Katrina 2.0

Last night I wrote a long piece, and as often happens, as I wrote I did more thinking and as it settled in overnight and through the morning, the story distilled and the conclusion became clearer.

Katrina was more than a hurricane, it was a disaster, that happened in three stages:

1. A category 3 hurricane, followed by relief. The city was still standing. A few broken windows, but nothing that couldn't quickly be repaired.

2. Everyone goes to sleep, wakes up the next morning to find the levees had broken and the city was flooded.

3. National paralysis. Some of the needed resources had been deployed elsewhere. We became a nation of Brownies all doing a heckuva job. People were killed in the flood and on the streets as the New Orleans was looted, while we watched in horror, unable to help, as an American city died, right there on CNN.

Katrina never ended, three years later, it's still not over. New Orleans is still broken. Whole families were wiped out in the disaster, and while we don't spend much time on it in our national discourse, even as the election approaches, it's still there, reminding us of something. But we're not learning the lesson, and now our nation faces a Katrina-scale disaster, across the entire country, and like New Orleans on the first night of Katrina, it hasn't sunk in.

There will be no place to go if we wake up tomorrow to find the financial levees have broken and our nation is under water. People don't understand how much momentum there is to an economy, and when the wheels stop turning, they don't just start up again. It will take years if not decades to get them going again, as it will take that long to reboot New Orleans, if it ever happens.

A commenter asked what to do, which is a fair question -- and the answer is easy, as long as you accept that we're in a Katrina-scale disaster. Don't got to sleep, and if the levees break, and even if we act they're still pretty likely to break, don't accept Brownie-level incompetence. Require more of yourself (key point) and your leaders.

Imho, we are in another Katrina. It's easy to be fooled into believing that like New Orleans we may still dodge the bullet, the unthinkable is of course hard to think about. But after Katrina 1.0, it should not be hard to imagine the same thing happening to all of us, at one time. That's what's at stake.

Comments

[nezumi]

There are more similarities.

In both cases the catastrophe was foreseable to the informed but nobody wanted to hear it. Doing something against it would have been costly in both cases. And why bother before it actually happens?

In both cases the government could have done markedly better.

In both cases the government (or the public) did not show much interest because only middle and lower class suffered the most.

[tompoe]

If you're thinking a yes vote to dump money into Wall Street is a necessary evil to prevent your idea that "People don't understand how much momentum there is to an economy, and when the wheels stop turning, they don't just start up again. It will take years if not decades to get them going again, as it will take that long to reboot New Orleans, if it ever happens.", that's just wrong. Bush spent eight years taking this country down with a strategy of rape and pillage. Recovery is now decades away. It's time to stop the wheels, stop the bleeding, stop the foreclosures, stop the war. There is a faster road to recovery than adopting the strategy of the Party of Corporate Welfare. America does not tolerate corporate welfare.

[BuckarooBanzai]

Why is the deflation of the housing bubble like Katrina? Where are the levees here? I am still getting calls from people trying to sell me a mortgage. The name on my bank is changing from Wachovia to Chase but my checks are getting cashed and the ATM still works.

Global Payments are being made. Large Investment banks have real problems and that type of business may not survive in the Short Term, but the smart players like Goldman and Morgan Stanley have become commercial banks; they are excepting limits on risky business to access guarantee'd sources of funding.

I am a banker. I know there are very serious problems with the economy that will take years and a lot of pain to dig out from, but is this a financial disaster like the banking runs of the 1930's ? or are we being stampeded into panic by people who know a lot about hyperbole but not a lot about finance?