Bushonomics: Credit crisis threatens New Orleans' recovery

The economic crisis could hamper ongoing efforts to help New Orleans recuperate from the devastation of Hurricane Katrina in 2005. Here, the steps of a former home sit in front of new construction in the Lower 9th Ward of New Orleans, on 4 August 2008.

8 October 2008

NEW ORLEANS— A prolonged recession and a tight credit market would cripple New Orleans' still-fragile recovery from Hurricane Katrina, delaying or eliminating road work, new construction and repairs to homes and businesses that have stood empty since 2005.

The city's infrastructure plans should stay on track, but a real estate expert calls it a "terrifying" scenario: A lack of sufficient credit would smother companies trying to start up or expand, and with them the new jobs needed to grow the area's economy. It would choke the flow of cash that developers need to build new homes and first-time homeowners need to buy them. And it would make it tough for the city to sell bonds to finance rebuilding projects on its appointed timeline.

Parking lots and buildings slated for reincarnation as gleaming high-rises might never move beyond blueprints. Small businesses, a lifeblood to the economy and neighborhood anchors, may never reopen or expand.