Katrina

[haggis]

The case for rebuilding NOLA

”The Ports of South Louisiana and New Orleans, which run north and south of the city, are as important today as at any point during the history of the republic. . . .

A simple way to think about the New Orleans port complex is that it is where the bulk commodities of agriculture go out to the world and the bulk commodities of industrialism come in. The commodity chain of the global food industry starts here, as does that of American industrialism. If these facilities are gone, more than the price of goods shifts: The very physical structure of the global economy would have to be reshaped. . . .

New Orleans is not optional for the United States' commercial infrastructure. It is a terrible place for a city to be located, but exactly the place where a city must exist. With that as a given, a city will return there because the alternatives are too devastating. The harvest is coming, and that means that the port will have to be opened soon. As in Iraq, premiums will be paid to people prepared to endure the hardships of working in New Orleans. But in the end, the city will return because it has to.”

I sometime forget the economy of geography.

[hal 9000]

Originally posted by Shapley:
Hal,

Thanks. I should point out that, in your scenario, at the beginning of 12 weeks, or GSO is 17,750.49 in debt, where as in mine, he is debt free after ten weeks (dismissing the effects of interest, as you did).

I will take this as an endorsement on your part for maintaining debt as good for the GSO's economy, even if his debt is increasing weekly (deficit spending). I will also note that, given OT's stated support of your math, that he, too, supports maintaining debt.

V/R
Shapley

This scenario, though unrealistic, does not show the GSO in debt. Yes, that $17,750.49 is how much the GSO has to borrow to buy the 5000 gallons of gas at $3.75/gal in week 12. But he earns $19,750 by selling it to the consumer that same week at $3.95/gal. The first $17,750.49 goes back toward the loan and he profits by $1999.51 that week (factoring in interest obviously lowers his profit, but not significantly since the principal only collects interest for a seven day period).

[dai bread]

That was an interesting article about rebuilding New Orleans, Haggis. I hadn't realised that NO is the largest port in the U.S., or that so much was transported on the river system.

It seems that someone, presumably in Washington, will have to bite a very large & indigestible bullet to fix the place properly. Bearing in mind the comments about parsimony & duck-shoving in other articles linked to, I won't be holding my breath.

[Shapley]

Hal,

My point is that, in your scenario, the GSO is in debt every day that he is opened for business. If he has fuel in his tank, it belongs to someone else.

Try expanding your scenario to a case where, in week 13, the price drops midweek by .50/gal. Your GSO is forced to maintain his price all week, because he cannot afford the loss. My GSO can drop his price immediately, stealing your GSO's customer base.

Granted, my GSO will show a loss on the books, in that he bought fuel for $18,750.00, sold half @ $3.95/gal. for $9,875, and was able to sell the rest for 2.95/gal., still able to pocket $1,000 and buy the next tank of gas.

If your GSO matches my price, his gross for the week will be $17,250, or $500.49 less than he borrowed, with nothing in his pocket.

Most likely, however, my GSO will match the .50/ga. price drop, which will allow him to maintain or gain customer base while taking advantage of the price drop to boost his profit. He will sell 2500 gals. @ 3.95/gal. and 2500 gals. @ 3.45/gal. grossing $18,500, a loss of $250 on the tank of gas, but still able to pocket $2,250 after buying the next weeks fuel.

If your GSO follows suit, his pocket will bill filled with 749.51, with nothing left to reduce the cost of next weeks fuel.

I should also point out that, at the beginning of week twelve, Your GSO has increased his net worth by $10,999.99, before assuming a debt of $17,750.49. Your GSO finds himself further in debt every week, while mine has never assumed more than $5,000 in debt, which was paid off in ten weeks. I do believe I stated from the outset that the intent was not to assume debt everytime the price goes up.

Are you now willing to accept that my math is not all that fuzzy?

V/R
Shapley

[hal 9000]

Shapley-

I called the math 'fuzzy' because it seemed to overlook the initial $5000 earned before the $1000 profit in week one. I see now that you mean to use that $5000 dollars to pay for the next weeks supply of gas and NOT to repay the loan. And since you realize that you have to pay $1.25/gal for the week 2 shipment, your GSO raises his gas price from $1.20/gal to $1.70/gal midweek in week 1. That is quite a price hike. Sure your GSO doesn't have to borrow money each week by doing this, but how much gas do you think he will sell at $1.70/gal if my GSO is down the road selling it $1.20/gal? Yes, my GSO borrows money every week to pay for his shipment, this is true. But he also repays each weeks loan from the gas he has sold and collects profit from it. If the next weeks shipment actually goes down in price by $0.50 your GSO will be able to respond immediately, that may be true. But since his price is already $0.50 higher than my GSO's price, that means your GSO will then be selling his gas at the same price as my GSO. Furthermore, once my GSO starts selling at that price the next week, he will again undercut your GSO's price.

I've been saying that my scenario is unrealistic- I've concluded this because it is not very likely that my GSO would be able to borrow so much money on a weekly basis (which is immediately repayed the following week) from any bank. Then a thought occured to me. My GSO could set up a credit card account for his business which he would use for purchasing his gas. Since he repays what he charges every week that means he can potentially charge his gas purchases without having to pay any interest. And therefore he is actually purchasing his gas every week.

But you are right, I misunderstood your business model. The math was not 'fuzzy.' However, I still disagree that it is necessary to charge customers based on future prices for gas that has already been purchased.

[Shapley]

Hal,

I'll take that as an apology.

BTW, by my model, the gas price only needs remain at $1.70 the first week, and only because of the midweek notification. Similarly, the model changes drastically if the volume of fuel is increased. My poor GSO has only a 5,000 gallon tank, so his price fluctuations vary wildly. If the volume is increased to 10,000 gallons, my GSO need only raise his price to $1.50 to complete the scenario (assuming he still wants pocket $500, and pay $500 on the loan.

With a 20,000 gal tank, he can charge $1.40/gal, and meet the payments above (taking 4 times as long to pay off his loan, or he can charge $1.50/gal. and put $1,000 in his pocket, and pay $1,000 on the loan, while still buying the next tank of fuel without going further in debt.

V/R
Shapley

<small>[ 09-06-2005, 01:00 PM: Message edited by: Shapley ]</small>

[BigJon@Work]

Besides, the Highway 190 bridge in Baton Rouge blocks the river going north.

This is the real reason New Orleans has become a critical port. The wily and corrupt Louisiana politicians saw to it that ocean-going vessels would be blocked from going to valid upstream ports by building a bridge so low that the ocean vessels couldn’t pass. Tear down the bridge as well as the levees so the economic benefits can be spread up the Mississippi and the incredibly expensive manipulation of the delta by the Corp of Engineers can be drastically simplified.

[piqaboo]

Galveston was well on its way to being the main port when the 1900 hurricane hit. Why not let it have its turn again?

[BigJon@Work]

Right. We can no longer have the keys to any of our economic engines in any one place.

[Selma in Sandy Eggo]

I'm pretty sure that we need some kind of major port to serve as the transfer point from ocean freighters to river vessels - the Mississippi and its tributaries are a huge cargo route.

Are there alternate sites for the same river? I'd favor any plan that developed several ports.

[Shapley]

BigJon,

The ocean-going ships would be incapable of negotiating the twists and bends of the Mississippi River. In addition, the river is maintained to a minimum depth of 9 1/2 feet, far less than the draft of most ocean-going vessels.

Ocean freight is discharged at New Orleans onto Barge, truck, rail, and smaller ships, for shipping to various parts of the country. It also arrives there from throughout the nation for loading and shipping overseas. There really isn't a suitable substitute unless we dig a very big canal to tie in to the river somewhere upstream. A noble idea, but I doubt such a venture would get far in todays environmentally conscience world.

V/R
Shapley

<small>[ 09-07-2005, 10:38 AM: Message edited by: Shapley ]</small>

[Haggis@wk]

"Galveston was well on its way to being the main port when the 1900 hurricane hit. Why not let it have its turn again?"

While true, the importance of the Mississippi River can’t be discounted. It is the artery that the bulk commodities of our agriculture travel upon to the Gulf of Mexico, in addition the rail and road networks in that part of Louisiana can’t be easily replicated in Galveston.

Moreover, remember there is a sense of immediacy in restoring the port facilities as soon as possible. The harvests are coming due and a large part of the world eats bread that started as wheat in Kansas and passed through NOLA.

How lucky are we to have a river that runs from the heart of the grain producing capital of the world to a major deep-water body?

Anyway, delays in restoring the port means someone somewhere is going to pay more for their bread.

We are truly a global village where the loss of your neighbor’s cows will affect your cheese business.

[Shapley]

http://www.washingtonpost.com/wp-dyn/content/article/2005/09/03/AR2005090301680.html

Behind the scenes, a power struggle emerged, as federal officials tried to wrest authority from Louisiana Gov. Kathleen Babineaux Blanco (D). Shortly before midnight Friday, the Bush administration sent her a proposed legal memorandum asking her to request a federal takeover of the evacuation of New Orleans, a source within the state's emergency operations center said Saturday.

The administration sought unified control over all local police and state National Guard units reporting to the governor. Louisiana officials rejected the request after talks throughout the night, concerned that such a move would be comparable to a federal declaration of martial law. Some officials in the state suspected a political motive behind the request. "Quite frankly, if they'd been able to pull off taking it away from the locals, they then could have blamed everything on the locals," said the source, who does not have the authority to speak publicly.

A senior administration official said that Bush has clear legal authority to federalize National Guard units to quell civil disturbances under the Insurrection Act and will continue to try to unify the chains of command that are split among the president, the Louisiana governor and the New Orleans mayor.

Louisiana did not reach out to a multi-state mutual aid compact for assistance until Wednesday, three state and federal officials said. As of Saturday, Blanco still had not declared a state of emergency, the senior Bush official said.

"The federal government stands ready to work with state and local officials to secure New Orleans and the state of Louisiana," White House spokesman Dan Bartlett said. "The president will not let any form of bureaucracy get in the way of protecting the citizens of Louisiana."

Blanco made two moves Saturday that protected her independence from the federal government: She created a philanthropic fund for the state's victims and hired James Lee Witt, Federal Emergency Management Agency director in the Clinton administration, to advise her on the relief effort.

And this:

The decision to employ active-duty ground troops and Marines was particularly significant given the administration's initial desire to limit ground forces largely to Guard units. Regular military troops are constrained by law from engaging in domestic law enforcement. By contrast, Guard troops, who are under the command of state governors, have no such constraints.

At a Pentagon news conference Saturday, Lt. Gen. Joseph Inge, the deputy commander of the Northern Command, said the active-duty ground forces would be used mainly to protect sites and perform other functions not considered law enforcement.

<small>[ 09-07-2005, 11:50 AM: Message edited by: Shapley ]</small>

[Haggis@wk]

I think the State and Local governments are going to have to take the bulk of heat on this one although the Frds will have to own up to some of the problems.

[OperaTenor]

"Frds"?! What do hobbits have to do with it?

(j/k)

[Haggis@wk]

*Feds*

<Glares at OT>

[OperaTenor]

I feel better now. It seems I don't feel on top of my game unless I've got a former machine gun-toting CMSgt glaring at me......

[piqaboo]

Hey Haggis, I need to sharpen up. Can I take some refresher glaring lessons from ya?

[BigJon@Work]

Yes, I believe the worst the feds can be accused of is logistical failures. A failure to move the needed items in a timely manner.

President Bush was in a no-win situation. Had he parachuted in on the first days, he'd been accused of grandstanding over a national tragedy. I think his approach was right. Hover over the states and move as soon as they asked for help.

[Haggis@wk]

goto this site and scroll down a bit.....