Hurricane Katrina Changes the American Landscape

Jackson Square is at the heart of the French Quarter in New Orleans
and bordered by the world famous St. Louis Cathedral.

We wish to express our sorrow for the tragedy that has befallen our neighbors to the South. Hagerman & Company has donated $ 1,000 to the relief effort for Katrina victims through the Salvation Army. We encourage our employees to donate as well.

The effects of this disaster cannot really be fully comprehended at this time. Surely the South will soon experience the greatest rebuilding effort since Civil War reconstruction.

Law and order must be restored, electrical service reestablished, and highways and bridges repaired or rebuilt. Then the task of rebuilding homes and buildings can begin.

Surely the City of New Orleans must also consider not only repairing the levees but greatly improving them, since the risk of a recurrence of the flooding of the city, however remote, is totally unacceptable.

Our guess is it will take at least five years for the region to return to pre-Katrina levels.

One silver lining may be the derailing of the Federal Reserve’s campaign of increasing interest rates. It would seem foolhardy and insensitive to keep driving the screws of tighter credit at the same time we are experiencing a national disaster of inestimable proportions. Besides, the long term credit market, which is not controlled by the Fed, has maintained stable ten year rates close to 4% for the past year. Were the Fed to continue its course, the overnight rates it manages would soon be higher than ten year bond rates. This senseless result would greatly increase the already substantial risk of a recession.

As for the rest of the country, we all will feel the effects of Katrina through either sky high prices for gasoline and heating oil, or, possibly, shortages of both. Depending on the severity of these effects, it may be necessary for our company, for example, to cancel events that require travel for our employees and our customers to attend. Fortunately, many events today can be conducted over the Internet. We may need to rely more on such Webinars in the future.

For now, let the rebuilding begin.