Offended by the Cost Estimates from Katrina

The legacy media have been tossing around numbers - provided by the insurance industry - of $20-30 billion for losses associated with Katrina.

This is so far off that I find it offensive. A ballpark figure is much higher.

The only estimates that have come out so far are insured losses. There are three problems with this. First, New Orleans is not a heavily insured city. Second, initial insurance estimates have been notoriously low for several disasters the last few years. Third, we've never had a disaster like this before.

Estimates of national wealth from the World Bank are $400K per capita in the U.S. Currently, with the failure to close the 17th Street levee break in New Orleans, the entire east bank of Orleans and Jefferson parish is at risk. Something like 800K live in that area. This places the total wealth of that are at $320 billion.

Now, to be careful, that World Bank estimate is very thorough, and it includes a lot of human capital (that can't be destroyed without loss of life) and agricultural wealth (that gets counted for a country, but is non-existent in the east bank).

Even so, current estimates of insured losses represent only 6-10% of the total wealth in the east bank. Based on what I know of New Orleans, and what I have seen on TV, this seems wildly low. Something more like $100-150 billion for all damages seems more realistic.

On top of this, the GDP of the east bank is roughly $2.5 billion per month. They are talking a bare minimum of 2 months before people can even come back everywhere across the city, much less get back to a reasonable facsimile of earlier production.