Katrina and the economy

Daniel Gross over at Slate has a good article on what Katrina means for the economy:

The hurricane directly affected only a small chunk of the consumer economy. Louisiana and Mississippi have a combined population of 7.5 million and account for about 2 percent of the nation's economic activity. But it will indirectly affect all consumers and businesses, in the United States and abroad.

The problem is that New Orleans lies at the heavily trafficked intersection of the Old and New Economies. The region's economy is based on agriculture, water transport, and natural resources. But moving and selling goods requires an intricate web of supply chains, pipelines, and commercial arteries that connect producers to consumers. The networked economy isn't just about bytes and fiber-optic cable, it's about oil, grain, and sugar. And when the infrastructure of these networks gets damaged, it can't be replaced easily or cheaply.

Read the whole thing it's worth your time.