127.55.83/story/2005/8/31/124723/302

Comments are, as usual, variable. Some good data about the seven refineries that are off-line is buried in there.

Advocating "a slug to the skull" for looting is at best monstrous and at worst monstrous and stupid. If people start seeing cops and soldiers as yet another threat - which they will if they go around popping caps in looter's asses over televisions and bottled water - an awful lot more people will die.

Looters (I describe a looter as someone stealing something that is not needed for basics, i.e. I would not shoot someone stealing a loaf of bread) should be terminated with extreme and immediate prejudice.

As it is, there are armed gangs firing on Army National Guard helicopters (that alone should get you a slug in the skull) as well as law enforcement.

You shoot them because it will escalate and it has been escalating precisely because they haven't taken firm measures.

Further, Martial Law was declared before the hurricane hit. The civil law is currently null and void until martial law concludes.

The longer this nonsense goes on, the longer martial law will last.

Besides. Practical matter. Just where are you planning on imprisoning all of these looters?

Further, what if they Resist?

Respects,
Steve
Northtown, Missouri

There's a lot of vague kneejerking about Theft versus Looting under Louisiana Law (which is Napoleonic). For the record:

Louisiana Looting Law
LA R.S. 14:62.5

A. Looting is the intentional entry by a person
without authorization into any dwelling or other
structure belonging to another and used in whole or in
part as a home or place of abode by a person, or any
structure belonging to another and used in whole or in
part as a place of business, or any vehicle,
watercraft, building, plant, establishment, or other
structure, movable or immovable, in which normal
security of property is not present by virtue of a
hurricane, flood, fire, act of God, or force majeure
of any kind, or by virtue of a riot, mob, or other
human agency, and the obtaining or exerting control
over or damaging or removing property of the owner.

B. Whoever commits the crime of looting shall be fined
not more than ten thousand dollars or imprisoned at
hard labor for not more than fifteen years, or both.

Louisiana Theft Law
LA R.S. 14:67

A. Theft is the misappropriation or taking of anything
of value which belongs to another, either without the
consent of the other to the misappropriation or
taking, or by means of fraudulent conduct, practices,
or representations. An intent to deprive the other
permanently of whatever may be the subject of the
misappropriation or taking is essential.

B.(1) Whoever commits the crime of theft when the
misappropriation or taking amounts to a value of five
hundred dollars or more shall be imprisoned, with or
without hard labor, for not more than ten years, or
may be fined not more than three thousand dollars, or
both.

(2) When the misappropriation or taking amounts to a
value of three hundred dollars or more, but less than
a value of five hundred dollars, the offender shall be
imprisoned, with or without hard labor, for not more
than two years, or may be fined not more than two
thousand dollars, or both.

(3) When the misappropriation or taking amounts to
less than a value of three hundred dollars, the
offender shall be imprisoned for not more than six
months, or may be fined not more than five hundred
dollars, or both. If the offender in such cases has
been convicted of theft two or more times previously,
upon any subsequent conviction he shall be imprisoned,
with or without hard labor, for not more than two
years, or may be fined not more than two thousand
dollars, or both.

C. When there has been a misappropriation or taking by
a number of distinct acts of the offender, the
aggregate of the amount of the misappropriations or
taking shall determine the grade of the offense.

Three dollars a gallon has arrived in Kansas City. We are usually one of the last to go over any given dollar mark. As with other places, there are rumors that stations may run out. I'll probably run the vehicle out during my lunch break to the local station and put in what I can.

Then I'm going to sit down with the budget and figure out what to cut.

Chances are, what I will do is simply drive less. I can't avoid that on Monday through Wednesday due to college classes right after work (and the buses in Kansas City, especially if you live North of the River, aren't worth a shit in my opinion). But Thursdays and Fridays, I may just break down and walk the five miles into Downtown Kansas City, or break the bike out.

That'll work right up until our damnable winter hits (usually arrives first day of October and doesn't leave until mid-May).

That said, books are usually the last thing I cut. They are right next to rent, food, beer and gym membership.

Respects,
Steve
Northtown, Missouri

Alex: thanks, WaPo link nicked for next blog entry.

>"What are the likely consequences (locally and globally) of blowing a 5% of GDP sized hole under the waterline of the US economy?"

It's clear then, Osama Bin Laden is almost certainly behind this Al Katrina too. We will be declaring war on hurricanes very soon now.

Antti

Washington Post on fuel prices:

http://www.washingtonpost.com/wp-dyn/conte...R2005090100705.html

I have heard that roughly 10% of the country's gasoline refineries are off-line. Not such a big number but we were using them at capacity last week. Search, rescue, and recovery are going to get a higher priority than Joe Public, obviously. Lots of generators being run, but less driving in storm-affected areas.

We will know within 72 hours--probably less--whether this is price gouging or an actual shortage. I very much doubt that our admistration has any kind of rationing plan at hand, so any crisis will be left to Adam Smith's invisible hand.

Don't expect a lot of mercy from it.

1- the trade can be routed to other ports, in the area as has already begun to happen.

2- america's current trouble with energy efficiency is due to the record low price of oil in the 80s and 90s. as prices increase, so do the incentives of becoming more efficient. it's a push and pull effect.

Fuel Prices in the US:

 I've seen reports of 5 dollar a gallon gas prices in Atlanta GA of all places. This is probably a panic reaction and the prices will fall again soon but they most certainly won't fall to the levels they were at before Katrina hit. Other reports say that truckers are having problems filling their tanks to keep goods and food moving; some gas stations have run out of diesel, others are rationing it. The US has lost a serious chunk of its refinery capability (maybe thirty percent) and nobody can give a definite answer when it will be back on stream. Meanwhile the heating-oil season is approaching...

 As for Gulf of Mexico oil production, one report from an oil company executive is that of the fourteen rigs and production platforms they had in the Gulf, they know where one is; the other thirteen (evacuated before Katrina hit) are not responding to telemetry signals. Previously the GoM was producing about 5% of the world's oil.

Edited by author 09-01-2005 10:07 AM
"Back to the pictures. New Orleans was evacuated - at least it was by those with the transport to get out, everyone else had to go upstairs or to the Superdome (probably the first and only time they could get inside, even if they are Saints fans) Look at those faces. Don't see too many white ones, do you. The poor in New Orleans are all black - and so are most of the prisoners, from what we could see on tv (which isn't that much of a shock, is it)"

I hope you would be posting this for the other side when their time comes as well but I think these big government times are coming to an end anyway and are irrelevant. I was very displeased that Bush had made no statements on the looting as far as I have read. More soundbites and teary eyed flag humping.

Also, what color were the faces who were looting? I would like to tell our international friends that all large percentages of people in our cities are black compared to the rest of the country. So the Superdome would contain that proportion. Our country is 15 percent African-American and our suburbs contain such while the cities are more black and the rural areas more white. Big deal. Money is going away too, I hope, or scarcity as Charlie points out.

I do agree about your poor assessment and the cultural devisions but that was created by the government and not one party. When you keep people poor and have illegal immigrants working like slaves whet would you expect but crime.

New Orleans is a flood plain and I really think that America should have calmed down with the borg-like necessity to build everywhere and limited the population there while beefing up flood security.

This sucks hard.

My prayers go out the New Orleans from Chicago. And our National Guard too to rescue people from homes while the police stop the looters in the city.

A calamity like Katrina should concentrate some minds, other than just the economic effect. Of course Gee Whizz doesn't believe in global warming (and the old family holdings won't be doing all that badly out of the ramping up of oil prices - remember, W stands for Walker, and that means Old Oil in Texas) and Katrina was unaffected by aforesaid phenomenon - there were stronger hurricanes in the 30/40s - and the increase in activity in Twister Alley might (just might) be a better indicator. However, what sticks out is the reduction of one of the most sophisticated, richest cities the world has ever seen to the status a Bangla Desh village in the Typhoon season - only with more cameras - overnight. It's going to take time, says the governor - and of course it is, it always does - but we aren't talking about some flea ridden corrupt dictatorship in the Horn of Africa with a Stone Age infrastructure being blighted by a natural catastrophe. We are talking about the USA, the self appointed leader of the world, the Crown of Creation (or should that be Amerika, the Krown of Kreation, to go back to when I was a kid).

The word 'hubris' might spring to mind if what we are seeing wasn't so appalling and so pitiful. Lets hope the images don't become debased by use, the way the images of the towers have been - those are still real people in there, and they are still dying, and they are people just like us (as were those poor sods crushed in Bagdhad) Those minds might concentrate on looking after the old homestead, rather than trying to impose an alien lifestyle on a country half way round the world.

No, let's not go into the reasons for the Iraq invasion - if I get started about Dick Cheney and Enron we'll all be here a long time.

Back to the pictures. New Orleans was evacuated - at least it was by those with the transport to get out, everyone else had to go upstairs or to the Superdome (probably the first and only time they could get inside, even if they are Saints fans) Look at those faces. Don't see too many white ones, do you. The poor in New Orleans are all black - and so are most of the prisoners, from what we could see on tv (which isn't that much of a shock, is it)

That might concentrate a few minds too.

Whether it will concentrate the minds of those with the wherewithal to actually do anything about it is another matter. After all, their family holdings are doing very well out of the price of oil rising . . .

Once upon a time, it was said that the business of the United States was business. While I certainly don't want a 20s style isolationist United States, maybe we'd all be better off if those in power paid more attention to the business of the United States (rather than just Halliburton . . . damn! I promised I wouldn't get into the Iraq invasion!)

Interesting times.

Last night I topped up my tank at one of the stations that hadn't pulled down the $2.79 sign and put up the $2.99 one. Gasoline is $3/gallon now in Virginia, which has some of the lowest gas tax rates in the country. There were rumors (unsubstantiated) that fuel distributors did not know when their next delivery would be. If true, there will be shortages by this weekend.

I am actually less worried about the ports than most people. Ports are fundamentally simple structures. They also tend to be designed and built by people who are well aware of floods and storms, unlike much residential housing. Feeding these ports with diesel, electricity, and skilled longshoremen is trickier, and where I expect the difficulties to be.

Mobile will not picking up any slack from New Orleans, as it got hit with the full strength of Katrina. Containerized cargo will be easy to reroute--it will just cost a little more. The specialized bulk-cargo equipment needed for grain simply doesn't exist in many other ports. Why would anyone invest in it? Also, loading to rail cars and then unloading again will add costs and make US exports less competetive.

The recession hazard is one of attitude. With an economy based on consumption, bad things happen whenever the populace gets uneasy. There was an excellent short essay floating around on the web by a fellow who was working for a company that opened its doors at exactly the same time that Gulf War I started, and everybody was glued to CNN for the next month. He would sit there for days waiting for the phone to ring, but nobody was spending money.

There's no way to walk down the steet in this country without knowing how much fuel costs, and the only real question is where the tipping point is: when do people stop being annoyed and start being scared?

The New Orleans/Louisiana area has the largest concentration of oil refineries and platforms in the US, doesn't it? I've heard that a whole bunch of those sites have gone down, probably for a long time (months). That's got to have a knock on effect.

Other things: I've been to New Orleans, it's (present tense, almost said was) a very industrial city. It's now mostly flooded. There's got to be a very large amount of industrial pollutants flooding the city and the nearby gulf.

Finally, how much of the grain that is shipped out from this port is destined for Europe? We're not going to starve or anything stupid like that but I can imagine that food prices here are going to rise.

What worries me is that a big setback in one sector of an economy can propagate and have knock-on effects elsewhere, triggering a recession that's been building for other reasons. (Hark back to October 2001 for a recent example.) Right now, the price of fuel is very close to an all-time high, for a variety of reasons that would hold true even if there wasn't a festering war in the Middle East. What's more, demand for oil is still rising as both China and India develop -- a gigantic and unprecedented change in world affairs, as we look at about 40% of the human population of this planet try to join a developed world that previously amounted to maybe 25% at most.

Energy costs have knock-on effects at every stage in a developed nation's economy, and these are exaggerated in the USA where there are large distances and inhospitable climates to deal with. As Jetse de Vries notes, there are other ports -- but getting the traffic moving through them is going to add to the transport costs (the Mississippi ports were, after all, profitable because they were the cheapest solution to the problem of moving goods).

For the past 30 years -- since the 1974 oil shocks -- western Europe has been focussing on energy efficiency, using heavy tax incentives to keep demand in check. The USA has no such preparation to buffer consumers and the economy against a sudden increase in energy costs and consumption. I'm wondering if we've hit the point at which other areas of the economy are going to begin cracking. I've already heard anecdotal reports of the $3 gallon of gas. How long until this ripples into the wider economy and, along with the throttling of import/export trade in bulk commodities, triggers an adjustment?

Edited by author 09-01-2005 06:48 AM
I was actually stationed (for my job) in Ocean Springs, Mississippi, for a year, so I know the area pretty well.

The amount of destruction, and death toll, is incredible, and I can't really grasp it at the moment.

However, while the economic damage due to the (temporary) closure of the greater New Orleans port will be huge, I do think it will not be quite as grave as Charlie fears, as there are quite a few other ports (Houston/Galveston to the West; Mobile to the East) that will pick up some of the action.

The thing is that it will be more expensive to get the goods to those other ports, because most of it is tranported by barges on the Mississippi (the same way that most of the port traffic to/from Rotterdam and further inland is through the Rhein, Maas and Waal rivers), and transport by boat is cheaper (more fuel efficient) than overland.
But, in a similar vein, if something horrible were to happen to Rotterdam, then most definitely Antwerp, Le Havre, Bremen and Hamburg would take over a quite sufficient part of the trade.

So its very, very bad, but not the total doom scenario Charlie fears (economically speaking).

I think you've made some good points (following in your spirit, I'll avoid counterjabs political at the previous poster). Stratfor is a good resource. Too bad they went to subscription status only.

We've been discussing this over at Asimov's, of course. As for what it will do to the economy, probably nothing good in the short run. A lot of goods are transported by tractor trailer and fuel prices keep going up.

In the long run though, perhaps this will move more people toward hybrids and super hybrid vehicles as well as prompt the industry to decentralize and expand their refining capacity. Or better yet, push biodiesel, ethanol and other more biologically based fuels.

Either way, sooner or later, most of the petroleum based economy on the planet will need to evolve into a post petroleum based state. Perhaps this incident will be one of the driving factors.

Respects,
Steve
Northtown, Missouri

Good commentary over at Making Light.

Bottom line: I agree with Charles, and so do others. Emperor Bush II just held a "Press Conference" in the Rose Garden. Of course, he took no questions, as he is useless without a prepared speech, and sometimes even then.

Important things that he did not say, including what Mr. Stross sayeth:

(1) Ask the Dutch: they lost 1,800 people to floods in the early 1950s, and now have a levee/watergate/dike system that can handle a 10,000 year storm. New Orleans and Biloxi were designed to handle a 100 year storm. Katrina was a 500 year storm. Sure, it costs $$$, but a small fraction of we will now pay from lack of preparedness. [the Netherlands is roughly tied with Britain in percentage of US infrastructure owned]

(2) Want to help? Don't drive, unless necessary, for a few days or weeks. That'll save gas, and relieve demand on oil and refining and gas distribution. [not bloody likely from an oilman with an oilman VP fighting an oil war].

(3) I cut FEMA's budget and authority, and put a political appointee in charge, then folded them into Homeland Security, as part of my plan to put the USA under Martial Law. [This is not a test; we're doing it already under another name]

(4) We have more people dead along the Gulf Coast right now that from 9/11. And I'm already taking credit for the too-little-too-late on this disaster too.