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September 05, 2005

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Thanks for the fine, informative post, Mimikatz.

This:

We failed to understand the importance of New Orleans, and so we failed as a nation to protect it......As the economic consequences of Katrina ripple through the economy, there may be political changes as well. As we decide how to rebuild, we must remember that "the market" will not take care of us because the market really does not care; it has no goals other than those that society creates and enforces through the web of laws and regulations that contain it.

..is what at least I meant when I asserted in the other thread that this event is probably the beginning of the end of the present government. I meant that the present governing ideology is exploded, not that the Dems are necessarily going to take back congress next year, etc. The superstition of Market Worship, wherein the Market is not a subset of Life, but a superset of it - has been horribly, dramatically, undeniably revealed for what it actually is in practice: a bordello. Chaos. Neglect. Arbitrary-ness. Whatever the election results in the near term, the party's over.

It is entirely possible they are not even aware of this possibility, let alone planning for it.

What in the world could make you say this, Mimikatz?

Great piece. I suspect when the stock and commodities markets open tomorrow in Europe and Tuesday in America, we'll get a pretty good whiff of what's to come.

Mimi, could you write this (cut and paste this?) as a diary over at Mydd? I'll promote it to front page status right away.

Ben P

Thank you, mimikatz, for this terrific post. (Tho' twinge-inducing for a New York chauvinist -- you mean we may actually not be the most important city in the known world?) The implications haven't even begun to be acknowledged, much less felt; the talking heads I saw today all blithely predicted 9/11 redux. And as many have noted here this past week, all this certainly bodes for major political change, and should indeed mean the death knell for the present governing ideology. But it'll require leaders who recognize and seize the moment.

As I read your piece I kept thinking about the social risk attendent to economic calamity -- in the 30's FDR was the indispensible man, whose combination of vision, optimism and agile pragmatism helped steer us away from the dangerous political extremes so many others fell prey to. If our economic plight gets anywhere near that bad -- and most Americans are accustomed to far greater creature comforts today than they were 80 years ago -- it won't be pretty. And however discredited the school of Norquist, those who subscribe to it also subscribe to the school of Rove, which is well-nigh indistinguishable from the school of Goebbels. The good guys have, as we've all noted, a historic opportunity, and we sorely need them to act; will they finally be ready to?

As to Corn and Soy Shipments -- they can with not all that significant additional cost go by rail to the Great Lakes ports (Duluth-Superiuor for instance) and go out through the seaway.

Of greater importance, if you happen to need gas in Benton County Minnesota (West Central county) by law you will get an 85% to 15% Ethnol mixture which closts about 40 cents per gallon less than the present 3.00 average gallon price for gas. (The County Farmers (0ld Progressive Grange tendency) own their own Ethnol making plant.

It may be we should keep the corn and make Ethnol.

btw, a belated welcome to the front page, mimikatz. Powerful piece.

There's much this administration doesn't know and doesn't get, but this time, they're not going to get away with ducking responsibility or blaming someone else.

Great piece, MimiK

I'll agree with jonnybutter, in a way. This may seriously stall globalization. When China and Nigeria realize they're not getting the grain from us they rely on, they'll think twice about selling us their underwear and oil, respectively. (Well, we'll still get the underwear at least!)

No doubt Duluth will be booming for the next couple months, but it's not clear capacity can be ramped up enough to handle the vast loads previously handled by the river.

Ethanol plants were already running at capacity.

Harvest season is immanent, and storage capacity likewise does not appear overnight.

The pain will be shared by the entire grain belt.

Ben P: done.

Sara: I am certainly no expert, but everything I read suggested that it would not be so easy, given the volumes of produce we are talking about. The problem is corn and soybeans. Wheat is produced further north, I think, and a great deal is now shipped out of Seattle destined for Asia. But if you are shipping to Nigeria or Latin America, it is a long way from the St Lawrence, and that means increased fuel costs at a time when supplies are tight. That is also the problem with trucking.

Rail lines that could take produce to ports like Houston are apparently completely inadequate, and they have already about reached the maximum in size for freight cars, judging by the Union Pacific trains I see here in the Bay Area.

And it is the East and West Coasts, plus the Great Lakes states, who will weather the economic stresses the best. The central Midwest and deep South (plus Texas), not so well.

Great piece, Mimikatz. You are getting a link.

Sara, Ben Masel is correct; there isn't the capacity to deal with it on the Great Lakes. In the last 10-15 years, the shipping capacity has dwindled, as the need for moving coal and steel has dwindled. Maybe the Canadians have some excess shipping capacity, but there aren't the ships or the sailors still active on the great lakes to handle it. I suppose some of the Merchant Mariners idled out of the deep sea ports--New Orleans most of all--could be put to work on the Great Lakes, but there are really only about two or three American shipping companies still operating on the Lakes, and I don't know that they have the vessels for it.

And if this seems like arcane knowledge that I shouldn't have without talking out my rear end, I'll let you know that I have a background in Great Lakes shipping, so while I'm out of date with the latest developments, I'm fairly sure of what I'm talking about.

assuming we can reach some agreement on how to rebuild and how to fund rebuilding.

I sit here, contemplating the fact that the current estimate for replacement of the San Francisco-Oakland Bay Bridge, proved vulnerable to failure in the 1989 quake, is something like 2012. It is likely that getting the economic life of the New Orleans region going will take less time than this project, but it is going to require political competence. I am not encouraged.

I thought of the Seaway at first myself. And then I started thinking about where on earth the ships would load. I think Duluth is probably about the only American port anywhere on the Great Lakes, and most of its operations are geared for iron ore, not grain or finished goods. There's certainly nothing in the Chicago metro area that I'm familiar with, and I don't remember seeing anything that looked port-like in Detroit, either. That's strike one.

Strike two is that the traffic on the Mississippi is in barges, not boats. Barges work just fine on a placid river. I wouldn't care to try them on any of the Great Lakes when there's any kind of a wind up, and we're coming into fall again. (Anybody besides me got "The Wreck of the Edmund Fitzgerald" running through his head right now?)

Strike three is that, as several other commenters have noted, the ships and the crews are on the Gulf Coast, not the Great Lakes.

It's going to be interesting to see what transpires, but it's not looking good from my perspective.

Duluth is a major shipping port for grain, as are Toledo and the Port of Indiana. But the problem is still the shipping capacity. The ships would either be small (to traverse the St. Lawrence Seaway and the locks at Niagra Falls) or would have to be built within the Great Lakes for the Great Lakes. Most of the big iron ore carriers (which can also carry grain) were built on Lake Erie. Some of them could probably be taken out of drydock, but it's late in the season to get them ready, crew them, and get them up into Lake Superior.

Had this happened a month or two ago, and they could have forseen the shipping problems, they would probably have had time to react. But I think it's too late in the season to get the vessels ready in time to handle the grain.

And now that I think about it, Great Lakes shipping wouldn't really solve the grain problem anyway. The reason grain goes down the Mississippi in barges is typically for transfer to deep sea vessels for transport to Europe, South America or Africa. The Great Lakes grain shipping is mostly to move it within the US, because large vessels can't get through the locks at the Falls.

So for grain bound for overseas shipment, it's either rail to an Atlantic port--and I don't know which port that would be--to Houston/Corpus Christi (which is going to be overwhelmed) or to the Pacific by rail.

And our rail system is at capacity, and not at all agile or responsive due to the consolidation of freight carriers.

They ship grain out of Indiana? Who knew?

And I'd thought about the possibility of using the ore carriers for grain, but figured there were probably just about enough of them to handle the demand for iron, and no more. Those honkin' behemoths can't be cheap to build, and I don't imagine anybody would build extras just on the chance that they might be needed in an emergency.

Mimikatz, thanks for this. Did you come across anything about or do you have any thoughts yourself on ripples into the housing market? I'm an idiot about this stuff, so forgive me if the question reveals my ignorance. But with housing prices already claimed to be in a bubble, your prediction that the cost of building materials will rise, and some million new homeless, I'm trying to figure out how it all will fit together.

Interesting question about housing. The demand for housing will keep strong, but if there is an economic downturn, maybe not so much demand for second homes, which is big in some areas like FL. Also, some may be rethinking homes in the hurricane belt. There probably will be an increase in costs, though. One article I read speculated $10,000 per house. I think interest rates will stay low, but other costs going up will crimp consumers. It would be great if some architects and buliders came together with creative plans for real affordable housing for our displaced citizens.

Oyster (from NO) has a post about a local guy who has pretty good looking modular homes, although I think they might be a little on the expensive side (around $100k - they ought to be more like $60k, probably).

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