Monday, October 10, 2005

Nuevo Orleans

I make it my business (literally) to observe the whole of a situation, make predictions of what the long term impact might be (megatrends), and make investments in enterprises that will benefit from the change. I guess my style is Ben Graham meets Alvin Toffler. Here's some of the observations I see with Katrina:

1. The population of New Orleans has largely sat back and asked the rest of the country what we're going to do to help. You don't hear this about the other areas devestated by Kartrina and Ivan because the residents of those areas rolled up their sleeves and rebuilt their own communities. Why did we simultaneously have thousands of volunteers from the rest of the country flock to New Orleans while lots of able bodied people from New Orleans sat in shelters and complained about not getting enough help? The answer is that the people of New Orleans see themselves as victims rather than stakeholders.

2. Mayor Nagin has been asking "how do I insure that New Orleans is not overrun by Mexican workers?" The companies coming into New Orleans to start the for-profit reconstruction effort are hiring Mexican workers, not New Orleaners. I saw something like this first hand in St Croix after it was wiped out by Hurrican Hugo in the 90s. Contractors from Puerto Rico flocked to St Croix to harvest the reconstruction dollars, and just stayed. Today there is a large Puerto Rican population on St Croix, representing most of the middle class. Most of the merchants are Indians. The Cruxians remain the poverty class because they were unprepared or unwilling to fill the construction jobs needed after the hurricane. I think we'll see this in New Orleans as well. Many of the Latino workers who show up there to rebuild the city will stay. The middle class of New Orleans will be Hispanic.

3. Mayor Nagin also wants clearance to build on-shore casinos in the city limits to accelerate the regeneration of the local economy. The hotel/casino industry that builds around that will be staffed with experienced folks from Las Vegas, Atlantic City and all the other communities around the US that support gambling. Other service jobs will be filled by Hispanics. The small merchants will be Indians, Pakistanis, Turks, etc who are looking for a place to get into business. There won't be a lot of jobs for New Orleans folks who come back later. Many just won't come back. The demographics of New Orleans has permanently changed.

4. The real estate in what was low income housing is owned by landlords who are going to sell to big bucks developers. They aren't going to build new low income housing! So the neighborhoods where many evacuees once lived will never be rebuilt.

5. Mayor Nagin will be seduced to serve the desires of the developers, not the citizens who have left. Golden Rule: "He who has the gold makes the rules."

Add it all up, and New Orleans becomes Las Vegas with a Miami climate. Sort of a Disney World for adults. Good thing the French Quarter survived. It is, after all, the main theme park in "Mardi Gras Land."

So how will I be investing? I won't. Not the way I want to make money.

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