Sunday, February 11, 2007

Back from the big easy

I didn't see much of New Orleans, most of my time was in the Convention Center and my hotel (just outside the French Quarter). I talked to some people who took "The Katrina Tour", a Gray Line bus tour of areas impacted by Katrina. Also to some people who drove in and saw 15 miles of abandoned apartment buildings and neighborhoods.

What I did see was that the downtown area has a lot of construction (doesn't every major city?) and that a lot of businesses are still closed. One that caught my eye was a print shop, similar to FedEx Kinko's. It didn't look like there was much damage, just no business. Looking around confirmed that the area was no where near as busy as it was 6 years ago when I was there last. It took New Orleans decades (centuries) to reach the level of busy-ness that it had pre-Katrina. It won't return quickly.

So what SHOULD happen in New Orleans? If I were King For A Day (KFAD), what would I do? Being a conservative capitalist who believes in individual responsibility, I don't think it's the government's job to rebuild. The free market will fix itself. People will move back when the jobs are there and when the market requires it. Keep the government out, it's already too messed up.

But what if I had been there? Well, again, personal responsibility. You self-insure against small losses, buy insurance against big losses. That's what I do at my home in SC. But regular insurance doesn't cover floods. So, as KFAD, rule # 1 is that (from now own), insurance is insurance. Insurance companies are in business for $$ (not for health), so they can adjust insurance rates. Customers should expect an increase. Oh, and by the way, customers in areas more likely to flood should expect a higher increase.

But, the market is not truly efficient, insurance companies (and all companies) typically look at the short term. Rule #2 as KFAD means that someone (probably a committee or a board) has to mandate that all insurance companies must have reserves to cover their part of Katrina-sized disasters and they must also be widely diversified so that they don't loose everything when Daughter of Katrina hits.

There were lots of sins and crimes and shames before and after Katrina. I don't want to focus on them. There will be much wringing of hands and pointing of fingers. As KFAD I wouldn't waste my time. Yes, much was lost and needs to be done better the next time. Much was also lost in the market burst earlier this decade. No one went to jail for that (well, except Ken Lay and a few others like him). Those of us who lost money, lost it knowing the risk. If we didn't know the risk, we should have. That's what investments are, risk. Sometimes they go up, sometimes they go down.

I know I lost a lot in one area, I have no idea how much I lost in some of the others. In fact, I'd probably rather not know. But that doesn't take me out of the game. I just watch a little closer and prepare for the worst. Self-insure myself.

The problem is, that there is no city of Jubilee in life. No place where you can escape. Remember in hide-n-seek? You could run to base and be safe. No one could tag you and make you "it". Doesn't happen in life. There is no "base", you can be tagged anywhere. Best you can hope for is to break even in the long run.

Now that sounds depressing, but it doesn't have to be. Instead, you can focus on other things. Life itself, the ones around you. The beauty of the morning (I watched the sunrise a couple mornings across the Mississippi). No one can take those away. So maybe, in a way, there is a "base".

This entry has takena few turns, I'm glad I'm back from New Orleans.

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